What is a fair project management salary?
Okay, so we all know that one of the criteria for project success is the use of a qualified project manager. In fact, 41% of failures can be attributed to not having a qualified project manager in place.
But what is this going to cost us?
Well, first of all, a qualified (skilled) PM or project manager shouldn’t really cost you anything. The savings in failed projects and cost overruns should pay for the salary and benefits anyway.
However, a recent article in CIO magazine “Project management salaries show growth, career potential” reported the results from the recent PMI salary survey (seventh edition). The original figures are based on US employers so they are somewhat higher than here in Canada. (Maybe — the country figures don’t take into account the mix of PM positions. A variation in number or payscale of one position could throw the figures off.)
Basically they say that (all figures per annum):
- a PMO Director should earn between $105,000 and $151,000 (avg. $127,000)
- a senior PM should earn between $89,000 and $120,000 (avg. $102,000)
- an intermediate PM should earn between $78,000 and $110,000 (avg. $92,975)
Now before we go further. I need to qualify a few points here.
PMI considers a project manager as a person who runs one project (and only one) at a time. A project manager who runs multiple projects at a time is either a portfolio manager or a program manager depending on their responsibilities and the period of time involved. A portfolio manager (responsible for multiple projects) and PMO director are often interchangeable.
At the other end, PMI recognizes a junior PM or PM 1. However, this person must work under a senior project manager and is only qualified to hold a CAPM. Effectively, this is a Business Analyst (aka Business Process Analyst or Business Systems Analyst not a Financial Analyst) who has a little project management experience. Typically, they are used as project co-ordinators (or project schedulers) under a project manager. So they only apply to large PMOs that can afford to train project managers. They are typically paid between $70,050 and $105,000 (avg. $87,000).
That means that your average project manager will cost you in the range of $130,000 up to $160,000 per year once benefits and employment taxes are figured in. (Employment taxes are amounts charged to employers for having employees). That means that your average project manager will cost you between $100. and $120. per useful hour (i.e. working on a project).
So what should I expect to pay for a project management consultant?
First off, a quick definition of terms. An employee gets full benefits including paid vacation, statutory holidays and company benefits (e.g. group health and life). An employee also costs the company employment taxes. In addition, the company is responsible for collecting the employee’s portion of the employment taxes. He/She can be paid by any period of time, although yearly and hourly are the two most common. A consultant (or freelancer) gets paid a fixed all-inclusive amount. His/her company is responsible for paying benefits (time off and company paid) and employment taxes. His/her company is responsible for collecting the employee’s portion of employment taxes.
A freelance project management consultant should cost between $100 and $120 per hour at a minimum. Their costs are slightly higher than a direct employee because they do have extra (business overhead) costs. However, frequently they don’t charge for these extra costs.
A full-service consulting company should therefore run somewhere in the $200 to $270 per hour range. Although secondary companies should be much higher ($400 and up). In reality, full-service consulting companies rates vary considerably depending on the nature of the engagement and the company.
In between, are the recruiters and pseudo-consulting companies. These companies provide little except recruitment and billing services. If something goes wrong you can expect them to replace the freelance consultant at best. Unfortunately, estimating their rates is an exercise in futility.
Given these figures is it any wonder you can’t find qualified and capable people who will stick around when you offer $50 per hour?