After a whole lot of fighting with the sales and management team here at work I have finally convinced them of a similar figure. To date, on the projects I have been working on, the figure seems close to the mark.
I do think it is important that for some clients (particularly internal ones - depending on your organisation I guess!) there needs to be a "factor" added to the 20% which accounts for the additional "hand holding" that client requires.
I honestly believe on projects around this value you will rarely be able to adequately manage the project for less.
Just my thoughts, interested in others. Saving Changes...
Unless you are working in a DoD or DoE environment, using Cost Schedule Control System with earned value, a $100,000 to $250,000 project should not exceed 10% for PM activities/hand holding. Really need more info as to the complexity of the so-called hand tasks holding to make a better judgement call. Saving Changes...
I am looking at external bemchamarking for our Project Management activity. What I need is some comparitive quantitative data. I am looking at the cost/value balance. Specifically for a given value of project(contract value etc) what cost of PM resource is reasonable. In other words if a contract/project is worth £1m and Project Management to deliver the project costs £100,000 is that reasonable or not - e.g. 10% ??? HELP !!! Saving Changes...
George, on smaller <1 million dollar projects, 10% for project management costs seems about right. As a general rule, project management costs range from 10 to 20% of the value of a project. A lot depends on the industry, project size and complexity, systems/processes, and organizational objectives and so on. For example, if you're using CMM, Rational Rose, or Cost Schedule Control System, then overhead costs are actually being driven up, thus PM costs would be closer to 15 to 20%, which is often the case on government programs where there's a lot of reporting requirements. Saving Changes...
Todd WethyProgram Manager| Volkswagen of AmericaAuburn Hills, Mi, United States
I've just completed this analysis in my organization for the projects completed in 2003. On average our PM costs are 18% but that ranges from as high as 33% for relatively small projects to as low as 4% for a $50M project. Now, this does not mean you should use these numbers as your baseline, we still spend a LOT of time, as Tom would say, hand-holding our business partners to help them understand the value of our work and what is expected from them.
I believe, and am planning on, to reduce this percentage over time to something closer to 13% - but that will vary based on the size of the project.
Todd Saving Changes...
Russell GeakeProject Management Consultant| Deciduous Partners LtdLostwithiel, Cornwall, United Kingdom
just been reading through this discussion. I'm writing a proposal for a potential client, who badly needs PM support. From my old days as an employee PM, we never even looked at budgeting PM time, even on my last £25m project nothing like that was discussed...interested to know more about it, I like the sound of budgeting meetings etc. Any hints on where to look? Saving Changes...
