Don't forget to factor in the total cost of a project when estimating its budget.

Every now and again we have interesting discussions in my office and more often than not I end up attempting to convey my ideas or position on my trusty whiteboard. Here’s a picture from my whiteboard today.

Here I’m explaining that the total cost of a project isn’t just the cost of the widget.

1. Project Management

One of the simplest ways to increase the likelihood of a successful project is to build in the cost of the delivery mechanism, dedicated project management staff. Whether you have in-house project management staff or you buy them off the street, there is no better way to guarantee project delivery than to allocate the appropriate level of project management resources. After all, projects don’t deliver themselves, so depending on the amount of effort required, you will most likely need dedicated, knowledgeable and skilled project management resources.

2. Contract Variations

On larger projects, you may find yourself delivering a project in partnership with a private sector partner. Contract variations are where changes to the baseline contract have occurred. Variations can occur for any number of reasons. For software projects it’s generally due to scope increase because of changed customer requirements or effort that was not estimated at the project setup stage, it can also occur to decrease scope – where a piece of work is found to be no longer required. However a variation surfaces, they more often than not cost money, so allocate a portion of your total budget to paying for the variations.

3. Change Management

All projects deliver change but not all projects need dedicated resources to particularly manage the change, as distinct from managing the project. You may need dedicated resources to communicate the project ambitions to a wider stakeholder audience or to handle inbound enquiries. You may also need to consider preparing and releasing formal publications containing project information, or writing articles for publishing on websites or in the industry magazines. Running an endless array of workshops to help any change resistant stakeholders through the pain also takes time and resources, so consider allocating a portion of the budget to dedicated change management resources.

4. Training

So your going to deliver a new software application or surgical centre. Do your customers need training on how to run it efficiently? You may even consider training when training isn’t, in your view, even required. yes I know, a total waste of time and money, but don’t tell me everything you deliver in a project is intended the way it seems on the surface. Sometimes you may need to offer training and no one takes up the offer. If you’re going to offer training, make sure your budget supports it and remember to design the training with the trainee in mind and in consultation with the business owner.

5. Widget

I use the term “widget” a lot nowadays as I often talk to people about project management who are from very different sectors. Your widget could be a changed business process, a day care centre, a bridge, a new road or a software application, all projects deliver either one or more widgets. Please don’t make the mistake of thinking that the cost of the widget is the total cost of the project. If you take one thing away from this post, that’s it. You need to consider all the items which are needed to ensure that the widget is delivered within the constraints, and the preceding four items include a lot of them.

What about costing risk?

What about the cost of risk I hear you say. Well costing risk is its own post one day, but you should consider building the costs of  your risks in to each of the above subject areas. Anyway, more on that at a later date.