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INFORMATION TECHNOLOGY SERVICES SCALE OF PROFESSIONAL CHARGES PRESENTED BY: ABIMBOLA SALAKO, Ph.D., FNCS, C.itp.

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Presentation on theme: "INFORMATION TECHNOLOGY SERVICES SCALE OF PROFESSIONAL CHARGES PRESENTED BY: ABIMBOLA SALAKO, Ph.D., FNCS, C.itp."— Presentation transcript:

1 INFORMATION TECHNOLOGY SERVICES SCALE OF PROFESSIONAL CHARGES PRESENTED BY: ABIMBOLA SALAKO, Ph.D., FNCS, C.itp

2 BACKGROUND AND HISTORY 1.Olayinka/Aghanenu – June Uwaje – May RR&C Comm. – Mar Members Input – Aug Council Final Approval – Mar. 2011

3 NEED FOR SCALE OF CHARGES  To aid in the regulation and control of IT practice  To promote growth in IT practice  To provide a uniform standard in conformity with those established by other professional bodies  To provide benchmark for project cost estimation and project planning  To safeguard the financial interest of both IT practicianers and their clients  To provide a standard for dispute resolution

4 Scope of Coverage All consulting services in IT Corporate Organizations Individual Consultants Long and Short-term Projects Exclusions: Purchase or Lease of project materials Consultant’s Reimbursable Expenses

5 KEY AREAS OF IT CONSULTING SERVICES 1.IT POLICY AND ARCHITECTURE PLANNING 2.HARDWARE INTEGRATION & MAINTENANCE SERVICES 3.NETWORKING 4.SOFTWARE 5.SOFTWARE FUNCTIONALITY AND INTEGRITY TESTING

6 Consulting Services Contd. 6.INFORMATION SYSTEMS PROJECT MANAGEMENT 7.SYSTEMS CONSULTING 8.SYSTEMS AUDIT/QUALITY ASSURANCE 9.IT CAPACITY BUILDING

7 Scale of Professional Fees  Rate or Percentage-Based Charges  Consultant as Lead Consultant  Consultant as participating Consultant  Time or Duration-Based Charges

8 Information Technology and System Consultant Categories Information Technology and System Consultant Categories Consultant GradeProfessional Cadre Professional Experience (Years) WORK POSITION Typical Private Sector Designation Public Sector Equivalent 1Principal ConsultantFellow Over 15 years CEO, COO, CTO Permanent Secretary 2Lead ConsultantFellow10-15 YearsDirector/GMDG (G17) 3Senior ConsultantMember8-10 years DGM, AGM, Senior Manager G12 – G15 (G14) 4ConsultantMember5-8 years Manager, Senior Technologist G10 – G13 (G12) 5Associate ConsultantAssociate Member3-7 years Asst. Manager, Senior Technologist, Technologist G8 – G10 (G9) 6Technologist Less than 5 Years Asst. Technologist G7 – G8 (G8) 7Technical/Intermediat e Staff Technical Staff /Artisan Less than 5 Years Technical StaffG4 – G7 (G6)

9 Proposed level of Professional Managers for IT and Systems Projects Project Value (Naira) Project Size Minimum Consultant Grade of Project Manager 1Less than 50millionSmallAssociate 250 – 200 millionMediumMember 3Above 200 millionLarge/Very Large Fellow

10 PROFESSIONAL CHARGES FOR CONSULTANT AS PRIME CONSULTANT PROJECT COST (N) CUMMULATIVE Project Cost FEES PAYABLE AS A PERSCENTAGE OF COST OF PROJECT Up to 10 millionUp to N10 million6.0% Next 20 million or part thereof Up to N30 million5.50% Next 20 million or part thereof Up to N50 million5.25% Next 50 million or part thereof Up to N100 million5.00% Next 100 million or part thereof Up to N200 million4.50% Next 100 million or part thereof Up to N300 million4.00% Next 200 million or part thereof Up to N500 million3.75% Balance over 500 millionOver N500 million3.50%

11 SCALE OF FEES FOR OTHER PARTICIPATING CONSULTANT (I.E. EXCLUDING PROJECT MANAGEMENT) PROJECT COST (N) CUMMULATIVE Project Cost FEES PAYABLE AS A PERSCENTAGE OF COST OF PROJECT Up to 10 millionUp to N10 million5.00% Next 20 million or part thereof Up to N30 million4.50% Next 20 million or part thereof Up to N50 million4.25% Next 50 million or part thereof Up to N100 million4.00% Next 100 million or part thereof Up to N200 million3.75% Next 100 million or part thereof Up to N300 million3.50% Next 200 million or part thereof Up to N500 million3.25% Balance over 500 millionOver N500 million3.00%

