How to Effectively Forecast Project Labour Costs Using Mojo Sense

Written by Tony Gray

 

If you didn’t check out my last blog post about how Mojo Sense came to be then, feel free to have a peruse. In this blog post, we’ll delve into some of the core functions of Mojo Sense, specifically around forecasting labour costs for projects. We will also delve into how some of these labour forecast costs can be used for scenario planning for upcoming reviews that may be happening on the project and typically, these reviews would occur on bigger projects where Labour forecast scenario planning would be required to get some idea on upcoming budget change requests that could occur.

 

Anyways, let’s get into it!

 

When going through the delivery aspect of a project, a Project Manager (PM) using the Microsoft suite of tools would typically use such tools as Microsoft Project Professional/Server/Online/PfTW (Project for the Web) to schedule out a list of tasks associated with the things that are required for the project. They would then assign some resources, work out the logic and sequencing of the schedule and then input duration + effort against each task. As an output of this, they would generally get the following:

  • Indicative timeline on how long the project or phase of each project lasts for;
  • An indicative duration of the project (with days off and public holidays taken account of)
  • An indicative estimate in hours/days which would typically drive the cost of the phase/project.

 

The power of a simple schedule is great! I know in our case here at Mojo Soup as a consultancy business, this is something that we do almost on a daily basis for the projects we are engaged in. However, there are a few other questions that are left unanswered:

  • We have a forecast of what the labour costs are, however, what happens if we want to compare this against a budget?
  • What happens if there are specific tasks that you want to map out against a particular WBS from your financial system?
  • Are there any roll-ups of specific cost categories that you may want to see?
  • Perhaps the most important, do you want to see your actual labour costs alongside what you are forecasting?

All these questions are valid questions and something that is asked probably more times than you think, and we are not saying that Mojo Sense can replace your usual scheduling tools, however it is important to note that Mojo Sense can work alongside to give a much better picture of your project finances, especially how they are tracking.

In this particular case, this is showing a typical implementation of Mojo Sense where there are some basic attributes kept of a particular resource, inclusive of a lookup of Positions/job titles, cost categories (typically matched to your PMO practise + a level (Associated to a particular daily rate for that financial/calendar year). If a contractor is selected, then a custom daily rate can be inputted. We also have inputs for configuring a daily FTE + Overheads.

Once all the attributes are inputted against each resource, it would then be the PM or project officer to forecast the labour costs on a monthly basis for the upcoming few months (if known) or if they are running a fairly mature practise, then start forecasting for the next year (dependent on the time of the year).

Each month represents how many days each resource would be working and is calculated into a cost and rolled-up into a total Salary cost line item + a total overhead costs (if applicable for the PMO practise).

This is then rolled-up further into specific cost categories associated with a project (if applicable) where it shows not only what costs have been forecasted, but how much the project has spent since the last monthly reporting period (See below yellow line items showing actual costs). These project costs would typically come from the finance system and would feed directly into Mojo Sense.

We can now go even further…, if a PM wants to do some scenario analysis, Mojo Sense has the ability to capture forecasts which aren’t part of the “official” figures. Why would anyone want to do this? Well, what happens when an expected event occurs which causes a budget change in either labour or purchases on a project? Well, you can input into Mojo Sense and get an overall result which would greatly help in getting a change to the budget across the line!

Project Managers can quickly get value out of using a tool like the Mojo Sense, however it’s important to know that with implementing a tool like Mojo Sense or any tool/software, that proper change management and training goes a long way in adoption and ultimately value add and ROI.

Please reach out to the Mojo Soup team if you’d like to know more or want to schedule in a demo to see the full extent of the features of Mojo Sense and how this could be of use to you and your organisation.