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Cost resources not included in EV calculations RRS feed

  • Question

  • I am trying to figure out the logic behind this.  When you are looking at all of the costs of a project to compute EV, cost resources should be included.  Material resource values, work resource values and fixed costs are included.  What is the reason that cost resources have been excluded?  In my opinion this is not correct and they should be included. Many of my clients use cost resources for the flat amount contractors performing jobs where hours collection is not needed.  They also use them for added costs to the project like travel and equipment rentals.  Cost resource values become part of the baseline value - why not EV?

    Any ideas??


    Ellen Lehnert, PMP, MCT ellen@lehnertcs.com www.lehnertcs.com Training/Consulting/Author
    Tuesday, June 21, 2011 4:15 PM
    Moderator

Answers

  • Hello Ellen,

    I believed you answered your own question.  Cost resources are not included because they are fixed or sunk costs.  There is no EV, because they can finish earlier or late and the cost is the same.

    CHeers!


    Michael Wharton, MBA, PMP, MCT, MCSD, MCSE+I, MCDBA
    www.WhartonComputer.com
    Friday, June 24, 2011 8:03 AM
    Moderator

All replies

  • Hello Ellen,

    I believed you answered your own question.  Cost resources are not included because they are fixed or sunk costs.  There is no EV, because they can finish earlier or late and the cost is the same.

    CHeers!


    Michael Wharton, MBA, PMP, MCT, MCSD, MCSE+I, MCDBA
    www.WhartonComputer.com
    Friday, June 24, 2011 8:03 AM
    Moderator
  • Interesting, Mike.  I have been in discussions on this topic with others and EV consultants have been arguing that it should be included.  I think part of the concern is that many are using cost resources for flat amount contracts.  Since that is labor it should be included.  It is appearing to me that a flag to say a cost resource should be included or not might be helpful.
    Ellen Lehnert, PMP, MCT ellen@lehnertcs.com www.lehnertcs.com Training/Consulting/Author
    Friday, June 24, 2011 2:09 PM
    Moderator
  • My projects (construction) involve significant materials costs, sometime more than 50% of the total cost is dedicated to materials.  From what I can see, there's no way to record progress against non-labor tasks in M/S Project.  Am I missing something or have I set up my Material resource incorrectly, preventing me from progressing it?

    Tuesday, January 13, 2015 6:00 PM
  • You are correct that progress (time) can only be tracked for non-labor resources.  However, if you have only 1000 bricks as a material resource assigned to a task and your actual is that you used 500 bricks the task will appear to be 50% completed.  If you have a work resource and a material resource assigned to a task you and use just the material resource, the task will appear as 0% complete. 

    Ellen Lehnert, MVP, PMP, MCT Training/Consulting/Author ellen@lehnertcs.com, www.lehnertcs.com

    Tuesday, January 13, 2015 7:20 PM
    Moderator
  • Ellen,

    I think you meant to say that progress can only be tracked for "labor" resources.

    John

    Tuesday, January 13, 2015 10:02 PM
  • Pardon me for bumping in, but you can record actual usage for material resources and it will update the % complete.  You record data in the Actual Work field in the time-phased view.  See the picture below.  It shows a task originally 10 days in duration (starting Jan 12) with the material resource "Bricks" assigned at 10/d with a cost of $1 per brick.

    If you update the % complete you will also see material resources being consumed according to plan.

    Tuesday, January 13, 2015 10:11 PM
    Moderator
  • Ellen,

    In earlier versions of MSP (2003) there was only work and material type resources, and if we wanted to assign dollars to a task without specifying that it was bricks and without accounting for the work, we just used a dummy material resource as a proxy for money. If you do this and avoid using cost type resources, doesn't that solve the EV problem?

    I will take this opportunity to commit a heresy and say that I think EV is over-rated anyway. People say it measures progress. I don't think it does. And it does not tell us the cause of insufficient progress or indicate any way to improve progress. The good ol' CPM is still the best thing since sliced bread.

    Tuesday, January 13, 2015 10:24 PM
  • Ellen and I have been having an email conversation and I see what she is reporting.  If you have assign both work and material resources and only update the material resource "actual work" the % complete does not update.  However, if you update the % complete, both a work resource and materials resources get "actual work".

    So, the moral of the story seems to be: (1) If using both work and material resources on a single task, update the actual work for both resources to show "progress".  or (2) assign only material resources to tasks.

    I guess I don't see a huge issue with material and work resources assigned - as the bricks (in our example) cannot lay themselves - a bricklayer (work) is required.

    Wednesday, January 14, 2015 12:12 AM
    Moderator
  • There is a "bug" here. BCWP(EV) must be Baseline Cost(BAC) at the end of the project, otherwise we are not doing EVM. The software shouldn't add Cost Resources in BAC without adding them to EV. Nowadays, the software adds Cost Resources to BAC then It must add that cost to EV...
    Thursday, January 26, 2017 6:27 PM