From beginning to end, Project Planning is an enormous undertaking that involves considerations of all types. At the top of any project’s priority is the need to keep project costs under control. If costs start to skyrocket, the project can be thrown off track very quickly, and it can result in significant damages to the final outcome. When it comes to breaking down the potential costs of your undertaking, it is imperative that you seek out multiple estimates, and know what you’re looking at when you receive the numbers.
Here are some important pieces of information that our Optimum Systems Online clients find helpful:
What’s included in a typical project estimate?
Before you even begin, you should know what to expect your estimate to contain. A typical project estimate will usually include the expected research, a planning phase, and live development of the project. Of course, testing and debugging should be included, as well, as this is an imperative part of any roll-out. Depending on your industry and the scope of your project, estimates can be made in many different ways. Do your homework and obtain estimates in as many different forms as possible to ensure that you’re working with the widest set of data.
How accurate are typical estimates?
What’s the point in getting an estimate if it’s just a fictitious number that means nothing once the project is complete? You have a budget; you have needs; and you need to find a way to make one work with the other so the project’s tasks come together successfully. When you’re shopping around for companies with whom to partner on your project, seek out reputable businesses that have happy clients and can prove their past performance to you. Don’t necessarily discount companies that are newer to the marketplace, but keep in mind that experience can help hone in more accurate estimates. One of the major pitfalls that can create inaccurate estimates comes in the form of guessing or “guesstimating”. In order to obtain the most accurate estimates, consider allowing multiple parties in on the planning process. You might be surprised to find that what you’re expecting from a project doesn’t match the expectations of those who will actually be doing the work, and more often than not, the folks at the lower level can provide a significant amount of insight into your project’s needs. It is also imperative that each cost comes with a defined timeline and that each dollar on the estimate is matched to expected billable hours accordingly.
Why would I use ‘per hour costs’ for my project?
Per hour costs are very popular, and they’re often chosen simply because it’s a language that is easily conveyed and understood across multiple members of the various organizations with whom you’ll be working on your project. In short, this cost method allows you to pay as the work is being done. In the end, you may win or lose, as it can be difficult to recover from cost discrepancies if the hours start to become skewed as the process moves along. Often times, a discrepancy in billable hours starts at the beginning of a project, when the project description provided by the client is either incomplete or not fully capable of addressing contingencies that may arise during the process. This is why communication with your vendors is absolutely vital. By talking through the “what ifs” and expectations, you can help to reduce differences in hours, which, in turn, can help your project costs stay where they should be.
The positives of ‘per hour costs’ can be best seen if you haven’t fully laid out the scope and functionality; it allows you to develop your expectations and tailor the project as you go. Per hour costs can also allow you greater flexibility to leave if you are displeased with your vendor partner’s performance. With this method, you’re typically not locked into any long-term contracts, which generally allow you to walk away fairly easily if something isn’t going right.
Why would I use ‘per project costs’ for my project?
This method is often best if you have a very strict budget that is accompanied by a very well-defined project scope that has detailed tasks associated with it. With this method, once the main scope of the project has been completed, the editing time can often move more slowly than the project itself did. Going with a ‘per project cost’ can lead to miscommunications between the client and the vendor companies if you don’t have stringent technical requirements. Web developers, for example, may think that he or she is building what you’ve asked for, while you have a different vision altogether. If there appears to be any difference at all in ideas, it is vital that they be discussed the moment a suspected discrepancy occurs.
As you build out your project plan and obtain your quotes, avoid looking toward the superficial question of, “What is your hourly rate?” Rather, focus on obtaining quotes that are based on exact samples and those that are accompanied by lots of supporting data, facts, research, and experience. Define your project requirements as specifically as absolutely possible, and seek out feedback from many members of your organization, particularly those who will ultimately be working on some aspect of this project (either while it’s in process or after it’s been completed). Above all, don’t fall into the trap of thinking that once a project has been completed, the work is done.
If you’re an experienced project planner, we’d love to hear your thoughts as a comment below. If you’re looking for a little advice about planning your project, you’re welcome to ask your questions there, too.