The Money Files

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A blog that looks at all aspects of project and program finances from budgets and accounting to getting a pay rise and managing contracts.

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How much do you cost your project?

Easy illustrations for your project meetings

7 Reasons to crash your schedule

10 Expert Tips for Project Budgets

5 Steps for Make or Buy Analysis (video)

How much do you cost your project?
Categories: business case

Have you ever sat in a meeting that has started late and wondered how much money it has cost the company to have all those subject matter experts sitting around doing nothing? If you haven’t, maybe you should. It would certainly encourage you to be more efficient in meetings!

Whether you do timesheets or not, or cross-charge your client or not, your time on a project has a financial cost. Let’s look at what that is made up of.

Direct costs

Recruitment costs related to hiring you in the first place: placing an ad, holding interviews, preparing materials

Direct costs are the tangible ones that related to your pay and benefits. They include:

  • Salary and ‘on’ costs such as national insurance and employers’ taxes
  • Benefits like pension contributions, healthcare, car allowance, childcare schemes, discounted gym memberships and so on
  • Cash benefits like a bonus
  • Your phone bill (assuming the device is funded by your employer and they don’t operate a Bring Your Own Device scheme).

All pretty clear so far.

Indirect costs

These are costs of turning up to work and are incurred by all employees. They are quite hard to work out and you might find some financial whizz in the business has done it but normally you wouldn’t know about these.

  • The cost of heating and lighting your workspace in the office
  • Tea, coffee, sugar, mugs (including breakages), spoons, the dishwasher, washing up liquid etc
  • Stationery like pens, printer paper, staples
  • Software licences for the applications you use
  • Hardware costs for your laptop, phone or tablet including keyboard, mouse, monitor, docking station, laptop bag, headset etc
  • Insurance both for you as an individual for example when you are travelling on company business and also for any expensive kit that you have.

Still with me?

Hidden costs

Then there are other costs that don’t appear on any balance sheet. These are the hidden costs of being an employee.

  • The cost of not being as productive or effective as you could or should (consciously like taking extra long tea breaks unconsciously or through other factors)
  • The cost of not tackling poor performance in your project team, such as failing to deal with conflicts that lead to low morale and lower performance
  • The cost of not being innovative. Who has time to factor in ‘innovation afternoons’ on a project? Lack of innovation (or the time to be innovative) can cost businesses a lot in terms of being first to market with a product or just generally working smarter
  • The cost of bureaucracy. Layers of bureaucracy on your project slow things down or add expensive admin loops.

How do you prove your worth?

OK, we can’t put a financial figure on the total of all of these but you can see that on any given day it could run to a substantial amount. On days where you work really hard and effectively from your home office (and therefore pay for your own heating, lighting and tea) and sort out a lingering personnel problem on the project team you would cost your company less than a day where all your meetings started late so there was a lot of sitting around in the office.

Regardless of the figure – and it really doesn’t matter what it is – the point is that your time on a project is worth something. How do you prove this to your manager?

No one is going to ask you at the end of the year whether you have contributed adequately to cover your ‘worth’. Your employment is not a profit and loss account. But it is a good idea to have some ideas prepared to make it clear to them that you are a valuable employee. That could be anything from taking part in external conferences to raise the company’s profile locally to gaining a credential to increase your confidence to delivering a project that generates millions of dollars of revenue.

I can’t tell you what the answer is but I do know that subconsciously employers do think about these things and do know who is a valuable employee and who is less of an asset to the team. They might not use pure financial terms to quantify your contribution, but they will be aware of what contribution you make and how that compares to others in the department.

Can you justify your contribution if asked?

I’d be interested to hear if you have ever worked out the cost of a slow-to-start meeting or if you have calculated your contribution in financial terms. Why not let us know what happened in the comments?

Posted on: August 26, 2014 11:41 AM | Permalink | Comments (0)

Easy illustrations for your project meetings
Categories: team, tips

You know how they say a picture is worth a thousand words? Well, at ProjectManagement.com this month we are really testing that theory with the features on visual project management. And not wanting to miss out, I thought I would share some drawing tips with you.

Drawing? If you are thinking now that you can’t draw, bear with me. By the end of this article you will be able to, I promise.

First, let’s think about why you should be using illustrations and pictures in your project meetings. It’s easy to come up with lots of reasons:

  • It’s fun
  • Drawings help explain complicated concepts
  • People remember drawings better than lists
  • Drawings help get everyone on the same page (ha ha! You know what I mean)
  • Drawings help remove misunderstandings about processes.

And I’m sure you can think of other reasons.

When can you use illustrations in your project meetings? There are lots of times when it is appropriate, for example:

  • Requirements elicitation workshops
  • Solution design workshops
  • Process workshops
  • Change management meetings
  • Long meetings that need something extra to keep the attendees engaged
  • Any time when you are facilitating a session and taking notes on a flip chart.

OK? Let’s get started.

Drawing people

I hated drawing at school so if I can do this, then anyone can. Think of people as a five-pointed star. Then replace the top point with a head, like in the illustration below. An easy person! You can make it look as if the person is pointing, and put them together around an object to represent breakout sessions or collaborative working.

It doesn’t take much to adapt the star concept to have pointy arms and lots of legs to represent a group. I know this particular group only has 5 legs which isn’t realistic. Six would have been better (although there are 4 heads in the front row so someone is still missing out). But you still know what it relates to, don’t you? You can see that this could represent a client group, a project team, a user community… anything.

