People

• Enter current and planned staff, and their compensation costs, perquisites, raises

• Enter cost of staff-augmentation contractors

Staffing Plan

• Define various types of staff within Budget Unit (eg, manager, admin, supervisors, senior, junior, interns, contractors); for each, enter maximum headcount (determining the staff mix)

  Key learning: What is our staffing strategy?

• Define relative productivity, specialized skills, and shifts (if relevant)

• For each staff type, set aside hours for unbillable activities

  Managers determine their "billable-time ratios" by analyzing all the critical sustenance tasks that staff must do (eg, training, product development, business development, and process improvement). Setting aside these hours means they're not available to work on the deliverables (ie, they're unbillable). This is a key driver of costs.

  Requirements: A list of the various unbillable activities to help managers remember to set aside time for each, and training in what's billable and what's not.

  Key learning: What must we do to sustain our businesses?

• Calculate compensation cost per billable hour

  Given the headcount of each staff type, its average compensation cost, and billable hours per year, the software calculates a blended compensation cost per billable hour which is applied equitably to all deliverables.

  Key learning: With the mix of employees and contractors, what does our time really cost?

  If speculative deliverables are funded and the business grows, the blended rate must be sufficient to permit hiring more contractors without losing money on their higher cost per hour.

  Requirements: A planning model (not just a cost amortization model) which anticipates growth through various planning scenarios.

Billable Hours

• For each deliverable, forecast billable hours required

  Billable hours may be entered either in total, or as billable hours per forecasted unit (productivity rate).

  These billable hours, combined with billable-time ratios, are used to forecast the needed headcount; and compensation costs is applied to each deliverable.

  Key learning: How big should our group be?

Direct and Indirect Costs

• For each deliverable, forecast direct costs

• Enter costs per unit of sending overflow work out to vendors (if planned staffing is insufficient)

  Key learning: What will we do if we can't bring on enough staff to satisfy funded demands? How do our costs compare with outsourcing?

• Forecast indirect costs

  Indirect costs (eg, tools and training, rent, vendor licenses, and other vendor services that are not project specific) must be spread across multiple deliverables within a line of business.

  Key learning: What will our external costs be? How much can we afford to invest in ourselves?

  If budgets are cut and the business must shrink, the organization must still recoup its fixed indirect costs.

  Requirements: Formulas to amortize indirect costs such that they're recouped even in the pessimistic business forecast.

• Amortize each indirect cost to the appropriate deliverables

  Indirect costs are amortized across the manager's products and services -- either all, or only those that draw on that resource.

  Requirements: Tools to amortize indirect costs to deliverables through flexible cost pools.