Cost price finding logic in project management and accounting

Have you ever thought how project management and accounting finds its prices when it comes to planning in work breakdown structure or in the forecast models? I just spent some time to figure it out.

Setup

In the setup we may add pricing information as

  • Role
  • Ressource
  • Category
  • Role + Ressource
  • Category + Ressource

For some reason it is not possible to enter any setup in combination of Role + Category

Setup
Category Role Ressource Cost Price
x 10
x 15
x x 20
x 25
x x 30

Work Breakdown Structure

The WBS pulls – of course – the pricing information straight from the setup we made. What you’d never think is, that the selected ressource doesn’t have any impact within the WBS planning. The reason I could find for this behavior is the possibility to add more than one ressource to the WBS activity.

The following price finding logic works

Information given in WBS
Category Role Ressource Cost is based on
x x Category (25)
x x Role (10)
x x x Role (10)
x Category (25)
x x Role (10)

So it seems pretty much, the given role rules them all 🙂 Indeed if you do a price setup including multiple values, then the more specific will of course win.

Forecast

Other than the WBS the forecast will recognize the planned ressource and will finally find other results for the same activity.

Information given in forecast
Category Role Ressource Cost is based on
x x Category + Ressource (30)
x x Role + Ressource (20)
x x x Role + Ressource (20)
x Category (25)
x x Role (10)

I always try to avoid ressource based price setup but this is not always a possible way. If you plan to use both – WBS and Forecast – which is not an uncommon scenario, you might run into trouble when it comes to comparison of both outcomes.

I hope this quick summary helps you to understand the results in WBS and Forecast a little better 🙂

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