Illustrating processes

Process maps are represented in a particular way when you are using Visio or similar to put them together in their final version. But in a workshop, you can have much more flexibility about how you draw out processes on flip charts or illustrate them on slides. And there are likely to be some processes that are discussed in meetings where you don’t want a full-blown detailed process map and a quick illustration to show that there is a process will do just fine.

Arrows are great as shortcut symbols for processes. It’s easy to draw a basic arrow, I’m sure everyone can do that. A few dotted lines and it becomes the most basic process diagram. You can write in the sections if you want to show what happens where (maybe useful for illustrating the project lifecycle in a kick off meeting?). Where your process has several different end points (like accept, reject or hold changes) you can give your arrow multiple-heads, like in the picture below.

One of my favourite types of arrow is the twisty one. It can stand for lots of things but it represents transformation. So something goes in, something happens and an output falls out the other side. It could mean that software code is quality checked, or that ‘the magic happens’ in a black box process that is being provided by a third party. But it is fiendish to draw, at least that’s what I thought.

I learned how to draw the twisty arrow and the other elements at the Oredev IT conference a few years ago, in a session about visual recoding. The speaker broke it down and I have done the same for you in the picture below.

So now you have the tools to illustrate your meetings, why not give it a go?

Posted on: August 23, 2014 05:21 AM | Permalink | Comments (0)

7 Reasons to crash your schedule
Categories: scheduling

Too lateCrashing your schedule is hard work and not something that is advisable in many cases. So why would you do it? Here are 7 reasons why schedule crashing might be the right thing to do.

1. To get the greatest schedule compression

The main reason for crashing your schedule is to get the project done faster. If you need to bring your project’s end date forward then crashing gives you the most schedule compression for the least impact and the smallest cost.

2. When part of the project jeopardises progress

You could also look at crashing when you are facing one part of the project putting the rest of the project at risk. If a particular workstream isn’t going well it could suddenly become the route of the critical path. That might be OK, but equally you might feel that this difficult strand of work is going to hold the rest of the project to ransom. Crashing the schedule around those tricky tasks is one way to get yourself out of difficulty.

3. When meeting a fixed deadline

Projects require change and changes (however formal and appropriate your change control processes) have a habit of adding more time into the plan. When you are dealing with fixed date projects that’s not a good thing. So what happens when your necessary and obligatory changes start adding more time to your fixed date project? You have two choices: tell the project sponsor that you can’t do it and that your end date has to change or try crashing and see if you can claw back some time.

Whether you choose to crash or not will largely depend on your relationship with your project sponsor and how ‘fixed’ your fixed date project really is. I know that many project managers are given a fixed date to deliver by but with this often has some flexibility (especially if the compulsory changes that add more time are requested by the project sponsor).

4. When you are delayed

Delays early in the project necessarily have an impact on later work. You might consider crashing your schedule as a way to make up for some of the lost time.

5. When the team is needed on other work

And now we reach the reasons that are to do with resources. Your project simply might not be the most important thing happening in the business right now. Your team might be needed on other projects – or at least a particular subject matter expert might be.

Crashing your schedule is one way to free up certain resources more quickly. You could look at crashing a workstream so that your critical resources are available for other tasks or projects. The alternative to this is that you let them go (or are asked to let them go and can’t say no) and then find someone else to do the work. That’s a valid route too but depending on how far you are through the project you might find it easier to simply crash and deliver what you can with the original resources earlier.

6. When another resource is free

Sometimes the opposite happens – more resources suddenly become available. Ooo, more people for your project. The impact this can have on your schedule can go one of two ways:

  • You add an additional resource, refocus the resource allocation and deliver on certain tasks faster

Or

  • You add an additional resource and it takes them ages to get up to speed so actually you don’t make any time saving at all.

Only you will know which of these scenarios is most likely on your project, and who the extra resource is matters hugely. A junior programmer who has no experience on your project is not likely to gain you much time. But an experienced technical architect who has always kept half an eye on the project and now is available to complete some solution design work alongside your existing resources should speed things up for you dramatically.

7. When another resource needs training

Finally, you may face a situation where you have a resource who is not contributing effectively to the project because they simply don’t have the skills. This hopefully doesn’t happen to you too often – ideally as project managers we would select people for the project team who have the skills we need to get the job done. However, I’m sure you are aware of situations where either ‘the skills we need to get the job done’ were not defined or changed halfway through the project or we couldn’t get a resource with the appropriate experience allocated to the project.

If you have to let someone go on training they obviously won’t be working on the project during that time. If they aren’t working on the project, then their tasks won’t get done. If you don’t have someone else to pick up their work, this will push their overall delivery milestones out.

You may find that crashing the schedule gives you some more slack around their work – either for them to get work done before they go on training (probably not if they don’t have the skills to do their work in the first place) or to speed things up when they get back.

Would you agree with these? What other reasons have you found in the past to crash your schedule? Let us know in the comments.

Posted on: August 19, 2014 11:43 AM | Permalink | Comments (1)

10 Expert Tips for Project Budgets
Categories: interviews, video

Posted on: August 07, 2014 04:27 AM | Permalink | Comments (0)

5 Steps for Make or Buy Analysis (video)
Categories: procurement, video

Posted on: July 29, 2014 05:06 AM | Permalink | Comments (0)
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