I found a couple of
web sites via a listserv that would be useful in estimating the costs, effort,
and/or activity durations associated with ID projects. The first is from the University at Buffalo
(The State University of New York, http://www.research.buffalo.edu/sps/about/guide/chapter5.cfm). This site covers virtually everything a PM
would need to consider when creating a budget for an ID project. It discusses many of the topics covered in
our reading this week, but also touches on some important expenditures that the
PM needs to consider, like travel, fringe benefits, consultants, and sub-contracts
(to be used if your company cannot accomplish all of the work). These are useful because omitting just a
couple of these items from the budget could mean the difference between staying
close to your project cost estimates and blowing right past them mid-way
through the work.
Another resource I
came across was published by Northwestern University (http://www.nucats.northwestern.edu/funding/seed-grants/arcc-seed-grants/pdfs/CCPHGrantWritingResources.pdf). This too discussed the cursory budget
considerations every PM should include as they are planning the project, but
again includes a lot of expenditures that can easily be overlooked by an
inexperienced PM. The examples given are
payments or incentives for participants, stipends for meetings outside of the
project’s local area (usually associated with travel), training workshops,
meeting room rentals and food for meetings (if applicable), and protocol
reviewer or lawyer expenses (again, if applicable). Depending on the type of ID project, there
can me many of these “hidden costs” that again can add up quickly and will
cause the PM a lot of sleepless nights as he/she tries to figure out why the
team is so far off-budget after just a few week’s worth of work. The old add 20% padding rule might assist in
softening the blow to leadership, but if the PM does not accurately account for
some of these costs AND something catastrophic happens on the project, then the
budget and the overall success of the project is at risk.
I have had the
opportunity to be part of a rather large proposal team with Northrop Grumman a
few years ago. While I only had the
logistics piece of the pie, there were at least 10-15 other people estimating
their own costs plus management oversight).
Throughout the process I was in awe as our team sat in the proposal room,
each pitching their labor and cost requirements. To see the business development folks add all
of the numbers up plus the many factors we were not tracking was incredible
(and not in the least enviable). When
everything was included, the overall budget for our proposal was rather large,
but then again so was the work we were bidding on; a major re-design on our
current project requested by our customer.
It taught me a lot about the so-called hidden costs within projects and
gave me a new appreciation for the amount of time and effort that goes into
project budgets and proposals.
Terry,
ReplyDeleteI found both of these resources extremely helpful and will keep them handy for future projects. In my experience it is very much as Potney et al state in that "developing project budgets is typically more difficultthan developing regular departmental budgeting." Also rather than padding budgets by the standard 20%, it has been my experience that foundations and state and federal allow overhead expenses. Although many foundations support direct programmatic activities, many do give grants to help cover administrative costs, also known as general operating expenses or overhead costs. This is usually limited to either 5 or 10% however so the other budget expenses need to be fairly accurate and the scope of work well planned including planning for contingencies. The two sites you share will help in thinking through all the nitty gritty details that can often be overlooked.
Thanks Amanda, I especially like your point from our book. I found the part about the 20% very interesting, but as you point out not every company is going to allow a PM that luxury. Thanks for responding.
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