What is it All About?
What is your price per hour? This is the main question people ask when evaluating how to cover r general IT resource needs or project specific ones. Does this somehow sound like a car buyer asking: what is your price per horsepower? Let’s look at different factors in an evaluation and their impact on business results. Going beyond “cost per horsepower” can be decisive for the future of your company.
Factors to Consider
- Cost : Price / h x number of hours. The number of hours needed are as important as the price per hour. The number of hours depends on experience as well as thoroughness when estimating hours needed and ethical standards of the company doing the estimate. The quality of project management, of processes is another factor impacting the number of hours needed, hence cost.
- Experience : the most obvious points people look at: number of years of existence and number projects of a similar complexity / technology developed. There is more:
- Experience analysing business situations and developing solutions/architectures linking the business need with the best available technology
- Employee retention: A company with an average “stay length” of 1 year may have done many projects over 5 years – but still have little experience.
- Competence : variety of technologies covered as well as depth. And again – there is more
- Architects designing a solution who need to be up to date on te breadth of latest technologies to allow for the best technologies to be chosen vs. what they know
- developers who need to understand their technologies in depth for the sake of quality and speed. Best synergy if architects and developers are all in one place.
- the ability to onboard additional quality resources with different skills in short time when needed. Nobody has all competence on board
- competence to run projects in the most adequate form of project management: agile, waterfall or hybrids all in a customer, change management focused way, including quality control.
- Capactiy : Adequate number and skill levels of architects, developers and project managers to run the project on time. Plus – as above – the ability to onboard additional resources when needed.
- Cultural fit : There are different aspects to be considered:
- Country – geography culture and possibly language of those interfacing with you. Normally less important for pure developers.
- Legal: country of contracting, applicable law, relevant courts and efficiency of the legal system in relation to the provider of services.
- Industry: depending on project experience working in or running projects for the customer’s industry.
The impact of These Factors
L’impact du “prix horaire” sur la question de la finalisation d’un projet “dans les limites du budget” n’est que partiel. Personne ne mène un projet avec le seul objectif de “le terminer dans les limites du budget”. Les critères que nous avons évoqués ont un impact direct sur 4 domaines pertinents au moment de prendre une décision en matière de ressources :
- Impact on Business : this is what counts long-term, this is why projects are run
- Impact on Project : It will determine the success of the project: on time, on budget, on scope
- Impact on Departments : internal and external competitive positioning in the fight for projects, service level agreements, funds
- Impact on Individuals : on their career, pay, prestige, recognition etc.
Below are some examples of how the topics impact results. Most apply to project and dedicated resource situations alike, some to one of the two only.
Do you see a pattern? Cost per hour is the factor with least impact on business, project, department and individual success.
In today’s business world digital fitness of an organisation can be a question of survival. Cheap can be expensive, even fatal. It therefore certainly makes sense to look beyond “price per hour”, to assess what elements have what impact and should therefore be criteria to be considered when taking decisions. Don’t hesitate to ask for a more in depth conversation with the author.
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Written by Erwin Peter, Managing Director, SwissHelios Sàrl.