Project Cost Projections: General Information

You can estimate the final costs and remaining costs of a project at a particular stage by using cost projections.

Learning Objectives

In this chapter, you will learn how to do the following:

• Configure a cost projection class
• Create a cost projection for a project
• Create a new revision of a cost projection
• Estimate the costs of a project at a different level of detail
• Review the projected costs in a project budget

Applicable Scenarios

You create a cost projection revision to compare the calculated costs with the initially estimated costs in the cost budget of a project, and thus to detect parts of the project that may be over the budget.

Budget Detail Level of Cost Projections

A cost projection revision created for a project has a certain budget detail level, which is determined by the cost projection class specified in this cost projection.

You create a cost projection class on the Cost Projection Classes (PM203500) form. For the class, you specify the entities that are included in the budget level of detail by selecting or clearing the check boxes in the Cost Task, Account Group, Cost Code, and Inventory ID boxes.

A cost projection revision prepared for a particular project must have a cost projection class that provides the same budget detail level as that of the project—which is specified in the Cost Budget Level box on the Summary tab of the Projects (PM301000) form—or it can be less detailed. For instance, if the project has the Task and Cost Code cost budget level, the cost projection classes with the following level of detail will be applicable: cost task only, cost code only, or both cost task and cost code. A cost projection class with more detailed budget level (such as cost task, cost code, and account group) will not be applicable for this project.

To be able to release a cost projection, you need to prepare a cost projection revision that has the same project budget detail level as the project budget currently has. If you restructure the project budget, you then need to create a new cost projection revision of the cost projection class that has the appropriate level of detail.

Creation of a Cost Projection Revision

You create and process revisions of cost projections on the Cost Projection (PM305000) form. A newly created cost projection revision has the On Hold status and can be edited. You can create as many revisions of a cost projection as are needed for a project.

In a new cost projection revision, you specify the cost projection class, the revision ID, and the project for which you need to estimate the costs. Then on the table toolbar of the Details tab, you click Select Budget Lines on the table toolbar. In the Select Budget Lines dialog box, which opens, you select the Included check box in the rows of the cost budget lines of the project for which you need to estimate costs. Then you click Add Lines and close the dialog box. The selected cost budget lines are added to the cost projection revision on the Details tab.

For each line, the projected values are calculated by using the following formulas:

• Projected Cost to Complete = Budgeted Cost - (Actual + Unbilled Committed Cost) if Budgeted Cost - (Actual + Unbilled Committed Cost) is greater than 0; otherwise, Projected Cost to Complete = 0
• Projected Cost at Completion = Projected Cost to Complete + (Actual + Unbilled Committed Cost)
• Projected Quantity to Complete = Budgeted Quantity - (Actual + Unbilled Committed Quantity) if Budgeted Quantity - (Actual + Unbilled Committed Quantity) is greater than 0; otherwise, Projected Quantity to Complete = 0
• Projected Quantity at Completion = Projected Quantity to Complete + (Actual + Unbilled Committed Quantity)
• Projected Completed (%) = (Actual + Committed Open Cost) / Projected Cost at Completion * 100%
• Projected Variance Quantity = Projected Quantity at Completion – Budgeted Quantity
• Projected Variance Cost = Projected Cost at Completion – Budgeted Cost

You can change the projected values in the cost projection revision to see how this affects the cost budget. To change these values, for each cost projection revision line, in the Mode column, you select a data entry mode, which defines how the projected values in the line are recalculated:

• Auto: You manually modify one of the projected values in the row; the other values are recalculated automatically.
• Manual Quantity: You manually modify one of the projected values; the other values are recalculated automatically, except for the Projected Quantity to Complete, Projected Quantity at Completion, and Projected Variance Quantity values, which are preserved.
• Manual Cost: You manually modify one of the projected values; the other values are recalculated automatically, except for the Projected Cost to Complete, Projected Cost at Completion, and Projected Variance Cost values, which are preserved.
• Manual: You manually modify one of the projected values; the system does not recalculate other projected values.

For each cost projection revision, in the Summary area of the Cost Projection form, the system provides the total values for each prepared revision (in the Totals by Revision section) along with the overall project profitability information (in the Totals by Project section).

When a cost projection revision has been prepared, you click Remove Hold and then Release on the form toolbar of the Cost Projection form. The system releases the cost projection revision and assigns it the Released status. The projected values in the project are copied from the latest released revision of the cost projection to the corresponding cost budget lines of the specified project on the Projects form.