+ MANAGING PROJECT COSTS 103 cost estimates, get more business, and make more profits, and your company can grow. Creating a Chart of Accounts A chart of accounts is a menu of the services and materials that you offer for sale--the categories of work that your company does. For example, a Web designer might create static HTML sites, Flash sites, blog templates, and even logo designs. Each category would have an associated cost element: a cost per hour, cost per Web page, or cost per logo. When a project is proposed, the de- signer can see what elements are to be included and quickly cre- ate an estimate based on the chart of accounts. There are two ways to create this chart. The preferred method is based on past performance. If you have records of what things have cost in the past, you can create a chart of ap- proximately what these things, type of work, and labor will cost in the future. Another approach is to create a chart of what you're going to charge to do certain types of work. You can use your favorite spreadsheet program to create the chart of accounts that you'll use to build quotes for clients. The system can be as complex as you like, although simpler is usually better. Within the chart of accounts, it's a good idea to base the quote on your costs first and then use a percentage that represents your profit margin--how much you'll mark up the work. This gives you some negotiating room for projects that you really want to win. You know exactly what it's costing your company to do the project work, what you'll make from doing the project, and what your profit margin is. Through negotia- tions with your client, you can adjust your profit margin rather American Management Association · www.amanet.org