PROJECT MANAGEMENT 101 AT WESTON & SAMPSON
MODULE 1 · WEEK 1
What a Pursuit Costs
The Town of Millbrook issues RFP 26-014. Our firm decides to pursue it. Three technical staff spend time on the proposal, and all three had billable work available in the same two weeks.
Suppose this was a pursuit our firm should have declined. What did it cost?
What is given
- Technical salary
- $72,800 a year, the figure Module 0 works
- Working hours in a year
- 2,080
- Overhead rate
- 1.85
- Target ELM
- 3.30
- Billable work available
- Yes, for all three technical staff, in the same two weeks
Round to the whole dollar. Hours are exact.
Step 1The hours at risk
Written Lesson, Sections 1.1.2 and 1.1.3.3
Proposal hours are indirect labor. Our firm pays for them and bills none of them. The hours that cost our firm something are the hours of people who could have been doing billable work instead.
| Solicitation | 26-014, CRA Infrastructure Improvements, Cypress Landing East (CLE) Public Utilities Renewal (TownPUR) Project, RFP (CCNA) |
|---|---|
| Notification date | 08 September 2026 |
| Pre-proposal conference | 15 September 2026, 10:00 A.M. |
| Written questions close | 18 September 2026, 5:00 P.M. |
| Opening date and time | 29 September 2026, 2:00 P.M. |
A non-mandatory pre-proposal conference will be held September 15, 2026 at 10:00 A.M. local time.
Five entries were charged to the pursuit. Two of them are not hours of our own technical staff who had billable work available.
Tick the entries that belong in the total. The number fills in below.
How many hours of billable capacity did the pursuit consume?
Two tries. After the second the page shows the worked solution and carries the correct value forward.
Count only our own technical staff who had billable work available.
24 + 10 + 6 = 40 hours
The subconsultant's 12 hours are the subconsultant's cost. Marketing's 30 hours are already indirect labor, so no billable hour is displaced by them.
Step 2The first cost, the salary our firm paid
Written Lesson, Section 1.1.3.1. Method from Module 0, Section 0.2.3.
Our firm paid these people for the time whatever the outcome. That salary moves into overhead, where every project carries a share of it.
Technical salary $72,800 a year, across 2,080 working hours.
Unit hourly salary cost = $72,800 ÷ 2,080 = $35.00
What did our firm pay in salary for those hours?
Two tries. After the second the page shows the worked solution and carries the correct value forward.
Hours times the unit hourly salary cost.
40 × $35.00 = $1,400
None of it is billed. It lands in overhead.
Step 3The second cost, the work those hours did not do
Written Lesson, Section 1.1.3.1. Method from Module 0, Sections 0.2.2 and 0.2.3.
The same hours could have been charged to a project. At the target ELM each hour of salary cost is meant to produce $3.30 of Net Revenue.
$35.00 unit hourly salary cost × 3.30 target ELM = $115.50, the billing rate at the target ELM.
At breakeven the same hour bills at $35.00 × 2.85 = $99.75.
How much Net Revenue did our firm not earn?
Two tries. After the second the page shows the worked solution and carries the correct value forward.
Hours times the billing rate at the target ELM.
40 × $115.50 = $4,620
The $1,400 of salary sits inside the $4,620, because the billing rate is built to recover salary first. The other $3,220 is the overhead recovery and the profit those hours did not earn. Adding $1,400 and $4,620 to reach $6,020 counts the salary twice.
What the pursuit cost
Forty hours. $4,620 of Net Revenue our firm did not earn, with $1,400 of salary inside it that moved into overhead.
At the target ELM, $4,620 of Net Revenue would have carried $1,400 of direct labor, $2,590 of overhead, and $630 of project profit.
A pursuit our firm should have declined does not cost the proposal hours. It costs what those hours would have earned.
That is why the Go/No-Go decision comes before the hours are spent, and not after.