Goal: Estimate costs

Microsoft Office Project 2007 helps you to develop cost estimates for the resources and tasks that are needed to complete your project. To obtain realistic cost estimates, you may want to review historical data to use as a basis for entering cost information in Project. Then you can review and fine-tune your costs to create an accurate budget. The best cost-estimating method for your project depends on the scope of your project, the level of accuracy needed, and the practices of your organization.

Tip: This article is part of a series of articles within the Project Map that describe a broad set of project management activities. We call these activities "goals" because they are organized around the project management life cycle: Build a plan, track and manage a project, and close a project.

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number 1  Review historical data     Examining the cost histories of similar projects helps you to better estimate the costs in a current project.

Number 2  Enter cost information      You can establish cost estimates in Project 2007 by entering costs for resources, tasks, or both.

Click all of the following that apply:

  • Set pay rates and fees for resources if you want Project 2007 to calculate cost totals for resources, assigned tasks, and the entire project. You need to enter rates and per-use fees for resources, such as people and equipment.

  • Set fixed task costs for the use or purchase of resources, such as equipment. Project 2007 can then incorporate these fixed costs into the total cost of summary tasks and the entire project.

  • Set material costs and other miscellaneous costs if you plan to use consumable resources, such as supplies, or costs that occur only once, such as airfare. Project 2007 can calculate cost totals for these material resources and cost resources from the base rates and quantities that you enter.

  • Change the cost rate tables on a resource assignment if you want to apply the resource rates that you entered in different rate tables.

Number 3  Review planned costs      After you enter costs for resources, tasks, or both, you can examine them to see if they need to be adjusted to meet your goal for costs.

Click all of the following that apply:

  • View cost totals to verify the cost totals that Project 2007 calculated, based on cost information that you entered.

  • Export cost information to Microsoft Office Excel 2007 or another program to analyze the cost details.

  • Create a visual report if you want to use Microsoft Office Visio 2007 or Excel 2007 to create reports that help you to analyze and report on costs, at any phase of your project planning.

Number 4  Optimize costs     Before you establish your cost estimate as a budget for your project, you can make final adjustments to the cost totals to ensure that your estimates are as realistic as possible.

Click all of the following that apply:

  • Replace a resource assignment with another resource who is less expensive or who you think can finish the job sooner.

  • Remove a resource assignment when fewer people can complete the work without requiring extra time.

  • Reduce rate-based costs by applying different pay rates for different types of work or by using a different grade of material.

  • Reduce fixed costs by minimizing or eliminating set expenditures (such as travel costs) that aren't crucial to completing a task.

  • Explore cost variances by applying various cost views so that you can quickly focus on cost overruns for tasks or assignments.

  • Analyze project and resource performance with Microsoft Office Project Server 2007 by using PivotTable and PivotChart views to help you understand the health of your organization.

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