How to Budget an ISO 9001

Implementation Project

WHITE PAPER

Copyright 2017 Advisera Expert Solutions Ltd. All rights reserved.

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Table of Contents

Executive summary ....................................................................................................................................... 3

Introduction .................................................................................................................................................. 3
1. Benefits of using budgeting practices in an ISO 9001 implementation project ....................................... 4
2. Impact of the steps of an ISO 9001 implementation project in budget planning .................................... 5
3. Types of costs in an ISO 9001 implementation project ............................................................................ 7
4. Implementation options impacts in budget planning ............................................................................. 8
5. Tips to improve budget planning ............................................................................................................ 10
6. Verifying budget outline ......................................................................................................................... 12
Conclusion................................................................................................................................................... 13
Sample documentation templates ............................................................................................................. 13
References .................................................................................................................................................. 13

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Executive summary

Considering the costs of inefficiency and the increasing challenges to deliver products and services that
meet specified criteria and achieve customer satisfaction, more and more companies are seeking a way
to increase their quality levels. For approaching the quality improvement systematically and achieving
long-term results, the best way is to implement a Quality Management System (QMS), and ISO 9001
provides a framework that has already been recognized by the market and customers for several years.

This white paper will discuss the costs of implementing and maintaining ISO 9001, as well as the best
practices for budgeting the project, how each step in the implementation affects the budget, and what
options are at your disposal for implementing the standard together with tips to improve budget
planning.

Introduction

Over the years, ISO 9001, the leading global framework for implementation of Quality Management
Systems (QMS), has established itself as leading management system tool to ensure that products and
services meet specified criteria and the satisfaction of customers in a systematic, cost-effective way.

But, these benefits of management systems come at a cost, in terms of time, man-hours, and
organizational resources, and the better your organization knows about these costs (their sources, values,
and when they will be needed), the better the chances of achieving a successful implementation and
effective operation with minimal costs.

This papers goal is to present some aspects that an organization should consider when preparing an ISO
9001 implementation project budget, to help identify the implementation approach best suited,
considering resource availability, and three implementation options knows as On your own, Hiring a
consultant, and Do it yourself with external support (for more information, see: 3 strategies to
implement any ISO standard).

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1. Benefits of using budgeting practices in an ISO
9001 implementation project

In an ISO 9001 implementation project, you will face two main types of costs where the ability to forecast
expenses is useful:

The initial costs related to QMS implementation, where budgeting practices can help you plan and
control the projects progress, by identifying risks and opportunities related to project expenses
before they occur, so they can be properly treated to maximize the chances of project success.

The regular costs related to QMS operation, where budgeting practices applied to the project can
support the organizational budgeting process, by developing a forecast of the operational and
maintenance costs of the ISMS after implementation / certification, so the new process can be
better integrated into the business.

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2. Impact of the steps of an ISO 9001
implementation project in budget planning

In general, these are the steps that an organization should take to implement an ISO 9001 QMS, and their
influence on the project budget:

Estimated %
# Project step Influence on the budget
of overall cost

Obtain Paramount component to get the funds to start the project.

1 management Critical to ensure funds availability for the project activities
support during organizational changes and priorities changes.
5%
Establish a Minimization of losses and maximization of savings by the
2 project forecasting and treating of project costs, risks, and
structure opportunities.
The larger the scope, the greater the budget needs will be,
Define the QMS
3 in all aspects (e.g., staff, organizational resources, money,
scope
etc.).
Implement basic Although the standard requires a small number of
documentation mandatory documents, the organization may define as
4 for many documents as it deems necessary, and the greater the
management number or complexity of these documents, the greater the
system costs to develop them.
Conduct
identification 15%
and evaluation
of
The larger the scope, the more costs will have to be
product/service
allocated related to staff (outside the implementation team)
5 requirements,
that must be involved (e.g., process owners, key users,
risks, and
suppliers, etc.).
opportunities
and develop
mandatory
documents

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 Estimated %
# Project step Influence on the budget
of overall cost

At the beginning of the project these expenses are hardest

to foresee, because more reliable information comes only
Implement all
after determination of risks and opportunities and
6 processes and
requirements to be met; however, implementation
procedures
frequently involves implementation or adaptations of
current practices that must be accounted for on the budget.
50%
The more people in the scope, the more costs will be
required for training and awareness.
Perform training A diversity of areas in the scope (e.g., production,
7
and awareness marketing, HR, etc.) also demands a greater variety of
competencies to be mastered by the instructors for
effectiveness.
Project costs are associated with the monitoring, by the
Operate,
project team, of activities performed by users within the
monitor, and
8 QMS scope.
evaluate the
Additionally, this first cycle will validate the projects
QMS
forecast for the QMS running and maintenance costs.
Costs related to required corrective actions and approved 30%
Improve the opportunities for improvement identified in the QMS first
9
QMS running cycle should be considered with more care if the
organization intends to get certified.
Costs related to certification will vary according the QMS
10 Certify the QMS
scope size and chosen certification body.

For more detailed information, see these materials: Six key benefits of ISO 9001 Implementation, ISO
9001:2015 Implementation Diagram, and Checklist of Mandatory Documentation Required by ISO
9001:2015.

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3. Types of costs in an ISO 9001 implementation
project

Considering the previous section, it is possible to identify the following costs that should be taken into
account when planning or evaluating a project budget:

Personnel costs: Costs related to work of internal people involved with the project (full-time or
occasionally), considering number of required working hours and hourly rates.

Material costs: Costs related to equipment, tools, facilities, documents, software, and similar needed to
perform the work, considering leasing, renting, and purchasing conditions and item price.

