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Subject: IT Budgeting - Communication

Tutorial: Get Your IT Project Funded - 5 Steps to Improve the Odds


Step 3. Flesh-out each of the key points with the necessary detail points (cont'd)

b) Cost Estimate

Developing cost estimates is one of the tasks that can become a whole lot easier once you learn some budgeting basics. For most budget justifications, cost estimates do not need to include exhaustive detail. There is certain basic information that senior managers and business analysts are likely to look for:

  • Total Amount Requested
    This is the sum of the personnel expenses (PE) and non personnel expenses (NPE) costs specified below for the next fiscal period (typically, a year)
  • Amount for PE (a.k.a., Personal Services)
    This includes the salary cost of employees who will be working on the project. It generally includes the salary costs for only the period of time that the employees will be assigned to the project (e.g., if a person is working on the project for six months, only one-half the annual salary is requested for the project). Note: Some organizations include the "full cost" of the employee for the period worked; full cost would include additional amounts such as benefits.
  • Amount for NPE (a.k.a., Non Personal Services; Other Than Personal Services)
    This includes all other costs associated with the project: consultants, hardware and software acquisitions, T&E, etc.

Note: There are more advanced techniques and concepts relating to project costing that are beyond the scope and purpose of this tutorial; for example, full-life-cycle costing, return on investment, and capital budgets. These are discussed elsewhere on this web site.

Get Your IT Project Funded - 5 Steps To Improve The Odds, Lesson 5 of 10

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