Posted by themselves on August 6, 2012 at 2:58am
Hi guys,
Just wondering, how does everyone else charge for their project management hours? We are wavering between a few different methodologies, from a flat percentage on a project to trying to actually count the exact time spent per client, but it'd be useful to know what other people out there do as well, maybe there's a really clever solution to it that our little company hasn't been able to work out yet.
Comments
Fixed cost or hours
I don't like percentages as it relies on what the customer can negotiate for a sale.
A fixed project cost for fixed parameters is best for me as both parties know what to expect in advance. Build in some flexibility. Talk about and charge for anything out of scope.
Hours can work but then you need to justify your time or your rate. If you are good, you can do it very fast. Then your rate comes under fire.
We already bill by the hour
We already bill by the hour for our dev work, and wouldn't ever go back to fixed price work, except for on the most trivial of jobs. This is more about the project management component of a job, 10% to 30% of a project's time can be taken up by PM, but it's an awkward one to bill for, as you can't really bill someone 6 minutes for answering an email - although lawyers do.
no magic bullet
"maybe there's a really clever solution to it that our little company hasn't been able to work out yet"
I think the answer has to be no.
The flat percentage in the budget is good because it means no micromanaging and everything is clear upfront. However the risk of under-budgeting, as Chris said, is high (I've never over-budgeted for PM). Also some clients, particularly in advertising and marketing, don't like to pay for something that they think should be free.
Charging by the 6/10/15/xx minute block is good because you get paid for the work you do and it is an incentive for the client to only call you when they absolutely have to. However time-keeping then becomes an issue.
Some lawyers that I know fill their timesheets out at the end of the day based on a gut feeling on how long they spent with each client and tend to underestimate for the poorer clients and make up the time for the bigger.
The main problem is with client contact. All the other things that a PM could do (even if they shouldn't) like project planning, scrum mastering and QA can usually be estimated in advance.
Charging for Project Management
I prefer the bill by the hour approach, but I charge a lesser rate than for the actual development work. Much of my project management work requires a lot of research work, for which I could not justify a programmer's rate for. But the research work is important and so I explain to my clients that there is one rate for development work that delivers specific outcomes, and a lesser rate for research work. Then I just keep a time sheet and tot up the work in 6 minute units, with a 4-5 word explanation of each billed chunk of time. If they want more detailed reporting on the project mgmt work then I charge them for the time it takes to generate the more detailed time reporting. All my clients accept the brief reports on project mgmt work, cos they dont want to spend their own time checking an itemised bill. And they have learned to trust me, and know my rates are very reasonable.
John
John Young
Yindi Systems
web: www.yindi.net
twitter: @yindisystems
I find this quite surprising,
I find this quite surprising, putting the worth of a programmer above the project manager. :)
Actually depending on your roll in the project, from the pm pov, all companies that I have worked for in the past have charged the project manager before 130%-200% more than a developer. Then again in these roles they were the Lead of the project, and managing getting entire project, and success or failure rested with them.
For most projects I charge the same rate as a dev, since I am also the dev, doing project management duties, takes away from doing development. So why should I take less to jump through their hoops. I prefer to be developing over project management.
In the cases where I take responsibility for the project, I charge more.
IMO it comes down to if you are a code monkey or a PTB.
Gordon.
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Gordon Heydon
Flexibility
Interesting discussion.
My two bob's worth:
I find that one of my main assets as expressed by the people I work with is my flexibility. While my preference is to charge by the hour, I work mostly with non-for-profit organisations and understand their limitations in terms of budget. I try to always propose 2-3 different approaches depending on 3 levels of budget including their additioanl benefits if going for the higher budget options (unless they tell me their budget which is not very common). If their budget is not flexible I quote my hours on a minimum and maximum time I think I would spend with the promise that if I go above the maximum I still charge the maximum. I have never gone above the maximum quoted so this would depend on your knowledge of your work and of the required implementation.
I also tend to do a bit of research if I am not as familiar with the area I am working on (e.g. new modules, specific template modifications) so that I do not have to charge them for my knowledge but rather for the actual implementation of my knowledge.
I do not have any hourly rate client for whom I charge for PM. I do have another part-time role where I do mostly project management but I get a part-time salary for it.
While the development is certainly more specialised knowledge, in my opinion as a person doing both for different clients, I agree with PM being worth more than development as the project manager is responsible for overviewing the whole project.
Raul Caceres
www.simsolutions.net.au
We currently charge a
We currently charge a percentage of the overall product time, but we have found we usually under estimate the time needed… So, still figuring it out!