Loading cost in primavera schedule using resources and expenses

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Plusses and Minuses
of
Loading BOQ cost in “Resources” and “Expenses”
in a primavera schedule.
Mujahid Ishtiaq
PMP® | PSP® | PMI-SP® | AMPC®
Project Planner/Scheduler
17th
February 2016.

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Contents
Abstract ........................................................................................................................................... 3
Introduction..................................................................................................................................... 3
Comparison....................................................................................................................................... 3
1. Loading cost in “Resource”:....................................................................................................... 4
2. Loading cost in “Expense”:........................................................................................................ 8
Conclusion......................................................................................................................................... 9

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Abstract
In our daily practice and here in GCC, normally we load BOQ cost in schedule as lump sum by creating
a global resource or an expense item. First of all, it is not a proper way to add one resource and assign
it to all activities giving it weighted or lump sum calculated cost for each activity. Proper and
recommended way is to develop a complete resource pool, with correct resource types, units and
rates. Moreover Expense item is used to load only non-variable or fixed cost types. But as mentioned
earlier, in GCC, distribution of BOQ cost in schedule as lump sum for each activity has become normal
practice.
In this document some advantages and disadvantages of both options will be discussed and analysed.
Introduction
When we go for cost loading, one finds couple of ways to load cost in schedule as follows:
1. By creating a global cost resource, assigning it to multiple activities, exporting budgeted cost
column in excel, populating budgeted cost column in excel and importing it back to P6.
2. Creating one or multiple expense items, assigning them to respective activities, exporting
expense column in excel, populating expense column with calculated budgeted cost for each
activity and importing back to p6.
Although common purpose can be achieved in both ways, but sometimes there are situations
when one has to select specific technique out of two. But if we don’t know exactly what other
benefits or facilities we may lose by selecting a specific technique or what additional benefits
can we get from one method, we will not be able to get complete sense of paybacks of
Primavera.
Comparison
Here, we will discussed both options and their plusses and minuses so that one may consider
all these points before selection of a method to load cost in schedule.

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1. Loading cost in “Resource”:
 One of the best advantages of loading cost in schedule using Global Cost Resource is that you
can extract your cash flow at both early and late dates called “Early Cash Flow” and “Late
Cash Flow”. These two types of cash flow are sometimes extremely important especially for
management while making financial decisions for multiple projects to get answer of question
“what is delay tolerance available in providing funding to a certain project at a certain point?”
Figure 01 Early and Late Cash Flow.
These cash flows are based on “Early Start & Finish” and “Late Start & Finish” dates of
schedule activities or in other words we can say that these cash flows count on on floats
available in non-critical activities.
 Second advantage of loading cost through Global Cost Resource is “Resource Curves”.
When resources perform work on an activity, you can choose how the resource units or costs
are spread through time. This is done using a resource curve. To see this column, right-click
on the Resources tab on an activity, customize the columns, and choose Curve.
See figure 02 given below.

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A wealth of curves from which to choose is presented. These curves will determine how the
effort and cost of a resource is spread over time. This could reflect expected cost for labor or
the expected consumption of a material resource.
Figure 02 Recourse Curves in Primavera.
To view and modify resource curves, choose the menu Enterprise | Resource Curves. A list
of resource curves, much like the one shown in Figure 3-1, appears. This screen allows you
to modify, and delete curves. In the EPPM web client, resource curves are defined in the
Resource Curves section under the Administer |Enterprise Data. Because so many standard
curves come standard with P6, there may be no need to define your own.
Besides the preloaded curves available in primavera, there is also an option available to add a
customised curve or cost distribution along activity.
To develop a customized curve, see figure 03-1 & figure 3-2 and follow given steps.

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Figure-03-1 Adding a customized resource curve.
Figure-03-2 Adding a customized resource curve.
 Auto compute actual is also a plus in loading cost using resource. Actual cost, remaining cost
and at completion cost are auto-computed when you update activity by giving actual dates
and remaining duration. To activate this option, you have to check Auto Compute Actuals
option in resource details pan. See Figure-04.

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Figure-04 Auto Compute Actuals in Primavera P6
 When you load cost in resources, you have access to different types of cost data as given
below:
 Budgeted Cost
 Actual Cost
 Actual Overtime Cost
 Actual Regular Cost
 Actual This Period Cost
 Remaining Cost
 At Completion Cost
 Staffed Remaining Cost
 Unstaffed Remaining Cost
All these costs are available in the form of spread sheets giving you multiple data forms to
analyse with respect to time and you can copy this data to excel to create attractive graphs
and charts to present it to management.
 Some planners feel it easy to handle (I don't know why…?).

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 A drawback of loading cost using Global Cost Resources is that you cannot feed cost to any
activity before it commences (like upfront payments of subcontractors) or after activity is
completed (like retentions etc.). Actuals of cost in resources will only incur once activity has
started and cannot be adjust after activity is complete.
 Another drawback of loading cost using Global Cost Resources is that you cannot assign
resource to a milestone thus you cannot assign cost to a milestone, which sometime is
required in schedule.
2. Loading cost in “Expense”:
 The cost zeroing out is sometimes a problem when Remaining Duration equals Zero as may
happen with resources. As explained earlier, sometimes costs are incurred in a cost
management system after an activity is complete due to back charges or retention etc. So
expenses allow you to re-adjust your actuals and remainders even after you have finished
playing with your activity.
 An additional benefit of loading cost using expense items is that, unlike resources, it allows
cost to be incurred or adjusted before an activity even commences, representing a
contractor’s upfront payment.
 In loading cost using expense items, costs are not affected if remaining duration changes,
which may happen with resources. Sometime cost to complete or remaining/actual cost has
nothing to do with the remaining duration or % complete. So expenses give you option to
manage cost regardless of how much duration is remaining or how much % of activity you
have completed.
 Unlike resources, you can assign expenses, which is cost, to a milestone.
 Unavailability of Auto-compute actuals and remainders in expense items is sometimes
considered a drawback as well. But it is not fact that expense items do not auto-compute
actual, remaining and to complete cost. Expense items have ability to auto-compute actuals
but this process is a little bit hard to understand. As a brief, auto-compute option in expense
items works with our old friends the Planned Start and Planned Finish dates.

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For example, if activity’s schedule % complete is 0% but performance % complete is 10%,
expense will not auto compute actual cost because 0% of scheduled work shows that planned
start of activity has not kicked in yet. Similarly, when other variances occur between planned
and actual dates, expense items do not auto-compute actuals because it works with planned
dates.
 In expense, there are very limited options to spread cost over activity duration. Unlike several
pre-developed and customization options of resource curve in resources, expense give only 3
accrual types (At start, uniform, at end).
 Unlike resources, In expense you have only following types of cost data:
 Budgeted Cost
 Actual Cost
 Remaining Cost
 At Completion Cost
It means you will have to summarize all types of cost before you load into expenses. And later
on if you need to insert separately some different costs like overtime cost etc. you cannot do
that and you will have to merge it in actual cost.
Conclusion
To get accurate planned and actual progress, it is a must to load cost in schedule. And if it is
required to load Lump sum BOQ cost in schedule, both methods can be used i.e. by creating a global
cost resource or expense item. Both methods have their plusses and minuses as discussed in this
document, but ultimate goal of loading BOQ cost in schedule can be achieved both ways. The only
difference lies in privilege of analysing data and getting multiple options for this analysis. Discussion
shows that benefits of using resource for cost loading overcome those of expense. Conditions which
make expense to use for loading cost are rarely encountered. Regardless of everything, while loading
cost in schedule one should positively look into the situation and conditions and should select the
method which serves the purpose best.