Project Management

Managing Money Q&A (Part 5)

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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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Categories: FAQ

It seems ages ago now that I gave a webinar on managing money on projects, but it is taking a long time to answer all the questions that I didn’t get round to doing during the live session.  Thanks to all the fabulous participants, who asked such brilliant questions!  I am still trawling through them hoping to answer them all, and here is today’s batch of managing money Q&A. 

Is there an industrial standard for a ball-park of the Project Management cost during estimation for all IT projects? Does it vary for Application Development projects versus Application maintenance projects? Also, does platform matter?

There is no industry standard for ball-park project management costs for IT projects.  It depends on the complexity of the project.  A small project that requires very little oversight, with competent and experienced developers and engineers, may only need a small amount of project management time.  A complex, never-been-done-before project might need project management effort at practically full time.  I don’t think the type of project, or the platform, matters much.  What matters is the skill of the project manager and the complexity of the project.  Look back at the statistics that your PMO has about percentage of project management time per developer day.  If you really, really, don’t have a clue, start with 20%, which is one day of project management time per developer week.

Should I track project costs if I have never been required to do this? And if so, where would I begin since this would be for my information only, for now, with the intent of presenting to upper management (sponsors) to show value?

If you want to do this as a learning exercise, then go ahead.  You are not required to do it, so don’t let it take up too much of your time.  Are any other project managers required to do it?  If so, why?  Maybe they work on projects of greater strategic significance or with higher external costs.  Ask your PMO why you don’t have to track costs – you might be reassured by the answer.

If you’d still like to do so, you could start with tracking your time, and then talking to the Finance department about the daily rate for resources so you can put a financial value on that.  If you are only managing a project with people resources, and not other expenditure, you can track how much effort it is taking to complete the project. If you are spending money on other things, like buying computers or hiring a contractor, you can add those in too.

Do you have publicly available SharePoint templates (e.g. budget tracker)? Or url?

No, sorry. Although this is an excellent suggestion.  I’ll see if I can sort something out. On another note, why would you want to use a SharePoint template as a budget tracker?  It’s not designed to be a spreadsheet so that is going to give you a lot more work to do.  Use a spreadsheet programme, and get it to do all the maths for you.

Salary and contractor costs are sensitive information.  How do you share the entire budget with the team without divulging this sensitive information?

You don’t.  Sharing capital expenditure – buying things – is different from sharing operating expenditure.  To be honest, not many project mangers have access to salary information for the people on their teams anyway.  That’s normally data belonging to the line manager.  You may have day rates set by the company for different types of resources, which are not the same as salary figures.  These will be publicly available.

Read Part 1 here

Read Part 2 here

Read Part 3 here

Read Part 4 here


You can see the whole presentation online here, via a recording of the webinar.  I’ll have some more Q&A for you soon!   Got any questions?  Leave me a comment and I’ll answer them in a future post.

Posted on: December 17, 2010 05:41 PM | Permalink

Comments (2)

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Julie Goff Brisbane, Q, Australia
Hi Elizabeth,
Thankyou for the article. On the issue of Salary and contractor costs it is worth noting that a lot of companies do not include salary costs in the cost of the project as it is often too hard to calculate. (They do not want to instigate timesheets). The salary costs are considered "sunk"costs and only the additional expenditure required by the project is budgeted for.

Contractor costs are usually much less sensitive as everyone knows that the contractor usually does not actually get paid the amount they are contracted for with taxes and agency fees taking a big bite out of the contract rate "cherry".

Elizabeth Harrin Director| London, England, United Kingdom
Julie, you are right it is often too difficult to calculate the 'real' cost of salaries in projects. In one of the previous companies where I have worked we had flat day rates for every job role across the organisation and used those as a figure on which to calculate people costs. This was used during the estimating and business case preparation, but you need timesheets at the end of the day to work out if you got the estimates right.

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