1. Project Management Project Planning Costs & Budget neil@minkley.fr

2. Project planning processes Define scope & collect requirements Develop scheduleDetermine budget Create WBS Define tasks Sequence tasks Estimate task resources Plan procurements Estimate costs Plan communications Plan quality Estimate task durations Develop human resource plan Plan risk management, identify & analyze risks

3. Planning processes: where do we stand? Scope defined & requirements collected Schedule developed WBS created Tasks defined Tasks sequenced Task resources estimated Plan procurements Plan communications Plan quality Task durations estimated Develop human resource plan Plan risk management, identify & analyze risks Determine budget Estimate costs

4. Estimate costs & Determine budget Define scope & collect requirements Develop scheduleDetermine budget Create WBS Define tasks Sequence tasks Estimate task resources Plan procurements Estimate costs Plan communications Plan quality Estimate task durations Develop human resource plan Plan risk management, identify & analyze risks

5. Estimate costs (1) Develop scheduleDetermine budgetEstimate costs  Estimate the cost of each of the resources needed to successfully complete the project tasks  Costs expressed in numbers of monetary units Estimate task resources Estimate task durations

6. Estimate costs (2) Develop scheduleDetermine budgetEstimate costs  Estimates may incorporate a “contingency reserve” to take into account changes due to the realization of potential risks  Estimates refined as the project moves forward and more details are available Estimate task resources Estimate task durations

7. Costs (1)  Labour  Overhead  Hiring  Offices

8. Costs (2)  Workstations  Servers  Other equipment  Supplies

9. Costs (3)  Materials  Documentation  Competitors’ products  Multimedia assets

10. Costs (4)  Travel  Events

11. Costs (5)  Services  Consultancy  Contractors

12. Cost of salaried employees (example) Weeks per year52 Days per year excluding weekends260 Public holidays10 Total potential working days250 Vacation days30 Total actual working days in a year220 Gross annual salary36,000 Employer's social contributions (%)50% Employer's social contributions18,000 Annual cost excluding overhead54,000 Overhead (%)33% Overhead17,820 Annual cost including overhead71,820 Total cost / gross salary2 Cost per day of work326 Taking idle time into account: add 10% or so to cost per day or count 200 workdays per year  Cost per day = Gross annual salary / 100

13. Project EXONE labour costs (1) Project manager Senior technical consultant Junior technical consultant Developer 1 Developer 2 Tester 1 Tester 2 Client

14. Project EXONE labour costs (2)

15. Example of other costs (1): project EXONE

16. Example of other costs (2): project EXONE

17. Questions?

18. Estimate costs & Determine budget Define scope & collect requirements Develop scheduleDetermine budget Create WBS Define tasks Sequence tasks Estimate task resources Plan procurements Estimate costs Plan communications Plan quality Estimate task durations Develop human resource plan Plan risk management, identify & analyze risks

19. Determine budget (1) Estimate costs  Add up all estimated costs  The budget should be officially approved by the project sponsor Determine budget

20. Determine budget (2) Estimate costs  Authorized budget = baseline for the evaluation of the “cost performance” of the project  May incorporate “management reserve” to provide for “imponderables” Determine budget

21. Determine budget (3) Estimate costs  A contractor’s budget for the execution of work for a client should include a profit margin  Price = total cost of work + margin Determine budget

22. Reminder: Margin & Mark-up  Margin (profit) = 20  Margin% = 20/100 = 20%  Mark-up% = 20/80 = 25% Price paid by the client Cost of project for the contractor 100 80 20 Price = Cost/(1-Margin%) Mark-up% = 1/(1-Margin%) - 1

23. Example of profit margin Estimate costs  Estimated cost = 100,000 €  Required margin = 20%  Price = Cost / (1-Margin%) = 100,000 / 0.8  Amount invoiced to client = 125,000 €  25% mark-up (100,000 x 1.25 = 125,000) Determine budget

24. EXONE: costs

25. EXONE: summary budget - Contractor Project EXONE: contractor's budget Estimated cost of project66,575 Management reserve (10% of estimated cost)6,658 Total cost of project73,233 Mark-up% (% of total cost of project)25% Mark-up amount18,308 BUDGET (price to be paid by the client)91,541 Profit margin amount18,308 Profit margin % (% of budget/price)20%

26. EXONE: summary budget - Client Project EXONE: client's budget UnitsUnit costsTotal costs Internal costs Content creation8030024,000 Data preparation & delivery (sample and final)104004,000 Product testing (alpha, beta & final)103003,000 Project management3545015,750 Total Internal costs 46,750 External costs Software development 91,541 Content proofreading202505,000 Product testing (beta & final)53501,750 Multimedia asset licences302507,500 Server and software13,000 Total External costs 108,791 TOTAL Cost155,541 Management reserve (10% of total cost)15,554 BUDGET171,095

27. Questions?

28. Planning processes: where do we stand? Scope defined & requirements collected Schedule developedBudget determined WBS created Tasks defined Tasks sequenced Task resources estimated Plan procurements Costs estimated Plan communications Plan quality Task durations estimated Develop human resource plan Plan risk management, identify & analyze risks