Determining the Cost of Resources

PM Milestone Project Management Templates

PM Milestone Business Templates

Get Instant Access

One of the project management plans needed for cost estimating was the staffing management plan, which defines all of the attributes of the project staff, including the personnel rates. Armed with this plan and a determination of what resources are needed to complete the project, the project manager can extrapolate what the cost of the human resource element of the project will likely be.

Resources include more than just the people doing the project work. The cost estimate must also reflect all of the equipment and materials that will be utilized to complete the work. In addition, the project manager must identify the quantity of the needed resources and when the resources are needed for the project. The identification of the resources, the needed quantity, and the schedule of the resources are directly linked to the expected cost of the project work.

There are four variations on project expenses to consider:

• Direct costs These costs are attributed directly to the project work and cannot be shared among projects (airfare, hotels, long distance phone charges, and so on).

• Indirect costs These costs are representative of more than one project (utilities for the performing organization, access to a training room, project management software license, and so on).

• Variable costs These costs vary, depending on the conditions applied in the project (the number of meeting participants, the supply and demand of materials, and so on).

• Fixed costs These costs remain constant throughout the life cycle of the project (the cost of a piece of rented equipment for the project, the cost of a consultant brought onto the project, and so on).

And yes, you can mix and match these terms. For example, you could have a variable cost based on shipping expenses that is also a direct cost for your project. Don't get too hung up on these cost types—just be topically familiar with them for your PMI exam.

Was this article helpful?

0 0
Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

Get My Free Ebook


Post a comment