Do you know how to track schedule costs in Primavera P6? Most of us are familiar with the process of updating and tracking schedule activity progress from a time standpoint, but what about the cost of those activities? Well, Primavera P6 has features available for keeping track of the cost of labor, equipment, and material resources. It is also possible to track the cost of project specific expenses.
This article describes the process of tracking the cost of labor resources on a project. It considers a schedule where all activities are on the critical path, so a delay in any activity will result both an increased activity cost and project management cost. It also assumes you want to track the actual project labor cost incurred on a weekly basis. This includes the addition of project management costs to the weekly update.
Figure 1 displays the project that we will track labor costs on a weekly basis.
Note that we have three 5-day tasks that are connected using the standard Finish-to-Start relationship. These tasks are all on the critical path. We also have a 15-day level of effort Project Management activity. The duration type of activities is not shown. Because we are not adding additional resources the duration type assignment is not important, and may be left at the default, which for our schedule is Fixed Duration and Units/Time. Also, note that the baseline has been set. The baseline is displayed as a yellow bar on the Gantt chart. Also, note the BL Project Labor Cost column in Figure 1. This is the baseline for labor costs, and is set when the baseline is assigned.
Week One Update
Activity A is progressed as displayed in Figure 2.
It completes during the scheduled 5-days of work. Note that the Actual Labor Cost is automatically updated in Figure 2. The Baseline Project Labor cost and the Actual Labor Cost are the same, so the Variance is zero. In Figure 3 the project management level of effort is updated to reflect 5-days of project management effort, i.e. $3,800 actual work. Instead of having Primavera P6 compute project management labor costs based on duration % complete, we manually enter the actual and remaining labor cost for the project management effort. Enter $3,800 actual and $7,600 remaining for project management.
The data date is advanced one week, as displayed in Figure 4.
Week Two Update
Figure 5 shows the update for task B.
This activity was scheduled to be complete in 5-days, but at the end of the week the activity was only 60% complete. This is reflected in the Actual and Remaining Labor Cost. You must manually enter the actual and remaining labor cost for activity B. The actual labor cost is $9,120. The remaining labor cost is for two additional work days at $1,824 each. So the remaining labor cost is $3,648. In Figure 6 we update the project management effort to reflect 5-days additional work.
Again, we manually enter the actual and remaining labor cost for project management, which is $7,600 actual and $3,800 remaining. After advancing the data date, Figure 7, we note that the At Complete duration of the project management effort is 17-days, up 2-days from the original 15-day effort. At this point the additional two days project management is not accounted for in the variance, but the variance for activity B is negative $3,648.
Manually enter the remaining labor cost for project management, which is 7-days of work costing $5,320. The schedule variance of $1,520 in the project management activity reflects the additional 2-days project duration. Also, note the schedule variance of $3,648 for activity B, which also reflects the additional 2-days activity duration.
Week Three Update
In Figure 8 we close out activity B.
We must manually enter the $12,768 actual cost of Activity B. Again, note the schedule variance of $3,648 to account for the additional 2-days required to complete activity B. Activity C is commenced in Figure 9.
Here we complete 60% of the effort in three days, which shows that this activity is on budget. It, however, is behind 2-days due to the 2-day schedule delay because activity B took longer than planned. In Figure 10 we update the project management effort.
Manually enter the actual and remaining labor costs. Enter the actual cost of the project management effort of $11,400. Next, enter the remaining project management cost of $1,520, which accounts for the additional 2-days schedule duration. In Figure 11 we advance the data date one week to the beginning of week four. Now we see the total cost variance of $5,168 due to the additional activity B and project management efforts.
Week Four Update
In Figure 12 we close out activity C.
Activity C, although delayed, completes on budget after 5-days of work. The Project Management activity is 2-days over budget due to the delay in Activity B. In Figure 13 we specify the project management actual labor cost is $12,920 and the remaining cost is $0.
We advance the data date one final time in Figure 14.
Note in Figure 14 that the variance for project management effort is $1,520, Activity A $0, Activity B $3,648, and Activity C $0. The project was completed at an additional labor cost of $5,168 as a result of the additional two days required to complete activity B. So the project completes two days late and $5,168 over budget.
The advantage of this type of schedule update process is that you can see the beginning of cost variance starting at week two. This provides an early warning to the project manager, who can then look for ways to realign the schedule through techniques, such as activity schedule compression.
Once the activities, corresponding relationships, and resources have been incorporated into the schedule you are ready to set the baseline. The baseline sets both the activities in the Gantt chart as well as the dollar amounts in the activity view baseline columns.
The available cost baselines include: BL Project Labor Cost, BL Project Material Cost, BL Project Nonlabor Cost, BL Project Expense Cost, and BL Project Total Cost. Setting the baseline freezes the amounts displayed in these activity baseline columns.
The baseline cost columns along with the actual and variance cost columns enables you to track project cost. Note that when an activity takes longer than planned you have to manually enter the actual labor cost for the activity. Also, lengthened activities will incur a work crew labor cost for each additional day. You also will incur project management labor costs for each additional day. The project management effort expands and contracts according to the expansion and contraction of the critical path.
Reporting BL Project Labor Cost, Actual Labor Cost, and Variance – BL Project Labor Cost provides an overview of schedule project labor costs. These labor costs may be updated and reported on a weekly basis as done in this article. Weekly reports should provide sufficient early warning when the schedule labor cost is veering off the planned budget.