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Is there a rough rule of thumb to compare the amount of effort estimated for
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After developing an estimate to complete a project, I was questioned as to why about 15% of the cost and labor went towards project management vs. the cost and effort associated with project execution. I know it will very from industry to industry and complexity, but is there some basic guiding thought on what may be a rough guideline or some way to help folks to understand the need for that much project management time?
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We use 15% as a standard in my company, also. I don't have a succinct summary of why, I think justifying PM time is the ongoing struggle for us all!, but I remind them that I'm responsible for meeting prep, facilitation and follow-ups as well as budget management & control, status updates, reporting, project plan management, and monitoring scope, new requests, etc.
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1 reply by Michael Moffett
Apr 19, 2019 1:33 PM
Michael Moffett
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First I would differentiate labor vs. non-labor costs. In engineering projects, the engineering itself can be around 10% of the entire project cost with about 5-10% of that project management. Part of that variance can be how you capture PM costs. Working in a large functional organization, my own PM costs may be a small percentage of the total labor, but within the functions themselves there is internal PM work going on to manage their own SOW.

There is an article on PMI stating 7-11% of the total costs, but I take some issues with the math used to arrive at that number.

https://www.pmi.org/learning/library/proje...ppropriate-5072
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There is going to be overhead on any given project - PM, BA, QA, Meetings, etc., generally those functions that are not "delivering tangible value". Sure, understood, there are varying opinions on what constitutes'value'. Fifteen percent may be a little high, maybe 8-10%.That is assuming 100% allocation (8hrs/day).
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If you google it, 15% is a good rule of thumb, some say 12-18%, some 7-11%. My own estimate is 15% too.

If you have a high PM maturity, so many templates, support, tools supporting projects it could be lower. If you have a greenfield project, it might be higher. If there is a lot of external constraints, like compliance, safety, reporting needs, then it might be higher. I have seen projects with 25% and 5%.

The problem is they do not trust you. Nobody would ask a surgeon to speed up with heart surgery. You can mitigate this by building trust. Certifications, reputation, historic data can help build trust. Getting outside advice can help. Playing an estimation game is another idea.

In any case, if they do not want to have this discussion for any project, they should start counting. If they do not have the data, how could you have it, you are not scientifically proving anything, you are giving expert advice to laymen.
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As with all estimates you need to provide some supporting justification. This effort doesn't represent only the cost of a PM but the collective effort of stakeholders in PM activities. It also will scale based on the size and complexity of a project so one size fits all is not ideal.

Kiron
Network:1835



First of all, most of the project managers fail to make they work visible. For example, is usual to see project schedules without project manager activities defined into it.
Depending of the state of the organization the acceptable range is 15%-25%. For example, if project manager must make micromanagement (some organizations demands that) then you can have 25% and sometimes more. That is the percentage of performing project management and it is a precentage of total project duration. But performing project nanagement does not mean you will have a project manager assigned You can perform project management without a person asigned to the role. You can distribute and assign the project management activities to project team people.
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Good points Kiron, Sergio.Thank You !!
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Apr 18, 2019 4:33 PM
Replying to Grace Kilpatrick
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We use 15% as a standard in my company, also. I don't have a succinct summary of why, I think justifying PM time is the ongoing struggle for us all!, but I remind them that I'm responsible for meeting prep, facilitation and follow-ups as well as budget management & control, status updates, reporting, project plan management, and monitoring scope, new requests, etc.
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I would recommend defining the activities and deliverables the client expects from the PM team per month and after that threshold is met, and then similar to CM estimated cost per month (8%-10%) , an estimate of PM costs as a percentage of the project estimate can be applied (10%-15%). Regardless of the scope and budget the project, clients often have written and implied requirements for project management. This may include staffing levels, routine activities and deliverables, responding to client Emails and telephone calls, and adhoc activities and deliverables per month over the duration of the project.
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Another rationale for 15% is that a group from 7-8 people needs a leader function in order to work efficiently and to act as a communication line into the wider organization.

In my projects, e.g. one with 120 team members, I tried to break the team down to teams of 8-12 max and assigned team leaders. These acted in a (sub) project management role, though most also had specialist tasks.
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