Implementing Project Portfolio Management: From Organization Structure to Recognized Revenue · Module 11 · Burdening and Cross-Charge
Why burdening exists
Lesson 112 of 198 · 2 min
A consultant's hourly cost rate covers their salary. It does not cover the office, the laptop, the recruiter's fee, the finance team or the training budget. A PROJECT CHARGED ONLY THE RAW RATE LOOKS MORE PROFITABLE THAN IT IS. Burdening applies indirect cost to direct cost, so project cost reflects the true cost of delivery. The typical layers. Fringe or employment costs on labour. Overhead on total direct cost. Sometimes general and administrative on everything. TOTAL INDIRECT COST DIVIDED BY A BASE. FINANCE OWNS THAT ARITHMETIC. YOU CONFIGURE IT. The rates come from the cost accounting model, and that model is theirs. The commercial consequence, and it is the reason to get this right rather than approximately right. Burdened cost drives project margin, which drives pricing and bid decisions. A wrong burden rate means the business bids badly for a year. Not one project — every bid, until somebody notices…
The full lesson is part of the course
The video, the complete written lesson and the module quiz are included in Implementing Project Portfolio Management: From Organization Structure to Recognized Revenue, with a certificate on completion and a fourteen-day refund window.