Resource Management
What you must know
Resource management in PjM covers the people, time, and money a firm commits to a project. Candidates should understand the difference between fee (what the client pays), budget (what the firm plans to spend to deliver), and profit (the gap). Know the labor-cost concepts: direct labor, overhead/multiplier, billing rate vs. pay rate, and utilization. Understand how a staffing plan ties to the schedule and the work plan, and how scope creep erodes profit if not managed through additional services.
Traps in questions
- Confusing billing rate with cost rate. Profit and break-even questions hinge on cost, not what you charge.
- Forgetting that overhead must be recovered; a project can look profitable at direct cost and lose money after multiplier.
- Treating a contingency (for unknown-unknowns) as the same as a management reserve (held above the project).
- Assuming more staff always shortens duration - Brooks's law and coordination overhead say otherwise.
Worked rule of thumb
Direct-cost multiplier method: if a firm's multiplier is 2.5 and a task needs 100 hours at a $40/hr pay rate, cost to the firm is 100 × $40 × 2.5 = $10,000. If the fee allocated to that task is $12,000, the task contributes $2,000 toward profit. Always compute in hours × rate, then apply the multiplier, then compare to fee.
Key habit: when a question asks whether a project is "on budget," check whether it means cost budget, fee, or schedule - the answer changes with the frame.