Ynes CoiscouProject Manager,CBAP,Senior Consultant, Business Analyst,Scrum Master Certified| Independent ContractorFlorida, Fl, United States
When estimating cost for a project does internal human resources cost (ex. Actual salary etc ) should be estimated as project cost ? For internal human resources I mean people assigned to the project team from within the organization. Saving Changes...
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Bala S DuvvuriProject Manager| ShellBangalore, Karnataka, India
It doesn't matter whether it is an internal project or external project.
We need to factor in all the costs including internal human resources to arrive at the cost.Some of the costs which i can think of with respect to internal human resources like salaries,training costs,team celebrations,hardware/software costs etc.
You may want to look at direct/indirect,fixed/variable costs in PMBOK.
There might be two types of cost estimates. First, costs for estimators might not be directly inclusive in project cost in case of cost estimates for proposal or bid for the purpose of obtaining the project. Second, upon a project awarded, it depends on the organization's policies and standards to allocate each type of cost to the project costs. For example, in case of costs of team members for full time commitment, it might be direct costs whether they are from internal or external to the performing organization. . But in case of part time commitment in the project, you should consult with organization's polices or standards. "Man*hours" might be used as a unit for cost estimates of the direct cost in case of part time commitments.
There are various ways to include manpower costs in the project costs based on the countries or industries.
Costs for project manager and project management team are inclusive in the indirect costs in construction domain of some countries, while direct manpower costs are only for team members directly involved to complete the physical project deliverables, like technical supervisors, skilled labors, operators and general labors. Saving Changes...
Elizabeth HarrinDirector| RebelsGuideToPM.comLondon, England, United Kingdom
In theory: yes, because that gives you a total cost of the project including everything, as others have said. In practice, we don't do it. At a previous company I worked at we did, but using artificial day rates set by the Finance department, so even then the information wasn't 100% accurate as it bore no relation to people's actual salaries (+ on costs). Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
If the human resource is assigned to a project activity then it will be part of the activity cost. Saving Changes...
Yes , ideally any resources that have been expended for delivering a project need to be part of that project's costing. All colleagues have responded with very useful information on costing.
To further add to Sungjoon Park's response above , some costs can be difficult to apportion by each project - for example utility costs of the facility where project team is collocated with other project teams. In such cases, some practical formula needs to be worked out to apportion such costs.
Even for human resources, if a specialist (say a design engineer) is sharing her/his expertise with more than one project, a formula can be arrived at to apportion her/his cost to company between projects.
In bigger set ups, human resources costs can be assigned by designation/role to make assigning costs a bit easier. For example two electrical engineers on a project may be assigned same hourly /daily cost, even though their salary / wages could be somewhat different based on seniority in the organization.
In summary, some practical formulas based on organization needs/project execution patterns, can be arrived at for assigning all project costs. Saving Changes...
Stéphane ParentSelf Employed / Semi-retired| Leader MakerPrince Edward Island, Canada
It is not unusual to use cost rates, based on the salary band of the employee, rather than the salary itself.
This has the benefit of keeping employees' salaries private, as well as providing you with a start-up rate upon which you can build other costs - indirect, SG&A, travel, ...
This is pretty handy for time and material projects. Saving Changes...
