The calculation method for cost of estimated hours

 

To have a cost estimation for projects and services, ITM Platform allows you to establish the cost per professional profile, used to calculate the estimated budget for a given task or project.

Professional profiles accept ranges of values. For example – A “Junior Engineer” as an employee (in-house) can have assigned a cost of $30/hr from 1 – 15 January, and then $35/hr from 16 January onwards. To estimate the cost for a task to be completed between 1 –30 January, the system will automatically multiply the assigned hours by the hourly rate, for each day. For example:

  • Task: Draw a Turbine
  • Junior Engineer Assigned: Cairo Martell
  • Total hours spent: 80hr
  • Hour distribution: Uniform, 4hr/day, 20 days
       - 1-15 January: 20hr
       - 16-30 January: 20hr
  • Hourly cost of this task:
       - 1-15 January: 20hr x $30/hr = $600
       - 16-30 January: 20hr x $35/hr = $700
           Total cost of this task = $1,300
  • Purchases for this task: $2,000
       - Total cost of this task: $3,300

To be able to perform the calculations aforementioned, each task should have a defined starting and ending date. Therefore, one would be able to determine which hourly rate should apply, based on the professional profile. Since ITM Platform allows for tasks to have neither of the two dates, the calculations will be done according to:

  • If both starting and ending dates are provided, the previous methodology will be applied, calculating the hourly cost every day.
  • If only either the starting or ending date is provided, the hourly rate of the current day will be applied on the total hours spent in a given task.
  • If neither date is provided, the standard cost at the calculation time and date will be applied on the total hours spent in a given task.

The aforementioned will also be applied to provider rates.

The calculations for estimated hour cost can be found in project list (task-list), services, tasks and activities, details in the Commitment section of each task, budget section of a given project or service, tables, P&L reports and API methods.

Other related articles: Resource Planning.