Creating a Budget

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rix187
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Hi,

Do project managers need to know the salaries of the people working on the project in order for them to create a budget for resources used in the project? For example do they need to ask the developer working on the project what his hourly rate is in order for the PM to workout how many hours he spends on a certain task?

Any help and advice would be appreciated on creating a budget for resources used in the project.

Thanks.
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dhaughey
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Hi,

Welcome to the board. You have a choice, you either need to know the rate (hourly or daily) you are paying the person, so you can work out their cost and add a mark-up, or you need to know their charge out rate, regardless of how much they actually get paid.

There are a few different charging methods - by the hour, by the day, by project, by retainer, by cost per line of code, or a percentage of sales. The most common in my industry, IT development, are by the day and by project. Retainers are also common for specialist skills.

Duncan
NickC
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My directors don't want to share details of people's salary.

We don't ever calculate or monitor the cost of wages associated with project delivery. We work with an 'hours' budget. The idea is that when we plan the projects we designate an hours requirement per work package which we seek approval on.

This obviously isn't very accurate due to differences in earnings between team members, but at the end of the day it is up to senior management to decide how they want you to go about this.
GeorgeE
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rix187

Where I work we have a standard hourly rate for each different job role, so depending on the persons job title we input the different rates. Obviously the costs may not be exact, but they will be close and if you have many different people with the same job role the figures average out.

George
rix187
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Thanks for the responses, is the project manager's rate also included in the budget?
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dhaughey
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Yes, it should be included. I usually keep project management as a separate line item in the budget. Often, project management is added as a percentage of the overall project cost.

Duncan
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