Dear all,
I would like everybody to comment on my approach for planning travel costs of the project. May be you can suggest something better.
If say I have a project, which would last for a year (a critical path). I know that this project would occupy Project Manager (PM) for pretty much 100%. I also know, that this project manager would travel to the customer in average every 4rth week (so, in average 25% of his working time). I also know his travel expenses for a week (say 2000 USD). I also assume, that PM would book 40h on a project per week.
What I do is I calculate so-called effective hourly rate of PM. Say his standard hourly cost is 100 USD /h. Then his effective hourly cost (taking account travel cost) would be:
100 +25%*2000/40=112.5 USD/h.
Then in MS Project I assign the Std. Rate of PM to be 112.5.
After that I create a task, which runs through entire project duration, called PM Work and then I assign PM resource to this task for 100%.
The same I do with other resources. But for instance a Field Engineer, who I know is always travelling, would have a higher increase in hourly rate.
100+100%*2000/40=150 USD/h
The advantage of such approach is that when I assign resource, his travel expenses get calculated automatically depending on duration of a task.
Of cause alternatively I could create a material resource called, “Weekly travel cost” and then I would assign certain amount of material resources to a task, but it will not be automatically calculated any longer. I actually use such approach for small projects, where I can exactly calculate amount of travel needed (say 2 customer visits). But for large projects, I am always using the statistical approach (effective hourly rate).
Or I could just add a “Cost resource” and add travel cost manually, but it would be the same effect (manual calculation).
Are there any ideas on how it can be improved?
One of the issues my management has is that they don’t like idea of effective rate, as they want to see travel costs separately from hourly rate to be shown in overall “resource usage” table