Assigning Expenses in Primavera P6
Tracking expenses is a critical process for any project’s life cycle. It is very important to forecast, analyze and track the expenses of activities to avoid budget overruns. Primavera P6 provides advanced cost management solutions to help project teams to plan and manage the project budget successfully. The expense tool of Primavera P6 allows you to assign expenses to activities. With the help of this tool, it is also possible to assign costs to activities without assigning resources. Assigning expenses in Primavera P6 is a useful method to track project expenses in an effective manner.
This article illustrates the assignment of a project-specific material expense to activity in Primavera P6.
What are the Project Expenses?
Project cost management is an important practice for making project decisions. As a project manager, it is your business to plan and track project costs to complete the project on budget. Typically there are five types of costs in a project. These are fixed, variable, direct, indirect, and sunk costs. Simply put the people who do the work, like bricklayers and machine operators are direct costs to the project. On the other hand project managers whose work is supervised people are usually an indirect cost to the project. If you don’t know the difference between direct and indirect cost, you can read the article.
Primavera P6 has advanced cost management capabilities. You can assign resources, costs, and expenses to activities easily. Expenses can be transportation, consulting, training costs, wages, etc. Direct and indirect costs can be assigned to activities as expenses without using the resources in Primavera P6. The expense tool is useful for project-specific material, labor, and equipment costs.
How to Assign Expenses in Primavera P6?
Now let’s assign expenses in Primavera P6 by using a sample project.
The sample project given below is a pipeline project and you will assign a material expense to the Mechanical Works activity of Block Valve Station-X. (Figure -1)
Let’s assume that a specific valve should be installed in order to complete the mechanical works and the cost of the valve is $25,000. You can assign any type of costs such as project-specific material costs, and other non-resource based costs using the ‘Expenses’ tab in the bottom details area. (Figure- 2)
Click the + Add button at the bottom left of the screen and enter the Expense Item name and the Expense Category as shown in Figure 3.
You can fill in the required cells as shown below.
The expense Item is “Valve”.
The expense Category is “Materials”.
Budgeted Units is 1.
Price/Unit is $25,000.
The vendor is “ABC Limited”.
Accrual Type is Uniform over the Activity. If it is required, you can accrue at the start or finish of the activity by using this cell.
This article demonstrates how to add expenses in Primavera P6. You can add numerous expenses to an activity with the help of this tool. Also, you can add several expense categories by using the “Select Expense Category Window”.
Linda Maltz is vice president of design and consulting at Cuboca, a project management training and consulting organization specializing in construction management and BIM. She is certified Primavera P6 Trainer.