A project's budget
Costing a project: daily rate, budget lines, capital and running expenses, contingency, total cost of ownership, and tracking with budget, committed, actual and remaining spend.
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Daily rate: what is it?
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The full cost of one person's working day, which includes social charges and a share of overheads, not just the gross salary.
Effort multiplied by this rate gives the staff cost: 45 person-days at €400 a day make €18,000. Using the gross salary underestimates the budget.
A developer earns €3,000 gross a month. Why is costing his day at 3,000 / 20 = €150 in a budget a mistake?
- A day also costs social charges and overheads
- You must divide by 30 calendar days, which gives €100 a day
- Gross salary never enters a project's cost
- A budget is costed in hours, never in days
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A day also costs social charges and overheads
For the company, a day costs far more than the gross salary: employer charges, workstation, management, non-billable days. The budget must reflect that full cost.
A staff work package's budget is the effort in person-days multiplied by the …, plus the ….
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A staff work package's budget is the effort in person-days multiplied by the daily rate, plus the contingency reserve.
45 person-days × €400 = €18,000, then + 10 % contingency: €19,800.
Contingency reserve: what is it?
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A sum set aside in the budget, often as a percentage of the total, to absorb unforeseen events and any risks that materialise.
It is managed as a whole and in plain sight, at project level: it is neither hidden inside each task nor spent without the project manager's decision.