In Excel Gantt Charts part of our project management series, we have discussed about how using Conditional Formatting and Formulas we can make a gantt chart like this:
But when you have large project plans, gantt charts like above can get pretty intense and hard to read. So a better approach is to group various tasks in project plan – like this:
In this article, we will learn how you can make such a grouping in a regular gantt chart.
For this tutorial, we will choose a familiar project – Project Peanut Butter Jelly Sandwich. (If you dont know what a PBJ is, you should find-out, prepare and eat one before reading any further. I am serious…)
Step 1: Make the regular project plan gantt chart in the following format
We will not talk about making a regular gantt chart. Here is an excellent tutorial on making excel gantt charts (and one more).
Once you are done, the chart should look like this:
Step 2: Add a new column and define groups of activities
This is very simple. Just add a new column (preferably to the left of activities) and define groups of project activities there. Like this,
Step 3: Select the entire gantt chart and add “subtotals”
To do this, just go to Data Ribbon (or menu) and select “Subtotals”.
Once you are inside the subtotals dialog, select “Start” and “End” columns to add subtotals.
In order to get the correct grouping in the gantt chart, we need minimum of start and maximum of end in each group. But this is not possible with subtotals dialog. So we just select “minimum” as the subtotal type.
Once you press OK, Excel will insert new rows and add SUBTOTAL formulas automatically.
Step 4: Change the SUBTOTAL formulas
Since both Start and End subtotals are pointing to minimum, we need to change the formulas for End so that they show Maximum. Just do that by editing the subtotal formulas manually and changing total type to “4” (MAX) for column End.
While we are at it, you can also change the labels from “Min of <group>” to “<group>”.
Step 5: Modify the conditional formatting so that groups are shown in a different color
In the conditional formatting add another condition (like when activity is blank) so that we can show those rows in a different color. [here are some tutorials on conditional formatting]
Now our Project Plan for Peanut butter sandwich is ready with groups.
Download the Gantt chart template with grouped activities
Download a copy of this example – Excel 2007 | Excel 2003 [mirror]
Get a copy of my project management template set – It has 7 gantt chart templates and 17 other project management templates.
Do you group tasks in your project plans ?
Grouping activities can be very useful to monitor project progress. In large projects usually there will be hundreds of activities. It can be a nightmare to know which ones are delayed, which ones need attention. By grouping you can present overall picture while allowing drill-down to items that need attention.
Do you group tasks in your plans? What is your experience like?
More resources on Project Management using Excel:
I suggest reading my 7 part series on project management using excel. Starting with Excel Gantt Charts to Project Dashboards.
Also, read the excel conditional formatting tips article and primer on excel subtotal formula.
15 Responses to “Modeling Interest During Construction (IDC) – Excel Project Finance”
Thanks again for a very helpful post.
I had a similar problem when trying to model a balance sheet and profit and loss projection. The problem was that interest expense (in P&L) was dependent on a cash shortfall (in BS) which had to be funded. The cash shortfall depended on how much interest was paid, so the mutual dependency made a circular reference.
I addressed it with a macro that calculated interest outside of the P&L, then pasted the calculated amount into the P&L as a value. The model was out of balance, but by repeating the pasting and calculating loop the imbalance reduced to zero. It was a bit messy, and had to be repeated every time a line changed - but it worked.
If I have to do it again I'll read this article again first and see if it can be done more elegantly.
Hi,
The use of a circular reference can be avoided in this case. Just make use of the geometric sum to calculate the interest required. I’ll walk through the example from the spreadsheet.
First calculate the cash needed each year without the interest expense. So you year 1 you need 55 Mn, year 2 105 Mn, and 190 Mn for year 3. The total amount to borrow for year 1 is then (50 Mn)/(1-interest_rate) = (50)/(1-0.1). For years 2 and subsequent the amount borrowed is the cash needed in that year plus the interest_rate times the amount already borrowed. For year 2 (105 + interest_rate * sum(previous debt raised))/(1-interest_rate)=(105+0.1*61.1)/(1-0.1).
This process avoids the need for a circular reference, and makes the calculation more stable.
Thanks,
Tristan
The question is for the year 1 in your case, the amount works out to 45 mn. However in the year 2 you have applied the loan amount as 61.1 mn.
Am I missing something ! Please help !
very helpful information!!!
using circular references and to make model more stable we can use combination of "IF" and "ISERROR" functions. i.e
=if(iserror(formula1),"",(formula1))
this formula will return blank value if there is any error otherwise give the result required.
I usually use this in my models and it makes them very stable......
🙂 🙂 🙂
@Terry: Thats right. Exactly same problem is seen in Interest - Cash cycle in P&L and Cash Flow statement as well. In our trainings on financial modeling in excel, we demonstrate using both the circular loops as well as the macros to take care of this problem. Circular loops have their own pitfalls. If the model enters into a state of error, the error percolates!
@Tristan: Thanks for pointing out. I agree with you that if circular loops can be avoided, they should be avoided.
@Yogesh: This is one way of avoiding the problem. Although circular loops have another problem that they make your sheet slower. Each time, there is a change in the sheet, all the calculations are redone. So if they can be avoided, they should be avoided.
Please note that this was an example (a large one indeed) and I didn't have space to speak about the pitfalls of this approach! I just wanted to illustrate an approach and am glad that some of you found it useful!
I think while posting, there is an error in the images! The last image should be flipped with the one that is posted in step VII!
I think you can try the following simple solution given by Microsoft itself to make the circular works:
Windows: Excel Options -> Formulas -> Put a tick on "Enable iterative calculation"
Mac: Excel -> Preference -> Calculation ->Put a tick on "Limit iteration"
You can change the maximum number of calculation iterations as well as the maximum changes which iteration stops for goal seeking or for resolving circular references based on the number you type in the maximum change box.
Thank you.
Hey All
I heard that we can take care of the circularity with the help of macro for IDC. Can anybody help on the steps to construct the macro for the same.
Regards
Vinay
Hi Vinay,
If you look closely, you are essentially copying the values from the interest calculation to the IDC in project cost.
Basically you can record a macro, that takes the values from interest and pastes special the values in IDC row in project cost.
Then you can run that recorded code in a for loop.
Hope this helps.
Thanks Param for reply.
But before calculating interest, i need to provide for Upfront Equity and Equity, which are essentially part of total project cost. Hence, i need to put in Upfront Equity and Equity to calculate the IDC which is again hitting the total project cost.
Bit of confused on how to remove this circular reference.
Regards
Vinay
Wow, this was a brilliantly simple post. I was looking online for a while before I found this page. Never seen this been explained so beautifully yet so crisply before. Thanks for saving my ass at work! (i'm relatively new to finance + modeling)
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[…] Project Finance Modeling using Excel – Part 1 & Part 2 […]
I have been reading your blog since my college days. Today, I'm writing just to say thanks.
We have calculated Financial Rate of return of a hydropower projects, and the observer has raised an observation regarding Total Project cost with IDC Rs. 8616.01 million (PKR) and with-out IDC 8352.46 million (PKR). How does the Financial nalysis be calculated on the basis of with-out IDC Or With IDC?????
Please helpf. if possible to spare some time.