I’m a huge fan of PMIWDC’s PM Point of View podcast. It helps to live in the home of NPR.
On a recent podcast, Steve Devaux argued that projects need to be considered as investments.
Investments in resources – money, personnel, energy, time.
And most organizations start projects because they are trying to get some return on investment.
It seems like common sense to me. Unfortunately, it’s not common sense in practice.
We act like we have unlimited time, energy and resources.
And we often don’t ask what the expected return on investment is supposed to be as a result of an activity.
Why don’t we pause to ask WHY are we doing what we are doing? How much time is spent doing busy for the sake of busy?
Where we start looking at a project as an investment, if we think that way at all, is when we look at project budgets.
Ideally, keep the costs under the initial estimates. Not much conversation of what we intend to get in return for the investment.
Furthermore, a large swath of resources is not accounted for in the budget.
Happy New Year!
Looking to get more organized in 2018?
I’d like to share a free PDF containing a useful personal prioritization exercise to help you get started.
I hope you can join me on this journey!
Most organizations do not treat employee time and energy as a cost line in budgeting the project.
They are treated as “free.”
However, each employee costs money. Your more skilled resources cost a LOT of money.
How much time does that skilled resource need to spend on your project? And how much are you paying them hourly?
You are making the same calculations for any external consultants and contractors you bring in.
Why NOT your internal employees?
And what other activities do you need that skilled resource for that they won’t be able to do as a result?
There’s a simple calculation to help you develop a more accurate labor cost for your project:
Calculate the following for each task:
Hours it takes to perform the activity x the hourly rate of the employee you are using.
That’s a more accurate assessment of how much that project is going to cost.
Nevermind the opportunity cost of things you can’t do because you are doing this project.