Project Management on a Budget

Mark Mullaly is president of Interthink Consulting Incorporated, an organizational development and change firm specializing in the creation of effective organizational project management solutions. Since 1990, it has worked with companies throughout North America to develop, enhance and implement effective project management tools, processes, structures and capabilities. Mark was most recently co-lead investigator of the Value of Project Management research project sponsored by PMI. You can read more of his writing at markmullaly.com.

  Cost Management   Estimating   Portfolio Management   Risk Management  

There is a cost to project management; it is not free, and it does not happen by magic. While the actual cost of project management varies--and there have been no studies that have provided any conclusive answers to the question--most educated guesses put the cost of project management at somewhere between 10 to 15 percent of overall project costs.

This should by no means by used as a rule of thumb, mind you. I have seen some projects where the cost has been as little as 3 percent, and others where the cost has been apportioned at 20 percent and beyond. The important point here is not what the number is, but that there is one.

For some, these kinds of estimates will appear eminently reasonable. For others, they will no doubt seem shocking. For yet others, the people being shocked are the people that you report to. It’s primarily for you that this article has been written.

Few challenges are greater than sitting on the other side of a conference table, watching an irate executive (with very little background or consideration) rip apart the budget estimates that you and your team have spent days, weeks or even months developing. You have belabored every number, challenged every assumption and second-, third- and fourth-guessed every unit rate until you have finally produced what you feel is a genuinely reasonable and justifiable reflection of what the project…

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