How much does the project really cost?

Working in an agency has taught me an important lesson about costs. As an agency you try to charge every hour of your staff to a project. After all, that's how agencys earn money. It doesn't matter what you do for the project: meetings, writing documentation, doing phone calls. Everything is charged to the client.

The client side

On the client side I'm trying to reduce costs as much as possible, because low costs will make management happy. After all they might not even grant a project if it's too expensive. So as a project manager on client side I will try to reduce the costs as much as possible so that the project looks good. It's probably a manager's most important question: How much does project xyz costs? And probably there's a nice internal PowerPoint slide explaining the costs:

$ xzy external vendor
$ abc infrastracture, hosting
$ cdf software licences
$ dfg Project management

$ asd Total

The real costs?

This list misses out on an important item: Internal costs. Yes, they might not be always relevant but at least for a project review they should be analyzed. Unfortunately they are often just ignored.

Scrum is not particularly helpful. Does the following scenario sound familar:

Sprint 1 – Project on track

Sprint 2 – We might have to dump some features if we want to complete on time. Oky, let's do that

Sprint 3 – We might have to dump some more features. What are the internal resources to build that feature? Ok, lets do it.

Project completed. Nice features. Costs as calculated: $ asd. Hurray. Nobody will ask internal IT how many hours they spent on the project. Nobody will ask internal staff about how much manual work they had to spend because the automatic migration didn't work as promised/planned.

So how much does the project really cost? A whole lot more, but maybe management is too scared to actually look at those costs, because it might mean that not everything is running perfectly.