Suppliers costs: Costs related to the organizations regular contractors (e.g., suppliers, transport services,
and others that already work with the organization before the project begins) that will be involved in the
project, considering number of required working hours and contractual situation.

Services costs: Costs related to external trainings, consulting, and certification services required to
support the project, considering the benefits of getting external assistance, price of service, and frequency
of use. Note that some of these costs may become permanent (e.g., certification services and specific
trainings on quality management and legal issues).

Depending on the implementation solution adopted, some cost sources may become saving sources, as
will be shown in the next section.

For more detailed information, see this article: What are the biggest challenges while setting up an ISO
9001-based QMS, and how do you overcome them?

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4. Implementation options impacts in budget
planning

The possible alternatives an organization has to implement a project, as stated at the beginning of this
paper, are:

On your own: you use only the knowledge and the capacity of your own employees.

Hiring a consultant: you hire an expert from outside who has experience with the implementation
of the standard.

Do it yourself with external support: your employees are doing the implementation, but they get
resources (e.g., document templates, checklists, etc.) and support (e.g., orientation on specific
issues) from an external party.

All these options are basically a relative trade-off between cost (in money and human resources), time,
risks, and opportunities:

Implementation
Cost Time Risks Opportunities
option

Generally, takes
Errors and Increases staff
the longest time
The cheapest mistakes may commitment
(maybe there is
alternative (you prove more (they are
Do it on your own no full-time team
already have the HR expensive than developing and
for the project or
resources). getting external implementing
they have to learn
assistance. the QMS).
on the fly).
The most expensive
Generally, takes Internal
alternative Knowledge
Hiring a the shortest time information is
(knowledge and transfer to staff
consultant (if you hire a good open to
experience are costly (learn by seeing).
consultant). outsiders.
resources).
A compromise Somewhere in Internal
between do it on between do it on demands may Better
Do it yourself with your own and your own and overwhelm knowledge
external support hiring a consultant hiring a staffs capacity transfer to staff
(documents and consultant (if the to work on the (learn by doing).
knowledge provided project team has project, even

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 Implementation
Cost Time Risks Opportunities
option

by external support sufficient time to with external

can save you time devote to the support.
and effort in some project).
activities).

The important thing here is, if you realize savings in cost, these savings are being paid by increasing
something else (time or risks).

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5. Tips to improve budget planning

As you work on elaborating or evaluating a budget, the following questions, covering main cost types,
should be considered for budget inputs:

Human resources

Are there people in my team with project management backgrounds?

Are there people in my team with experience in similar projects?

Are there people in my team who can assume responsibility for the QMS after
implementation?

How much time will be required for information security issues, during and after the project,
and what will be demanded from the person responsible?

Instead of a consultant for the project, should I hire a security professional to take care of the
project and the following QMS operation?

For more information about these issues, see:

How to choose a project manager for your ISO 9001:2015 implementation

Choosing the best person for the job of quality management representative

What is the job of the Quality Manager according to ISO 9001?

Material resources

Can previous projects in my organization give insight into the development of QMS
documents (e.g., policies and procedures)?

Can books, videos, and magazines about quality management also provide good references
to my project team and employees?

Note: You should at least consider buying the ISO 9001 standard.

Service resources

Which quality system trainings (e.g., foundations, internal auditor, etc.) can be performed by
my project team if they have enough knowledge, and thereby save costs on external training?

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 With proper training of my staff, could we contract external support only to deal with more
complex quality issues, and thereby save costs on dealing with common issues by ourselves?

For more information about this issue, see:

List of questions to ask your ISO 9001 consultant

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6. Verifying budget outline

When evaluating a budget, one of the most important things you have to do is ensure the quality of the
data used to prepare the budget. A budget is an estimate, and the less information you can find to support
the budget, the more worried you should be.

But, there are levels of concern regarding what you know. In some cases, the lack of information is caused
simply by the projects current phase for example, at the projects very beginning, or immediately after
change requests. How can you estimate costs without a well-defined scope? How can you know how
much QMS implementation will cost without the information provided by risk assessment? How do you
know how much a change request will cost without a scope analysis?

In this situation, instead of trying to come up with a precise value, you should consider in what range it
might be, and you can use the following table to guide you:

Reliability level of the information used for budget planning Range budget amount variation

You have only general industry statistics. -25% to +75%

You have data from similar projects / change requests. -30% to +50%

You have preliminary data about the project / change request. -20% to +30%

You have detailed data about the project / change request. -15% to +20%

For example, if you receive a budget value of $20,000 based only on industry statistics, you may expect
that the final cost of the project will be between $15,000 and $35,000.

This information wont resolve your budget reliability problem, but at least it will give you some
perception about what needs to be done to put the budget back on track.

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Conclusion

All effort spent to meet a project deadline and users needs may be useless if cost overruns exceed the
added value. This situation makes a project budget a critical component to facilitate value creation and
preservation.

By forcing the people involved to look ahead, plan, and coordinate efforts, the budget planning can help
identify risks and opportunities that can be treated to keep the project under control. But, even the best
planned budget will be only as good and as reliable as the information you consider.

The information presented in this paper, related to an ISO 9001 implementation project, can help an
organization to better understand required investments and potential expenses, improving its capability
to better allocate personnel, technical, and other resources, greatly improving chances to be successful
in such a project.

Sample documentation templates

Here you can download a free preview of the ISO 9001 Documentation Toolkit in this free preview, you
will be able to see the Table of Contents of each template, as well as a few sections from each document.

References

9001Academy

PMI (2012) A Guide to the Project Management Body of Knowledge, 5th Ed

http://www.pmdocuments.com/project-execution/

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