Project Management

Managing Money Q&A (Part 2)

From the The Money Files Blog
A blog that looks at all aspects of project and program finances from budgets, estimating and accounting to getting a pay rise and managing contracts. Written by Elizabeth Harrin from

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Man standing on pile of moneyLast week I shared with you some questions and answers from my recent webinar on managing money on projects.  I wasn’t able to answer all the questions after the presentation, and those questions I didn’t get a chance to answer in person I am answering here.

Here’s another batch of Q&A.

Can you give a definition of "Consultancy"?  Is that research/consulting on tasks OR the hiring of outside resources to assist with the project tasks?

I think it’s both.  If you don’t have the skills amongst the permanent staff in your organization, you need to hire those skills in.  The people hired could be doing specialist tasks like research or technical consulting, or they could be an extra pair of hands to help you get the project done, like an extra project manager on a large program.  Either way, these are additional, external resources and that’s what I mean by ‘consultancy’.  Essentially, it is paying for people who are not permanent staff.

Do you ever find that being transparent with $$$ leads the funding away from your project and onto another "priority" thereby interjecting project risk?  Seems like the norm is to cloak the budget until successful completion and then release at completion with the rest of the resources.

I think this is very dependant on the culture of your organization.  Fortunately I have not worked anywhere where I have seen this happen, although I wouldn’t be surprised to learn it did go on in some organizations.  It is all to do with what the company thinks are its strategic priorities and unfortunately your project might not be one of them.  A strong PMO can help here, as well as a mature project management culture where people understand the value of not chopping and changing their minds about projects every five minutes.  Projects cost what they cost, and if the investment is worth it and you haven’t padded out the budget unnecessarily, you shouldn’t have to worry about sharing the figures.

If your project is no longer a strategic priority it seems sensible to me to divert the funds on to something else that will deliver great value for the organization.  If you are worried that your management team doesn’t have the foresight to do this which leads you to hiding your budget until the project is over, they all need to go on Sponsor training!

Do you consider utilities, rent, etc to be a project management cost or deliverable cost?

Utilities, rent and so on are project management costs.  Let’s recap the difference:

Project management costs are the costs of doing the business of project management e.g. paying for your team members, training including the costs of a trainer, room hire, refreshments, delegate transport and accommodation, hosting large meetings off-site and hiring equipment.

Project deliverable costs are expenditure directly related to what the project is going to deliver e.g. software, hardware, purchasing equipment, licensing and things like buying software and funding anything that will change as a result of your work like new stationery or user guides or paying for documents to be translated.  

Might training be considered a deliverable cost associated with quality assurance? What about testing resources?

Yes, I suppose they could be.  The purpose for me of categorizing costs in this way is simply to provide a starting point for preparing a comprehensive budget.  People often think about what they need to buy to deliver the deliverables – a new server, new office equipment, software licences etc – but they forget about the costs required to make it all happen.  These are what I call project management costs and are the overhead of running a project.  In real life it doesn’t matter at all if you categorise training as a deliverable cost or a project management cost – the important thing is that you have considered it and included the cost in your budget.

You can see the whole presentation online here, via a recording of the webinar.  I’ll have some more Q&A for you soon!

Posted on: May 12, 2010 01:56 PM | Permalink

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