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Cost in a software project

  1. May 3, 2012 #1
    I skip a couple of video tutorials on Microsoft's Project 2010 , and come across a little problem because they all specify the project cost as an essential part that is excel-computed into a single file before sending to someone sitting up...above. I wonder how the software project cost is calculated, is that the amount to buy some devices to serve in the project or the sum of salaries paid to the project members ? I have not worked with any software projects that need to buy anything else and I am now confused... As a developer, I only see people out there coming over and asking me to do this, do that and I am sure the guys also know nothing Microsoft Project 2010... So I think all work is done by observing and repeating. That is like I am now watching how my PMers do/ask me what to do, so later if I am promoted or land on another position in another company I might do something similar as a project manager, for example. I would love to learn more about this if anyone cares to offer me advice, any sort of instructions, I truly appreciate.
    Last edited: May 3, 2012
  2. jcsd
  3. May 3, 2012 #2
    I am sorry my internet connection seems to have had a glitch while I was posting the message and I accidentally duplicated the thread myself.
  4. May 3, 2012 #3


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    Usually the software project cost includes salaries of the software group (mostly programmers, possibly testers, consultants, ...) involved in the project, and the cost for any development related tools. In the grey area would be prototype hardware, depending on how much of it was related to software versus hardware development. Depending on the company, project cost may also include the cost for office and lab space used by the team.
  5. May 3, 2012 #4

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    Salaries plus benefits plus mandatory expenses such as the employee's share of FICA, at a minimum. Somewhere along the line the cost estimate has to include office space and desktop equipment, that fancy new conference room, the nice shiny server, the costs of people on overhead, the costs of the cost estimators, the costs of those above the estimators. Whether all this and more are factored in as part of the cost per person or added at the end depends on the company. Another factor is that there's a big problem with these initial estimates. They are always low. Always. Sometimes by a huge amount, sometimes by only a bit. Companies that fail to account for uncertainty, risk, and all of these hidden costs don't stay in business for long.
  6. May 3, 2012 #5


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    Based on my experience, it depends on the coporate culture. In some cases, it's common to low bid projects deliberately, in order to convince upper management to start or continue some project. This can cause problems if upper management isn't compensating for these low bid estimates to base business decisions on. I've also worked in environments where the schedules were realistic, included feedback from the team that was to be doing the actual work, and included some padding for handling unforseen issues, and the norm for these projects was to be done on time or in some cases ahead of schedule if the team got lucky and there were no hidden issues.
  7. May 9, 2012 #6
    Here is small list of things that add to cost of project:
    1. Salaries and perks of people working on project. (Managers, business analysts, domain experts, software developers, technical writers, legal team members, quality assurance team, QC team, deployment team, maintenance team etc)
    2. Infrastructure (office, bandwidth, electricity, etc), equipment (hardware), license (software etc)
    3. Travel and Transportation
    4. Training people for skills required for the project
    5. External consultants, certification
  8. May 10, 2012 #7
    In short, everything that is consumed during the project.
  9. Aug 1, 2012 #8
    right! it's the amount spent during the project, but you also note that disbursements are not included on the total expense
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