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merry55 (IS/IT--Management) (OP)
28 Apr 04 17:06
I need to determine how to calculate people costs for projects.  In the past we just threw everyone into a pool, subtracted vacation and personal time and then came up with an average $ per hour for projects.  I think we need a bit of refinement and would like to ask how others calculate dollars per hour?  Due to the sensitive nature of salaries  I cannot apply a particular $ amount to a specific individual.  Any thoughts?
BNPMike (TechnicalUser)
28 Apr 04 19:41
Your finance department should tell you this.

Not wishing to influence the outcome, in my experience of many companies,  the biggest difference is whether you include office occupancy ie the cost of the building, support services, your workstation and support.

I can't say for America, but in Britain I would expect to see something like £500-700 per day. Where I am now is £350 per day which is clearly too low.

PDQBach (IS/IT--Management)
29 Apr 04 18:24
Why do you want to do this?

If it is so that you can bill the costs to an external client then the product owner will tell you what rate to use.  Full stop.

If it is for internal purposes there are two numbers:  "kinda basic" and "fully laden".  "Kinda basic" is average salary plus benefits (don't waste a second trying to do this for everyone; just get a general average value -- see your project sponsor) or "fully laden" which covers _everything_ including the replacement cost of the kitchen sink.  Once again, see your project sponson.  Once again, don't calculate the number for everyone, just get a single number and use it for everyone.

And, having said that, you _might_ want to use two or three numbers depending on roles (exec, grunt, other) but it's not worth the effort in most cases if you (the company) haven't been doing it before.

Third parties will, of course, be costed at whatever rate they have contractually agreed to use.
merry55 (IS/IT--Management) (OP)
7 May 04 17:05
What I want to do with this is to begin estimating costs for projects for internal staff. External staff is not a problem because we know what the cost will be. Currently, we do not estimate using hours, we use duration ie; I think this task will take 2 months.  There was no way of knowing if the resource worked on this part-time, full time or in between.  We have to get back to planning based on hours so that we can capture true cost to the project.  A few years ago we costed all internal staff at the same rate.  My management prefers not to do this if we can come up with a better way.  The reason being that a highly technical resource earns more than an inexperienced programmer and you aren't really capturing true costs.
BNPMike (TechnicalUser)
7 May 04 17:40

Quote:

External staff is not a problem because we know what the cost will be
You might know what they invoice you, but the cost is much higher.

There is no right answer to your question. Leave it to the people who are paid to interpret it - Finance Division.

buitenhek (Vendor)
11 May 04 21:27
Merry55,

1.Ask your finance group for a flat billable rate. This way you do not need each persons actual.
2.or take actual of each and multiply each by (a) burden rate (usually 30%) and (b)then if you are to sell this time use labor markup rate (usually 60%)
3. If material is involved use a markup rate of 40%
4. Add a direct job overhead rate (exec bonus etc) of 8% and you should be near a 30 GPM.

Regards
Peter Buitenhek
Profit Developer.com

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