What do the several columns on project’s budget section mean?

The cost elements administered within ITM Platform projects are those of hours and external procurement or acquisitions (invoices). In the simplest of terms, let’s say that a project consumes “n” hours at a cost of “x” and that it also consumes external resources, such as materials for example, for a total value of “z”. In this case, consumption by the project will amount to n hours * x dollars + z material costs.

There are three main blocks related to budgets and supervision handled by ITM Platform:

  • Budget: ❶ This is the amount of money assigned to the project. This is also what we call top-down, because it goes from the decision on how much money to make available for the project down to a more detailed analysis. This can be defined as a total amount for the project, setting other figures depending on whether they refer to internal or external staff, etc.
  • Cost Estimate or bottom-up ❷: This is the cost assessment made by the system based on the hours and procurement estimates made by the Project Manager at the planning stage. For example, let’s say that the project will consume “n1” hours on one task and “n2” hours on another, and that it will use “z1” materials for manufacturing and “z2” materials for commercial activity. The sum total of all these figures will produce an estimated cost as the schedule and project are updated with progress over time.
  • Real: ❸ This is easier to understand, probably the most helpful aspect and that which makes the system complete. It shows the number of hours reported by each member of the project team. Calculated in real time and based on standard costs and fees, they are used to generate real consumption and cost figures at any given time. Similarly, any invoices received and assigned to the project will be added to the corresponding section.

The procurement calculation is not a complex one. It merely allows for the separation of invoices under different budgetary headings and for each invoice to be assigned to specific suppliers.

However, the hourly cost calculation deserves a little more explanation:

ITM Platform includes a comprehensive standard cost system that enables values to be set for each professional profile, whether they relate to internal or external personnel. The Project Manager need not be concerned with establishing these relationships as the system does so automatically when allocating the project team to the tasks and estimating their effort.