Projects at NIL cost!

Do you have a budget for your project? This may seem a strange question however anecdotal evidence (and it is strong) from people who come along to our project management training courses have to deliver their project ‘at nil cost’. When they query with senior management what the budget for the project is they are told quite clearly that there is no budget, deliver it at NIL COST.

I however query whether this is the case as their time costs money; there is no such thing as free time in the project management world.

Do you count staff time as a cost?

From conversations I have had people do not take account of the time spent on projects. This is an uncomfortable area for some people as it shows:

• senior managers expectations are sometimes impractical as to what can be achieved without a budget

• time costs seem to be excluded in any business case calculations showing estimates and those of their senior managers are sometimes erroneous

• the need for project managers to assert that the project needs a budget or that the business case is flawed

However project managers are not alone in not thinking about the cost of their time is free. I came a cross an article by Fraser Hay. Fraser is a marketing wiz and runs The Results Academy.com , and in a blog he said:

“….they (the group) were spending £434,000 of their time a month trying to win new business, close deals and sell their professional solutions…however, it become quite apparent that they were not putting a value on their time, or keeping a track on how much time they were spending or investing in various marketing activities each month..including the time spent each month travelling to and from their one to ones, appointments etc.”


We all need to look at how we spend our time. We all need to account for our time. If we do not then we have real problems delivering effectively. Let’s start changing the mindset of those managers and companies who see delivery of key projects at NIL cost! It simply cannot be done!

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6 Responses to Projects at NIL cost!

  1. Elyse says:

    Another point to consider for organizations in which there are NIL costs for projects. If they don’t value the cost of employee’s time for an effort, then in all likelihood they don’t consider the opportunity cost of that time.

    In order to change this mentality, it is good to work with the finance department. Deriving a cost to a project will be an eye opening experience. Reporting on that cost will begin to turn the organization to a strategic enabler.

  2. Ron says:

    Thanks for the comments. Really good points here Elyse. I agree, working with Finance can make a real difference and you are correct; few organisations seem to recognise opportunity cost of time.

    Ron Rosenhead

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  4. Hi Ron,

    A problem I’ve run across is in organisations where the salary costs are paid out of one budget, while project costs come from another one. Sometimes the senior manager is only responsible for the project budget, so as far as they are concerned, the time of the people on the project is free.

    It comes down to a difference between value and cost. To the organisation, a project manager’s time is valuable, and so they pay the cost for it. But for the senior manager, the project manager’s time is also valuable, but they pay nothing for it!

    This leads to situations where the senior manager is happy to have the project manager doing work which is of a value less than the actual cost of the PM. As the senior manager doesn’t have to pay this, it makes sense for them to do so – but it doesn’t make sense for the organisation as a whole.

  5. Cris says:

    Hi guys,
    Great comments however, I really don’t think this is a good path too slide on though. And the reason is that we don’t want to transform our job into a hated one like a lawyer or something. It is true a lot of time it is spent travelling between offices or cities but let be honest you can’t charge for this kind of time in almost any job. Those days if you want you can make appeal to technology (video conferencing is one of them) and your life will be much easier.
    I’m not trying to say that we shouldn’t be paid for this but (as one of my teachers in Uni said: “…don’t try to find solution to your problems but try to find out what the problem’s origin is and remove it.”) I’m just trying to be fair against everyone including PMs. Best real life experience is about PMs working for consultancy companies. They charge the client with a minimum of $1400/day (Australia) for an 8 hours rate. The spending for the PM are not higher than $400/day (and that is quite high) so they put in their pockets close to $1000/day without moving/working too much. I would say that is not quite fair, what do you think? The time between clients could be used in our advantage (reading something, relaxing before a tough meeting etc.) doesn’t have to be counted or charged.
    Cris

  6. Ron says:

    Thanks Cris. I want people to recognise the value of their time or senior managers to readily accept that they need to determine whether the staff time (cost) to deliver a project is really worth it. In some instances I have heard people on our project management courses talk about the time they spend on a project – with no budget. BUT, their time is given ‘freely’- I want senior managers to recognise time is not free. Salaries and overheads are being spent…and this should be built into the business case e.g. it will take 4 staff 5 weeks to deliver this project (no budget) but the cost in salary terms is XXX – is it worth it?

    Hope that explains my thinking a bit more

    Ron

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