Collins AlugaQuantity Surveyor| MCK Contract Services LtdNairobi, Nairobi, Kenya
How does one charge for project management fees on a project? Is there any rule of thumb or a percentage that should be used in coming up with the fees?Alternatively,let me have your thoughts and the approach you use in your practice.
Luis BrancoCEO| Business Insight, Consultores de Gestão, LdªCarcavelos, Lisboa, Portugal
It is good practice, in designing WBS, the project manager's work has to be broken down.
As for other activities it should be budgeted Saving Changes...
PM costs are usually not tied to specific work packages but would span the project's lifetime at varying percentages.
I've seen organizations which have used a flat rate allocation which varies based on the complexity of a project. For lower complexity ones, this could be as low as 5%, whereas it could increase significantly for higher complexity projects.
Alternately, you can look at the lifecycle which the team will be following and allocate a percentage based on the PM's involvement in each phase.
Kiron
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2 replies by Collins Aluga and Luis Branco
Sep 30, 2019 1:12 PM
Luis Branco
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Dear Kiron
How to apply:
- WBS complies with 100% rule
- No work is omitted
- No extra work is performed
Oct 01, 2019 1:09 AM
Collins Aluga
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Thank you Kiron for the advise
Saving Changes...
Anton OosthuizenSenior Business Analyst / Project Manager| Self EmployedPretoria, Gauteng, South Africa
I'm not sure there is a good rule that cuts across all projects. The PM involvement would vary greatly depending on the project complexity. Managing a large stakeholder group would require more of your time as would managing remote teams. Is it possible to have a PM 100% allocated on one single project? Definitely yes.
Thank you for the advise and the article,it really cleared things up and answers the question
Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
Is not easy to ask because you can use different approaches depending on your organizational policies. I could say that the easy way will be putting all project management tasks and deliverables inside the project wbs or project schedule to calculate the spending time and then create the fees.
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1 reply by Collins Aluga
Oct 01, 2019 1:14 AM
Collins Aluga
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Thank you Sergio for the advise
Saving Changes...
Luis BrancoCEO| Business Insight, Consultores de Gestão, LdªCarcavelos, Lisboa, Portugal
Sep 30, 2019 7:17 AM
Replying to Kiron Bondale
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Collins -
PM costs are usually not tied to specific work packages but would span the project's lifetime at varying percentages.
I've seen organizations which have used a flat rate allocation which varies based on the complexity of a project. For lower complexity ones, this could be as low as 5%, whereas it could increase significantly for higher complexity projects.
Alternately, you can look at the lifecycle which the team will be following and allocate a percentage based on the PM's involvement in each phase.
Kiron
Dear Kiron
How to apply:
- WBS complies with 100% rule
- No work is omitted
- No extra work is performed
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2 replies by Collins Aluga and Kiron Bondale
Sep 30, 2019 4:37 PM
Kiron Bondale
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PM for the most part is overhead costs - yes, you could attribute planned effort & cost to certain PM deliverables (e.g. PM plan) but that wouldn't be the sum total of what a PM spends time on.
Kiron
Oct 01, 2019 1:16 AM
Collins Aluga
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Thank you Luis for that clarification
Saving Changes...
Yousaf KhanPM Consultant| City of TorontoToronto, Ontario, Canada
At various stages of the project, the allocation estimates for any resource would be different as more information is gathered and the estimation becomes increasingly accurate. For example, at project Initiation parametric or analogous estimates can provide a high-level allocation for a PM. Depending on the increasing complexity and size of the project, this may be 20%-100%. When Planning is completed, PM (and other resource allocations) should be detailed with estimated time required down to the task level, which will provide a detailed estimate and can be effectively time-phased.
If you are asking about what to include in the fee structure (assuming this is from the perspective of an external consusltant being hired as a PM), then consider market rates, cost of travel and other expenses to determine your charging rate. Saving Changes...
Dear Kiron
How to apply:
- WBS complies with 100% rule
- No work is omitted
- No extra work is performed
PM for the most part is overhead costs - yes, you could attribute planned effort & cost to certain PM deliverables (e.g. PM plan) but that wouldn't be the sum total of what a PM spends time on.
There are several ways to charge for project management including invoicing an hourly rate, flat rate per project, % of total cost of project retainer or consulting fee, or in phases of project completion.
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1 reply by Collins Aluga
Oct 01, 2019 1:10 AM
Collins Aluga
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Thank you Shadav for that advise
Saving Changes...
Collins AlugaQuantity Surveyor| MCK Contract Services LtdNairobi, Nairobi, Kenya
Sep 30, 2019 7:17 AM
Replying to Kiron Bondale
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Collins -
PM costs are usually not tied to specific work packages but would span the project's lifetime at varying percentages.
I've seen organizations which have used a flat rate allocation which varies based on the complexity of a project. For lower complexity ones, this could be as low as 5%, whereas it could increase significantly for higher complexity projects.
Alternately, you can look at the lifecycle which the team will be following and allocate a percentage based on the PM's involvement in each phase.
Kiron
Thank you Kiron for the advise Saving Changes...
Collins AlugaQuantity Surveyor| MCK Contract Services LtdNairobi, Nairobi, Kenya
Oct 01, 2019 12:06 AM
Replying to SHADAV MOHAMMAD ANSARI
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There are several ways to charge for project management including invoicing an hourly rate, flat rate per project, % of total cost of project retainer or consulting fee, or in phases of project completion.
Thank you Shadav for that advise Saving Changes...
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