Halftime! Do you have organized already all the Christmas presents? No worries, me neither. Instead, I suggest we leave this to our future-ego's and discover the newest episode of the Project Operations Advent Calendar today 🎅🏼
How to estimate your Project efforts correctly?
What do Estimates even do on a Project? In a short summary, estimates for sales and costs are not just numbers but strategic assets that can determine the success or failure of a project. They need to be as accurate as possible and should be regularly updated as the project progresses.
Estimates in Project Operations
In Project Operations we have three different types of Estimates available:
Times
Expenses
Materials
Depending on the type they're tracked differently in the system. At the end all Estimates are available in one view for review - the Estimates Tab on the Project:
This also indicates all Estimates are organized on the Project level. Expense and Material Estimates can be created individually and directly in the Project on the related Tab View.
Expense Estimates can depend on an Expense Category while Material Estimates link to a Product or Write-In Product. Both estimates can be linked directly to the Tasks of your Project Plan, consist of Quantity, Sales, and Cost Prices, and can handle different Units.
Neither Sales nor Cost Prices are required, so the Estimates can handle only Cost or only Sales Estimates - if the Sales and Cost are directly related it definitely makes sense to track both values in the same line.
In addition to the Expense Estimates, Material Estimates can be handled by Subcontractors and Vendors.
Time based Estimates
The third option for Estimates would be the most relevant one as soon as you work with a project plan and resources. These Estimates will be automatically created and displayed in the Estiamtes Tab.
As soon as the user adds Resources to the planned Project Tasks, the system generates them as Project Team Members and creates Estimates Lines per Resource and Task. There is no difference here if we talk about named Resources or only placeholders (Generic Resources). Mandatory are only the Resource Role, Start, and End including a Quantity of Hours - but this data will be available in any case you add the employee of choice to a Project Task.
From a business process view, the Project Manager only plans out the Project with the desired level of detail and finds the fitting Resources or generates the placeholders for the required Role. Based on the Task Estimation the system will generate the Cost and Sales Estimates we want to see.
The Project Manager has the option to show either Cost or Sales prices and group the data based on the Resource, assigned Resource Roles, or Categories.
Prices can be displayed based on the Day, Week, Month, or Year - depending on the desired level of detail.
Because the view is exclusively for read-only purposes and records are stored automatically, we have to consider some pre-conditions to generate valid data here.
Cost Values
Firstly let us consider Cost prices. Cost prices are defined based on Role Prices of the Price List with Context equals Cost. The combination of Resource, Resourcing Unit, Currency, and Resource Role defines the Price per Unit (default: Hour).
The number of Units, in our example Hours, is based on the Project Task plan - multiplied by the Price tag from the Price List will provide the final price of the Estimates.
In case there is no combination for the Estimate setup, e.g. there is no price for the Project Manager, the cost price will be set to $0.00.
The Price List for the cost context is defined per Project on the respective Contracting Unit - which department is executing the Project:
Per default, only one Cost Price List can be added per Organizational Unit. It's only possible to add multiple if their Start and End Dates don't overlap.
Sales Values
Literally, the same rules do apply for Sales Prices - based on Role Prices, the number of hours is based on the Project Plan, if the combination of Resource, Resource Role, and Resource Unit is not available in the Role Prices the value will be handled with $0.00.
The only difference is the Price List itself. Because you're smart, you know we have a separate Price List with the Context equals Sales for all the Sales Prices.
Sales Price Lists are linked on Quote and/or Project Contract (Sales Order) level.
Depending on the Parameter Settings the System creates either a full copy or associates the quote price list accordingly. This allows custom pricing per Quote / Order to match the customer's budget. More details on Price Lists and Role Prices are available in Advent Calendar #5.
This setup implies that the Project must be linked to either a Quote Line or Project Contract Line (Order Line) before generating valid sales prices for your estimates.
Please consider Price Lists can have start and end dates, this will have an impact, especially on long-running projects.
Business Workflow
From a workflow perspective, the estimation is available from the Quotation phase on, as soon as the Project can be linked. The Sales Manager hands over the Project to the Project Manager for Task Planning and Resource Staffing. Either already with named Resources or with Generic Resources and their requested Roles.
With a valid pricing setup all the time phased Estimates will be now available.
To close the estimation, the Project Manager only needs to deposit Expense and Material Estimates on top.
This Project estimation can be played back to the Quote / Order to provide the Customer with a highly detailed Quote / Order.
How that interaction between Quote / Order and Project works in detail is perhaps hidden in one of the next Advent Calendar Episodes 😇
Thank you for checking in today, hope you enjoyed today's advents calendar, and see you tomorrow 😊🎅🏼
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