Here is a very brief summary of how Department field is commonly used in Project Online, Project Server 2013 and Project Server 2010. You need to have some values in “Department” lookup table to get any advantage from it.
1- Filter custom fields in a Project.
Assign a department to a Project level Custom field, then create a new project and assign the same department value to Project Departments field. The custom field will only appear in your newly created Project.
2- Filter resource level custom fields for Resource.
Assign a department to a Resource level Custom field, then create a new resource and assign the same department value to Resource Departments field. The custom field will only appear for your newly created Resource
3- Show EPTs only to certain users.
Assign a department to an EPT. Assign same department value to a Resource in Resource Departments field. Only that resource will see the EPT as an available option to create the new project from.
Department fields are also utilised to filter OLAP cube data, Portfolio Analysis business drivers and driver prioritisations. If you really want to learn more about department field, check out this article by Treb Gatte.
http://blogs.technet.com/b/projectadministration/archive/2010/03/17/departmental-custom-fields.aspx
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