Project Management Practices Procurement Management

When you need to hire contract staffing or use vendors for certain phases of your project, procurement management comes into play. Procurement is also necessary when you need to purchase materials and equipment from selected suppliers.

You use procurement planning to identify which project requirements are best satisfied by purchasing products or services outside the project organization. Through procurement planning, you decide what you need, how much you need, when you need it, and who you're purchasing it from.

The procurement process includes the following:

• Bid solicitation planning

• Bid solicitation

• Vendor selection

• Contract administration

• Contract closing

Because contracting and procurement are specialized knowledge areas, it's best to get experts enlisted and involved on the project team as soon as possible.

Setting Multiple Costs for a Resource

Suppose that you know that certain work resources will get a 5 percent raise on September 1. Maybe the contract for an equipment resource stipulates a discount for the first month of use and then the cost returns to normal for the second month and beyond. Or perhaps a resource has one rate for one type of work and another rate for another type of work. You can specify different costs at different times by using the cost rate tables. To specify different costs, follow these steps:

1 In the Resource Sheet, click the work or material resource for which you want to specify multiple cost rates.

2 On the Standard toolbar, click Resource Information.

Resource

Information 3 In the Resource Information dialog box, click the Costs tab (see Figure 8-1).

3"

Figure 8-1. Use the cost rate tables in the Resource Information dialog box to specify up to 25 different resource rates.

4 On the A (Default) tab, you see the standard rate, overtime rate, and per-use cost you might have already entered in the Resource Sheet.

5 To specify a change in rate after a certain period of time, click in the next blank Effective Date field, and enter the date the change is to take effect. Enter the cost changes as applicable in the Standard Rate, Overtime Rate, and Per Use Cost fields (see Figure 8-2).

Figure 8-2. If new costs are to take effect on a certain date, add the date and costs in the A (Default) cost rate table.

6 To specify different costs based on different types of activities, enter the different costs in a different tab, such as B or C.

Click the B tab, for example; and enter the Standard Rate, Overtime Rate, and Per Use Cost for the other activity as applicable. When you assign this resource to a task that uses the different rates, you can specify them with the assignment.

Tip Specify rate changes in percentages

If a percentage rate change goes into effect on a certain date, you can have Microsoft Project calculate the new rate for you. Enter the date in the Effective Date field; and then in the Standard Rate, Overtime Rate, or Per Use Cost fields, enter the percentage change: for example, +10% or -15%. The actual rate representing that change is immediately calculated and entered in the field.

Assignment Information

Cost Rate Table A for resources is applied to the resource's assignments by default. If you defined a different cost rate table for another category of work, specify which cost rate table is to be used for the assignment. To do this, follow these steps:

1 In a task view such as the Gantt Chart view, assign the resource to the task using the Assign Resources dialog box.

2 Click View, Task Usage or View, Resource Usage to switch to an assignment view.

3 Click the assignment that needs a different cost rate table applied and then click Assignment Information on the Standard toolbar.

4 If necessary, click the General or Tracking tab.

5 In the Cost Rate Table list, click the cost rate table you want to apply to this assignment (see Figure 8-3).

Figure 8-3. Select which cost rate table should be used for this assignment in the Assignment Information dialog box.

Assignment Information

Figure 8-3. Select which cost rate table should be used for this assignment in the Assignment Information dialog box.

Setting Cost Accrual

The point in time when costs are incurred, or charged, is the cost accrual method. You can have costs incurred at the beginning of the assignment or after the end of the assignment. Or you can have the costs prorated across the time span of the assignment, which is the default method. Specifying the cost accrual method is important for budget cash flow planning.

To specify the cost accrual method, follow these steps:

Click View, Resource Sheet.

If the Entry table is not already applied to the Resource Sheet, click View, Table, Entry. In the Accrue At field for the work or material resource, click the method: Start, Prorated, or End.

You can also specify the cost accrual method on the Costs tab in the Resource Information dialog box. Although different resources can have different cost accrual methods, you cannot set different cost accrual methods for different cost rate tables.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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