When you add a new resource, the default setting toggles on “calculate costs from units.” But what happens when you manually enter a cost for a resource assignment? Let’s investigate.
With the setting “calculate costs from units,” P6 Professional computes the resource assignment cost when the scheduler enters an actual labor unit. Actual cost calculations in P6 were explored in the following blog Actual Cost Calculations in Primavera P6.
The above blog investigated the setting “recalculate actual units and costs when duration % complete changes.” We want to consider the “calculate costs from units” setting when “recalculate actual units and costs when duration % complete changes” is on. Often, the scheduler skips actual units, sometimes unknowingly, and directly enters a dollar amount for the resource assignment cost. The question becomes how P6 Professional handles this manual actual cost data entry.
This article investigates what happens when the “calculate costs from units” setting is on, and the scheduler directly enters a resource assignment’s actual cost.
For our demonstration, we create and assign a fixed price cost or lump sum cost resource according to the United States Army Corps of Engineers (USACE) guidelines in the following blog USACE SDEF Format and Cost Loading a P6 Schedule.
Figure 1 shows our demonstration resource, Lumpsum, with a standard rate of $1/h.
Figure 1
Note that the toggle setting “calculate costs from units” is currently on, as shown in Figure 1. Our demonstration schedule, in Figure 2, indicates that “calculate costs from units” is set for each resource assignment.
Figure 2
In our demonstration, all tasks were lumpsum cost-loaded. Note in Figure 2 that all tasks have the percent complete type duration. For this, the achievement and remaining duration are linked. If you enter an activity % complete, P6 Professional automatically computes the remaining duration and vice versa. Figure 3 displays other relevant settings for resource assignments and our demonstration schedule.
Figure 3
In Figure 3 above, we set P6 to subtract actual from at completion. This setting indicates a cost-constrained project. Also, we elect to “recalculate actual units and cost when duration % complete changes.” So, when we enter activity % complete status for a task, P6 automatically computes the equivalent actual labor units and actual labor cost.
As shown in Figures 4a and 4b, we progressed the schedule by one week.
Figure 4a
In Figure 4a, we entered a duration percentage of 25%, and the remaining duration became three days. We moved the data date to the end of the first week’s reporting period and calculated the schedule, Figure 4b.
Figure 4b
Per our settings in Figure 3, P6 Professional automatically computed the three-day remaining duration and the $1,000 actual cost, as shown in Figures 4a and 4b. This assumes a linear duration-to-cost, but we spent an additional $200 to complete the one day of work, so we entered actual units of 1200 in Figures 5a and 5b.
Figure 5a
The progress-to-cost in our demonstration is nonlinear; the actual units for one day’s Install Piping & Couplings work were 1200-h and not 1000-h. In Figure 5a, we enter 1200-h actual units for the lumpsum cost of the first day’s work on Install Piping & Couplings. The equivalent cost becomes $1,200, Figure 5b.
Figure 5b
Figure 6 shows the bottom details: 3 days remaining duration, 25% duration % complete, and $1,200 actual labor cost for the first week’s work.
Figure 6
We continue. We update the schedule for the progress made in week two. In Figure 7, we update the remaining duration to 2 days for Install Piping and Couplings’ second week’s effort; the equivalent duration % complete is 50%, and the actual cost recalculates to $2,000.
Figure 7
We move the data date forward and calculate the schedule. The bottom details lumpsum resource assignment in Figure 8 shows the 2000-h actual units and $2,000 actual cost.
Figure 8
Observe that the “calculate costs from units” is on. Having progressed with “Install Piping and Couplings” two days, the actual units and actual cost were automatically updated linearly, Figure 8. Now we provide the revised cost by manually entering the $2,400 actual cost in the bottom details, Figure 9.
Figure 9
Note that directly entering the actual cost turns off the “calculate costs from units” setting in Figure 9.
We proceeded to enter the status for week three. The activity percent complete is 75%, and the remaining duration is one day. The resulting schedule after week three progress update is in Figure 10.
Figure 10
Figure 10 shows the disconnect between the actual units and actual cost fields, with the actual units of 3000-h and the actual cost of $2,400. So, the actual units continue to progress, but the actual cost remains fixed because the link connecting actual units and the actual cost is broken.
In Figure 11, we toggle on “calculate costs from units” to reestablish this equation.
Figure 11
The popup menu appears, notifying us that the cost will be recalculated, and we say yes, Figure 12.
Figure 12
Figure 13 displays the reestablished link between actual units and actual cost; the duration-to-cost is again linear.
Figure 13
Summary
The “calculate costs from units” links actual units and actual costs. For the duration % complete type, the duration-to-cost is linear as the schedule progresses. The standard procedure to calculate the cost is to enter actual units and let P6 compute the actual cost.
However, receiving a dollar amount instead of units for progress is common. I often directly enter the actual cost of the effort and unknowingly bypass the actual units. When we continue to enter progress, the actual cost remains fixed at the value entered, while the actual units continue progressing as the duration % complete status is entered.
In some situations, this may be preferred so you can review the current schedule progress against the prior reporting period’s actual cost. You then adjust the actual cost per the current reporting period and nonlinear expenditure or recheck “calculate costs from units” to return to the linear work-to-cost progress.