12 FEE DISTRIBUTION TO CONSULTANTS PROJEC T COST (N) CUMMU LATIVE Project Cost FEE % For Prime Consultant OTHER CONSULTANTS Max Fee % if all Consulta nts are engaged Hard- ware Net- working System Audit Capacity Building Up to 10 million Up to N10 m 6.0%4.00% 22% Next 20 million Up to N30 m 5.50%3.75% 20.50% Next 20 million Up to N50 m 5.25%3.50% 19.50% Next 50 million Up to N100 m 5.00%3.25% 18.00%

13 Contd. Next 100 million Up to N200 m 4.50%3.00% 16.5% Next 100 million Up to N300 m 4.00%2.75% 15.00% Next 200 million Up to N500 m 3.75%2.50% 13.75% Balance over 500 million Over N500 m 3.50%2.25% 12.50%

14 FEE DISTRIBUTION TO CONSULTANTS PROJECT SIZE PROJECT COST (N) Prime consultant (Software or Other) OTHER CONSULTANTS Max Fee % Hard- ware Net- working System Audit Capacity Building Small Project million Up to N50 m 5.25%- 6.00% 3.50% % 12.50% % Medium Size Project Up to N200m 4.50 – 5.25% 3.00% -3.25%3.00% % 10.50% % Large Project Up to N500m 3.75%- 4.50% 2.50%-3.00% 8.75% % Very Large Project Over N500m 3.50%- 3.75% 2.25% % 8-00%- 8.75%

15 CATEGORIES OF CONSULTANTS IT CONSULTANTPUBLIC SERVICE EQUIVALENT A – Principal ConsultantPermanent Secretary B – Lead / Senior Consultant D.G/Director C – Consultant/AssociateAsst./Deputy/Chief Engr. D – Technologist/Tech. Officer Technologist/Tech. Officer

16 Category A – Principal Consultants AA top practitioner whose expertise is nationally or internationally recognized and who provides advice at a level of specialization where such advice is recognized as that of an expert.

17 Category B - Lead/Senior Consultant  A partner, sole proprietor, director, or member of a private consulting practice, who takes full responsibility for the liabilities of such practice, performs work of a conceptual nature in Information Technology System design and development, provides strategic guidance in planning and executing a project and/or carries responsibility for quality management pertaining to a project.

18 Category C - Consultant/Associate AAll professional staff of a private consulting practice performing work of an Information Technology System nature and who carry the direct technical responsibility for one or more specific activities related to a project. A person referred to in Category A or B may also fall in this category if such person performs work of an Information Technology and Information System nature at this level.

19 Category D – Technologist/Tech. Officer AAll other technical staff of a private consulting practice performing work of an Information Technology System nature under the direction and control of any person contemplated in Categories A, B or C

20 Parameters Affecting Man-Month Rates (ACEN) S/N.DESCRIPTION 1.Working Hours 2.Basic Salary Cost of Staff 3.Social Costs 4.Company Overheads 5.Fee Component Costs

21 Working Hours  8 Hours in a day  20 Days in a month  10 Months in a year

22 Basic Salary Costs S/N.DESCRIPTION 1.Annual Salary 2.Annual Bonus 3.Leave Pay

23 Social Costs S/NDESCRIPTION 1.Pension/Gratuity 2.Medical Benefits 3.Insurance 4.Leave Allowance

24 Social Costs Contd. 5.Housing 6.Transport 7.Time-Off for illness 8.Statutory Levies

25 Company Overhead Costs S/NDESCRIPTION 1.Admin. & Support Staff Salary Costs 2.Office Accommodation 3.Finance Costs 4.Office Equipment 5.Stationery & Consumables

26 Company Overhead Costs Contd. 6.Insurance 7.Communication Costs 8.Marketing & Business Development 9.Training & Professional Development

27 Company Overhead Costs Contd. 7.Communication Costs 8.Marketing & Business Development 9.Training & Professional Development 10.Provision for Loss of Productive Time

