Are employee's pay factored into costs for project?

Question

Here's my story.

I started working for a new company as an interface developer, with a small team of 3, for a semi-large laboratory 2 weeks ago. When I came into the department all of their projects were being managed by either paper or excel spreadsheets. Seeing an opportunity to tidy up the project management and do some coordination in assets and resources I spoke with my director and they've offered to pay for training within Microsoft Project and Project Server to have this all setup while I manage the projects as well as do development work. I'm a developer at heart, but have always wanted to learn PM.

Being brand new to this, I want to be able to track around 40 projects a year as well as give cost analysis and reports at the end of the year to my director on the work we've done. These are strictly ROI projects as we do not make any money for doing the work, rather it's a service we provide to our clients. The individual cost of the project will be dependent on the amount of work needed, and the amount that will need to be paid out to vendors to have the software interfacing done on their end.

My question is, should employee pay be factored in to the cost of the project? They are obviously resources but knowing another employees pay rate is something that's discouraged when working for a company. If this is so, how is the best way to approach this method? IS it worth factoring this in for such a small amount of projects?

Any help on this would be greatly appreciated. Thanks!

Answer 1

No. You do not need the exact wage rate of any individual employee. You use a standard rate for the job family and labor category in which an employee resides. The base rate would cover not only the wage rate of most employees in that job family, but also a multiple to cover benefits and a margin. On top of that, the rate is furthered burdened to include overhead, administration fees, on or off premise, etc.

For example:

John is in the mid-level developer family. His wage rate is $25.00/hour. The job family's base rate might be $75/hour to include the benefits and margin. After you add the other burdens, the price rate might be $130 an hour.

Therefore, no one except who is authorized to know will know an individual's salary. People might be able to guess roughly what someone makes, but they can do that now anyways.