After you’ve entered and linked tasks, added task-duration estimates, and assigned resources, Microsoft Project can build an accurate project schedule for you. That might be all the help you want or need to manage a particular project. But for projects in which it’s important to know how much money you’ll spend and when you’ll spend it, you can add cost information to your project plan. You can also use this feature to help you estimate how much future projects will cost.
When you add cost information to your plan, you can:
Where do costs come from? In many projects, the effort to accomplish tasks takes the biggest bite out of the budget. The total cost of each task is equal to its variable costs (costs that change over time), plus its fixed costs (costs that stay the same over time). The most common variable cost is for paid resources, for example, a painter who costs $15 per hour. The longer the painter takes to paint a wall, the more that task is going to cost. A common fixed cost is the cost of materials. The amount of paint (and thus the cost) required to paint a wall remains the same no matter how long the painter takes.
To monitor costs effectively, you should first assign rates to resources. You’ll assign hourly rates to some resources and per-use costs to others. An example of a per-use cost is the flat amount you pay each time you rent equipment or office space. If a resource works on two or more different types of tasks, each one requiring a different set of skills, you can assign that resource a different rate for each task. You can also specify pay increases (or decreases) that go into effect at a particular time. When you’ve finished assigning resource costs and materials costs, and you’ve assigned resources to tasks, Microsoft Project can show you the total project cost. From that estimate, you can develop a project budget.
As your project progresses, you might want to know how much a specific task has cost so far. Microsoft Project helps you determine this by giving you a choice of methods for accruing costs.