28 Company Overhead Costs Contd. 11.Non-Recoverable Project Expenses 12.Transport 13.Other Costs (e.g. Head Office)

29 Fee Component Costs  Contingencies  Interest on Capital  Responsibility  Profit

30 Calculation Of Time Based Fees (ECSA)  Total Cost of Employment of the person  Available working hours  A factor to make allowance for overhead costs  An utilization or productivity factor to distinguish between chargeable, and non-chargeable time  An allowance for profit

31 Calculation of working Hours per Year ITEMDAYS Days in the year365 Weekends – 2 x 52Deduct 104 days Public HolidaysDeduct 13 days Annual LeaveDeduct 30 days Sick LeaveDeduct 8 days Other LeavesDeduct 10 days Total work days220/Year

32 Working Hours Contd. Work year10 months Work month20 days Minimum hours / day8 hours Total available hours / year1760

33 Calculation of Overhead Factor (Exclusive of Profit) DESCRIPTIONFACTOR Salaries (total cost of employment) of fee- earning staff i.e. professional/technical staff 1.00 Salaries of non-fee-earning staff, i.e. administrative staff salaries 0.34 Telephone and communication0.05 Rental of premises, including electricity, water and taxes 0.13 Transport (not covered directly from projects)0.05 Paper, stationery consumables0.03

34 Overhead Factor Contd. Audit, bank charges, interest, insurance0.08 Marketing0.02 Office equipment0.06 Training and development0.02 Project direct expenses not recoverable0.08 Other (i.e. Head office expenses) – could vary widely 0.24 Net overhead factor (before markup for profit)2.10

35 UTILIZATION FACTOR Category Utilization Short TermLong Term A A,B, C D 0.95

36 Composite Factor Composite Factor = (Overhead Factor * Time worked * Mark-Up) / (Utilization Rate)

37 Long Term Hourly Fees Based on Public Sector Consolidated Salary 2010 Consultant Grade Professional Cadre Public Sector Consolidated Salary Com posit e Fact or Rate Per Hour (N) Rate Per Day (N) Rate Per Month (N) Principal Consultant Fellow 1,566, , , ,953, Lead Consultant Fellow 453, , , , Senior Consultant Member 196, , , , ConsultantAssociate 136, , , Associate Consultant Sub Professional 109, , , Technologist 80, , , Technical Staff/ Intermediate Staff Technical Staff /Artisan 64, , ,984.75

38 Short Term Hourly Fees Based on Public Sector Consolidated Salary 2010 Consultant Grade Professional Cadre Public Sector Consolidated Salary Com posit e Fact or Rate Per Hour (N) Rate Per Day (N) Rate Per Month (N) Principal Consultant Fellow 1,566, , , ,101, Lead ConsultantFellow 453, , , , Senior Consultant Member 196, , , , ConsultantAssociate 136, , , Associate Consultant Sub Professional 109, , , Technologist 80, , , Technical Staff/ Intermediate Staff Technical Staff /Artisan 64, , ,899.23

39 Factors for Revision of Scale  Socio – Economic Changes  Cost of Living  Government Regulations

40 References 1.Department of Public Service and Administration – January 2003 Guide on Hourly for Rates for Consultants 2.Ministry of Works and Housing, Lagos. Revised Edition Professional Scale of Fees for Consultants in the construction industry. 3.Federal Republic of Nigeria Official Gazette Certain Political Public and judicial office (salaries and allowances etc (Amendment) Act, National Salaries, Income and Wages Commission Circular, 1 st July, 2010 SWC/S/04/VIII /313

41 References Contd. 5.National Salaries, Income and Wages Commission Circular, 1 st July, 2010 SWC/S/04/VIII /298 6.Revenue Mobilization Allocation Fiscal Commission Monetization policy in The Association of Consultancy Engineers In Nigeria Standard conditions of engagement for Consultancy Engineers in Nigeria 8.The Institute of Chartered Accountants Of Nigeria Scale of Professional Fees

42 Web Search NO.Website Address 1.http://www.ican-ngr.org/documents/SCALEhttp://www.ican-ngr.org/documents/SCALE OF PROFESSIONAL FEES. doc. Accessed on June 8, http://openlibrary.org//books/DLhttp://openlibrary.org//books/DL M/itemised Scale of Professional charges for Quantity Surveying Service for Civil Engineering Works. Accessed on June 8, a/documents/ framework to Determination of Professional fees. Doc. Accessed on June 8, http://www.dpsa.gov.za/g2g/dpsa-old/documents/gics/consultant%20fees%20.Jan pdf. Accessed on June 8, 2010.

43 END Thank You. Abimbola Salako, Ph.D., FNCS, C.itp


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