ESTIMATING COSTS FOR EXTERNAL SERVICES you need to think through which tasks of the project are to be delivered by external service providers and to estimate how much this might cost.
It assists the process of identifying which project activities need be outsourced to external providers and to estimate the relevant budget for this purpose.
In principle, external expertise could be considered across all project activities if needed. For example, for project management, communication activities, webpage design and maintenance, workshop facilitation, thematic expertise, accompanying research, technical assistance, etc.
As with all the other tasks, it is important to check with your own organisation first if there are any particular systems that are being used to calculate these cost items.
The tool is a table for thinking through the costs involved in commissioning external service providers.
|Who is this tool for ?||When should the tool be used?|
Project design team
HR department (to identify forthcoming staff workload and potential recruitment plans)
Senior level managers (to potentially ring-fence organisational resources and to advise on potential / preferred external service providers)
The task of specifying and estimating a project budget for external service provision should be undertaken after you have clearly defined the project activities and the different tasks and staff required.
Click on the stations to navigate through the Costing line!
Key Challenges of this step
- The actual availability of your or your project partners' in-house staff is challenging to predict due to a potential time gap between project planning and implementation stage. By the time the project is ready for its actual implementation, some staff might have moved on or not be available anymore. This might create an increased need for outsourcing more tasks than orginally thought. It is therefore important to keep a degree of flexibilty and add a small budget for contigencies like this, if possible.
- At the planning stage, requesting quotes from external service providers is challenging as there is often still uncertainty about if and when the project might actually be implemented. However, providers are often happy to give you an approximate figure rather than providing you with a detailed quote.
- Over or under-estimating the required budgets for external service providers with the risk of either making your project less competitive, or leaving your short of money when you will need it.
- Ask your colleagues and partners about their experience regarding similar projects or situations where external service providers needed to be commissioned and at what cost they were able to do this (for example, website design and maintenance, or workshop facilitation, etc.).
- Be mindful of the fact that the costs involved in managing external service providers, meeting and collaborating with them requires a certain time allocation for project management staff. These costs need to be allocated under budget heading 'staff time and salary costs'.