Vendor's Actual & Estimated Costs - Reasonable?

Asking for that kind of data sends a message that you are going to try and micromanage the project yourself and add a lot of overhead burden that can greatly reduce the efficiency of the performing project team.

Government projects do often require far more cost transparency, but that comes with a burden of much higher costs to provide that level of data. Many businesses and private contractors won't bother to work for government agencies for that reason. When they do, they add on a large premium for the effort and may even spin-off whole business divisions.

If I was asked to provide actuals by person with their individual pay rates I would flatly refuse. That's what our functional managers are for. I would give you hours of work performed and the burdened labor rate for which I am charging you. I'm not going to explain why certain people work more or less hours in a given week and why some get paid more than others.

There are differences between project types and probably global location/culture, but in my experience with various aspects of aerospace, reporting to the client at the individual employee level would be a rare exception. In a large matrix organization, that is a balance between mitigating the risk of inaccurate charging, and a much higher burdened rate of micromanagement to avoid the risk.

At a law firm for example, the senior and junior partners, associates, and paralegals all bill directly to a project and at very different rates. By contrast, at an engineering firm with many specialties, our department of 1000 professionals will use the same billable rate for the new-hire as the 35-year veteran. It may be broken out into some major skill types and a few individuals like a specialty consultant. Within a skill code with one rate, the client doesn’t get to insist I use all our highest skill/rate employees on their projects, the lowest paid employees, or argue why there is a large disparity between the senior and junior employee.

Everyone must record their time by project in our system. The PM and functional managers are responsible for ensuring the right people doing the work and accurate charging at the employee level. Charging is rolled up to various tiers in the org. structure for reporting but not individually unless we think we detect a problem.

Time at the individual level generally only shows that some people spend much of their time on a project, while others like their team lead charge occasionally. It rarely shows much actionable information except to a client who wants to argue about every dollar at a cost of 2 more dollars. Part of the contracting process should be ensuring that the vendor is reputable enough that excessive costly oversight is not necessary.

Keith, I don't disagree that it differs from industry to another, project to another and one client to another. I was sharing my own experience in those types of situations working in the Middle East, Far East and North America as well!

Why do you want to see it by each vendor's team member? If there is a contract in place with the vendor, they are responsible for specific deliverables, so manage to those. If there is an estimated cost per deliverable, you can certainly control costs without the need to crawl into the details of individual vendor staff.

I've been on both sides of the client-vendor model for multiple technology projects in both public and private sector and have never seen a situation where that granularity of information was shared with the client. I do work in North America, so the situation might be different elsewhere.

Kiron

Not disagreeing at all Rami. As you know, the answers to many of the most interesting questions start with "It depends." The different perspectives are why there can be many considerations before choosing T&M, FFP, and everything in between. Cheers!