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.

Purchases and invoices

For any project you can make purchases, with the budget being assigned to the project. You can initially define an estimate and subsequently assign the purchase invoices and so calculate the actual value within the budget.

Go to Projects 1 from MANAGEMENT, select the project and click on the section Purchases 2. Add a new budget account and enter the budgetary item in the corresponding budget.

Budget and Estimated cost

Once a project has been created you can define the budget values by estimating the hours and purchases consumed.

Click on Projects 1 from MANAGEMENT and then select the project. In the Budget 2 section, specify the estimated hours in the field Team 3, even if the working team has not yet been assigned. Use the calculator to calculate the cost in hours in accordance with the standard cost.

In the Purchases budget you can also assign an estimated budget and, by calculating the sum total of hours and purchases, obtain a general project budget.

This graph presents the internal budget generation structure in Project & Teamwork:

Cost estimate

What is the estimated budget?

In ITM Platform there can be differentiated two types of budget and estimated. Budget indicate us the maximum cost of this project, even before any planning, while estimation indicates the planned costs for this project taking into account effort allocation and cost of each of the resources allocated.

Once you create a project you can define the values of the general budget in terms of hours, purchasing and overhead costs.

Click Projects from MANAGEMENT ❶ and then select the project. In the Budget section ❷ specify the estimated hours for internal team ❸ which is not yet assigned to the team. Use the calculator to calculate the cost of hours depending on the standard cost.

The planned hours and its cost is the calculation method used by ITM Platform based efforts on the tasks defined by the project manager. Similarly, the purchasing cost estimate is given by the sum of budgetary allocations to the project.

❶ Go to Projects, and then select the project where the estimated cost estimate.

In the Budget section as efforts are assigned to tasks, estimated cost is calculated from the hours allocated in cost estimation ❷.

This way you can see the difference between budget ❸ where comparably to the general budget a deviation appears.

Therefore, the first budget data are entered before detailing the project, estimation costs are calculated once estimated efforts and procurement budgets, then actual values ​​are updated based on reported hours on the project team.