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Percentage Cost of Project Management

Posted: Sun 19 Oct 2014 3:15 am
by spacecraft
Hello everybody, I'm new in project management and I have a question.

If we consider big engineering projects, value > 100 M€, what is the average percentage value for the project management in respect to the total value?

For now I found this data only in one website: PM is 5% of the total project value. I don't know if this could be right.

Thanks a lot.

Re: Percentage Cost of Project Management

Posted: Mon 20 Oct 2014 2:39 am
by Julieclt09
In my experience, the project management effort sums up all project resources' effort (example, dev, qa, sa, architect, etc.) and computes 20-25% of that total effort. 5% is extremely low considering everything that a project manager does - planning, managing, tracking, controlling, and so on.

Some say that a Project Manager's effort is lesser in case of Agile model. I disagree with that since all the expectations from a project manager remain the same irrespective of the model being followed.

If your organization has a mature PMO, you could look for historical information (estimates in this case) on a similar project, but make sure to check lessons learned to ensure the estimates were correct.

Re: Percentage Cost of Project Management

Posted: Mon 20 Oct 2014 9:03 pm
by dhaughey
There is a range of opinions on this question. I haven't found a definitive answer in any PM body of knowledge. In software development, project management is usually charged between 10-15% of the total project cost.

In the Mythical Man-Month: Essays on Software Engineering, Frederick P. Brooks gives a rule of thumb for scheduling a software task:
  • 1/3 Planning.
    1/6 Coding.
    1/4 Component test and early system test.
    1/4 System test with all components done.
That's 33% of the time spent on planning before writing any code.

It is difficult to apply a 'one size fits all’ percentage, because different styles of project management demand different amounts of time.

My feeling is that 5% is too little, and 50% is too high. For me, it falls somewhere between 10-40%.

Take a look at this thread on a similar topic: /viewtopic.php?f=2&t=788

I’m interested in how other people calculate the amount of project management needed on their projects. Any other thoughts?


Re: Percentage Cost of Project Management

Posted: Wed 22 Oct 2014 10:08 am
by spacecraft
Thanks a lot for your messages and suggestions :)