Project Management 4a. Estimating the Expenses of the Project

The expenses for a project include, at the least, what’s needed to design, develop, and produce the project and, at the most, what’s needed to market, support, and maintain the communication product after publications.

This discussion solely focuses on the expense of designing, developing, and producing a project.  This expense is actually the compilation of several individual expenses.

The largest expenses for designing, developing, and producing a project are labor costs, because designing, developing, and producing a project primarily involves hiring professionals for a given period of time.

The cost of producing a course or communication project includes:

  • Fully “burdened” cost of the instructional designer or information designer (architect). A “burdened” cost includes both the cost of labor and additional “burden” costs.

That is, the fully burdened cost includes the salary for the instructional designer or technical communicator as well as benefits (if any), employment taxes (if any), and related overhead expenses (such as the cost of the office, cost of support services).

This cost is usually based on time, charged either by the hour (for people working as contractors and consultants) or the month (for full-time employees).

Generally, assume that the professional works 90 percent of the time while preparing drafts and during 50 percent of the time when drafts are being reviewed (instructional designers and technical communicators might work on other projects at that time, or on administrative tasks).

  • Fully burdened cost of additional instructional designers and technical communicators who assist the primary instructional designer or information designer with the project.

This is only an expense on some projects as, on many instructional design and technical communication projects, the lead instructional designer or technical communicator handles all communication duties.

  • Fully burdened cost of the project manager, about 15 percent of the total time of the project.

This is only an expense on some projects as, on many instructional design and technical communication projects, the lead instructional designer or technical communicator might also serve as project manager.

  • Fully burdened cost of an editor, about 10 percent of the total time of the project (if any).
  • Fully burdened cost of the production staff, about 15 percent of the total time of the project (if any).
  • Costs of specialized services, such as the cost of conducting a usability test.

In addition to labor costs, some courses and technical communication projects encounter expenses other than labor, including:

  • Equipment costs, such as the purchase or lease of special computers and other specialized equipment for a project
  • Software costs, such as the purchase or lease of an authoring tools, graphics software, and content or learning content management software.
  • Training costs associated with the project, such as the cost of sending the instructional designer or technical communicator to a training class on the product described in the materials or classes related to specific instructional design and communication skills needed on this project, such as training on writing for translation. Note that training un-related to this project—such as general training on project management—would not be specific to this project and would not be included in the project cost)
  • Copying and distribution costs for review drafts (if any)
  • Production costs, such as the cost of preparing special effects for the printing presses.
  • Duplicating costs for the final product, which your printer can provide.

Different organizations have different methods for estimating these costs. Some, for example, have an hourly rate that they charge for a technical communicator that also includes the costs of the project manager. Others separately charge for these expenses.

Table 6 shows a list of component expenses for calculating the budget of a project.

Table 6: Component Costs of a Project and Issues to Consider When Estimating Them

Type of Expense Specific Expense
Labor
  • Need analysis
  • Information design
    • Writing
    • Editing
    • Graphics
    • Production
    • Programming
    • Project management
    • SME time (if appropriate)
    • Other
Training
  • Tuition, related fees, and times to attend formal training sessions on the content matter to bring team members up to speed
  • Additional time spent on the job learning the material and deepening their knowledge base through independent study, trial and error, and informal coaching.
  • Resources needed to support on-the-job learning, such as subscription fees to proprietary databases and memberships to professional organizations (which also provide access to resources)
Gathering source material
  • Purchase of information
  • Courier fees
  • Travel and lodging
  • Other expenses
Copying of drafts
  • Quick copy /copy center
  • Mailing/shipping/courier
Printing/CD duplication of the final version
  • Printing or duplication
  • Packaging (if needed)
  • Postage or shipping for final version
  • Inventory
  • Other
Direct expenses
  • Equipment
  • Software
  • Additional copying
Indirect expenses
  • Administrative expenses
  • Corporate overhead

Table 7 shows an example of a budget calculation for the user’s guide whose scheduled was estimated in previous examples.

Table 7: Example of Estimating the Cost of a Specific Project

Item Considerations for Estimating the Cost of this Item Estimate
Fully “burdened” cost of the technical communicator. 32 weeks@$60/hour (remember, the rate is fully burdened, the technical writer does not receive all of this funding) $76,800
Fully burdened cost of the project manager, about 15 percent of the total time of the project 4.5 weeks @ $85/hour $15,300
Fully burdened cost of the editor, about 10 percent of the total time of the project 3 weeks * Same pay rate as the technical communicator ($60/hour) $7,680
Fully burdened cost of the production staff, about 15 percent of the total time of the project 4.5 weeks * $45/hour $8,100
Costs of specialized services, such as the cost of conducting a usability test Guestimate $10,000
Equipment costs, such as the purchase or lease of a special computer for the project None on this project. 0
Software costs, such as the purchase or lease of an authoring system or graphics software A copy of Robohelp, and perhaps some additional software. $1,000
Training costs associated with the project, such as the cost of sending the information design to a product training class.
Note that a course on online communication, would not be specific to this project and would not be included in the project cost.
One 1-week class out of town $3,800 ($2,000 for tuition, $1,800 in travel expenses)
Copying and distribution costs for review drafts 10 copies per review, 3 reviews, 203 pages * $.07/page $426.30
Production costs, such as the cost of preparing special printing plates Special setup for cover $1,000
Duplicating costs for the final product, which your printer can provide and, if you are preparing a printed.
Different organizations have different methods for computing these costs. Some, for example, have an hourly rate that they charge for a technical communicator that also includes the costs of the project manager. Others separately charge for these expenses.
204 pages, $.07/page, $2/copy for covers and binding, 5000 copies $81,400

Total

$213,186.30

The total list of expenses for designing, developing, and producing a projects identifies the amount of money that a sponsor must be prepared to pay up-front to initiate a project.  Because sponsors have the responsibility for covering these expenses, they prefer estimates to be as complete and accurate as possible.

In some instances, the estimated expenses are higher than a sponsor wants to pay.  To ensure awareness of this issue, instructional designers and technical communicators should ask sponsors what they are willing to pay as part of the needs assessment process.

If, before presenting a proposed budget to a sponsor, you are aware that the expenses exceed the sponsor’s budget, you can try lowering expenses in advance.  That becomes difficult, in some instances, because you do not know what the sponsor’s preferences might be.

Some items on the budget are easier to cut than others.  Reducing labor expenses often has an impact on quality.  Reducing other expenses, however, can often be invisible to people.  For example, , many sponsors like full-color printing (often called four-color printing, because printers uses four colors of ink to produce the effect of full color).  When using a traditional printing press to achieve a full-color effect, the printer must run each sheet of paper through the printing press four times—one for each color—and that significantly adds to the cost of the project.  Naturally, this can cause printing budgets to mushroom nearly four times.  Reducing printing by 1 ink can result in significant savings.

In contrast, reducing the time needed by—and thus the salaries paid to—instructional designers or technical communicators might prove more difficult, without sacrificing the amount of time needed to create the project.

Continue with the next post, Project Management 4b. Estimating Revenues (if any) from the Project.

© Copyright 1996-2012. Saul Carliner. All rights reserved.  If sharing or excerpting, should be properly cited.

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About idmodelsandprocesses

Exploring, reporting, teaching, and advising on learning and communication for the workplace and consumers. saulcarliner.wordpress.com
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