A question I often get is “What’s the all-in cost” for a project. The answer is dependent on what is considered part of the project costs, versus support costs handled outside the project budget. Let’s consider the all-in costs as if it was the only project in the organization.
Labor: Typically, the bulk of the upfront costs, labor rates can be broken down further into the following categories:
- Build teams: In the agile world, these are often called pods or squads, and comprise the core teams focused on project execution (Product owners, scrum masters, developers, engineers, testers, ui/ux etc)
- Build support teams: Additional resources that can “flex” in and out of a project. These resources can provide surge capacity, backfill resources, provide expertise outside of the core build (i.e. connecting to other systems, architects, business analyst, infrastructure, designers), or any other providing ancillary and temporary project support
- Post deployment, production support: Resources dedicated to support the system/product once it’s been released to end users
- Stakeholder and management: Depending on your organization, overhead costs can be included as part of the project costs. Sometimes these are fractional cost or handled in a separate cost center
Non-labor: A cost factor often overlooked; these can be a critical component to the all-in costs. Examples of these costs can be estimated as:
- Licensing and subscriptions: Hosting, tooling and software
- Physical hardware: Utilized when hosting on premise
- Perpetual software: Software purchased as an asset, which the organization is responsible for maintaining
These are the typical components I’ve experienced when estimating agile IT projects. Let me know if there are other items to consider.