Michael BaileyBusiness ConsultantChicago, Il, United States
I'm looking for guidance on allocating time (cost) for project management. Over the years, I've heard that "project management should be 10 to 15 percent of overall project time/cost"? Where is this and other such information documented? When do you deviate from this "rule of thumb"? What about change management and business process redesign? I'm on a multi-year project that I believe has woefully underestimated the time and cost allocated for PM, CM and BPR activities. Saving Changes...
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Richard HowProgramme Management Consultant| How Associates LtdHarthill, South Yorkshire, United Kingdom
A lot will depend of the volume of work being done at any one time if the duration is multi year because the work is being rolled out slowly then the amount of management is less. If you have 30 resources working on the project at the same time then you will need a full time PM and probably a assistant PM/ Project coordinator/project support assistant/ whatever your org calls this role. Are there lots of assumptions in the base requirements that may lead to many changes? if so then a full time change manager may be required. If business process redesign is within the scope of the project then that should be planned and resourced just like any other task. Can you give some indication of the number of people working concurrently on the project as that will give me a better idea of the management levels required.
These "rules of thumb" for PM cost vary from 5% to 15% in what I have seen in industry. I believe that the construction industry may have done some formal research to justify specific numbers, but I have never read it.
Here is the fundamental problem with the research, though:
No one agrees on what "project management" is.
Even if you have access to another company's time sheets, you will see PMs doing all sorts of roles. Some are pure planners, some do or do not do scheduling, some do or do not program and do project work, etc...
My advice is to come up with a benchmark number based on your organization's actual results. Sometimes you can reconstruct these numbers based on people's recollections. I think those self-calculated numbers will be more useful than any studies you can find. Saving Changes...
Michael BaileyBusiness ConsultantChicago, Il, United States
Richard, thanks for your response. The project is matrixed and I've come in "midstream". Being a mid-level person, I'm just now getting my arms around the time and cost parameters of this project. I do know that $79M was allocated for people the entire project for a 30-month period. This includes HW/SW and people but I don't know the actual split. Approximately $1.3M was allocated for the development of future state business process flows and organizational change management activities. In my mind, there is (was) a need for the creation of data flow diagrams and use cases. There's not enough money allocated for this activity however. I think that there are real lessons to be learned, just need to know how to include these costs in the future... Again, thanks for your response Saving Changes...
Jeffrey GoldenProject Manager| Daugherty Business SolutionsMahwah, Nj, United States
Michael - I have also seen the 5% - 15% estimate for PM time when involving software development related projects. However, I just completed an analysis of projects in my group that were all what I would consider having greater than average risk. And our % of PM time was between 8% - 23%. (The 23% could be a bit misleading as this was a vendor integration project and I did not have their development/integration costs.)
I also agree with Alex that there the definition of what project mgmt is. I have see the activities vary from company to company and project to project. I think with a solid understanding of the tasks needed and estimates from the ground up you will be better served rather than using a % of project costs to estimate the PM time.
