Many shift patterns are determined by a Cash Budget.
How does one optimise a shift pattern to cost a precise amount?
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Decision Making Based on Cash Budgets
Combining Optimised Shift Working & How Much They Cost
How To Determine an Hourly Rate.It is first necessary to determine the cost of employees as an hourly rate. The accuracy of the hourly costs determines the accuracy of the budget and how much it can be controlled or reduced, and this can be as accurate as you like.
All employees incur a direct cost and an indirect cost. The cost elements that go into these direct and indirect costs can be determined by various methods, but the table below shows many of the costs involved. The values given to the costs are for you to determine from your company accounts, but some idea of how to do this is also included below.
C-DESK
Cash Budgets & Shift Patterns
What is Budgetary Control?
VisualrotaX gives you the opportunity to cost out the labour element of running your organisation to as exact a figure as you like. This is done by giving a cost to each hour worked. VisualrotaX converts all shifts into hours paid, and also into the cost of every persons shift. Each person can be costed separately, or in groups, or totals daily or periodically. VisualrotaX has the power to tell management the cost of every employee in as much detail as they would like - immediately. Update a roster and the cost, or saving, is shown immediately.
Execute 'What if' analyses to find the different costs
VisualrotaX gives you the opportunity to cost out the labour element of running your organisation to as exact a figure as you like. This is done by giving a cost to each hour worked. VisualrotaX converts all shifts into hours paid, and also into the cost of every persons shift. Each person can be costed separately, or in groups, or totals daily or periodically. VisualrotaX has the power to tell management the cost of every employee in as much detail as they would like - immediately. Update a roster and the cost, or saving, is shown immediately.
Execute 'What if' analyses to find the different costs
DIRECT & INDIRECT COSTS Hourly wage rate * Employers Taxes * Company Pension * Holiday pay * Bank Holidays * Sick pay * Maternity pay * Uniforms Training * Supervision * Health & Safety * Signs * Car Parking * Gardening * Cleaning * First Aid * Fire Prevention * Electricity * Gas * Telephone Equipment Rates * Maintenance * Repairs * Decorating * Bank Interest * Petrol * Car tax * Vehicle expenses * Taxi's * Transport * Removals * Offices * Handover periods Meetings * Advertising jobs * Interviewing * Books * Periodicals * Food & Drinks * Holiday Cover * Insurance * Board of Directors.
Hourly rates are the simplest to use, everyone who is paid an hourly rate will use a simple relationship such as £10 per hour, so that for every hour that the person is on the premises and working, they will receive £10. This value of £10 can be input into Visual Rota without amendment.
Salaries can be inaccurate if translated to £/hour, with an error of rate of 10-15%, unless it is done carefully. For example, a person working 40hrs/week translates into about 40x52=2080 hrs/year. Hence a person on £20,000pa could translate into £9.6154/hr. This ignores the extra day every year, 2 in leap years, which could occur in 5 years out of every 7, which equates to a reduction of about 0.3% or for our example £0.0288. Another way to look at these numbers is to multiply £20,000 by 0.3%, answer = £60 per annum per employee, and 100 employees makes for £6000 extra profit. So, where does the error of 10-15% come from? Almost all employees have paid holidays, and if a typical holiday was 5 weeks (25 days at 8hrs/day) plus 8 bank holidays, this equals a paid leave of 33 days out of 227 contract days, or 14.5%. In addition almost all employees have days off sick and these can be paid for or not paid for, also almost all employees arrive late at some time, or leave early at other times. All the above, and other types of paid leave (Compassionate, etc) is specific to each establishment, but can be costed fairly and accurately using past data and averaging out. For example, if a company has 33 days holidays including bank holidays a year, an average 3 days sick leave per employee and an average 5% lateness rate of 15mins, translates a salary of £20,000pa to £11.185/hr an increase of 16.3%. This type of exercise can ascertain the main expenses or detail all the expenses to the accuracy you desire. It is always worth going through the exercise to eliminate uncertainties.
Indirect costs to do with space and area.
Every establishment has a building and some of the building will be for staff use only, such as toilets, rest rooms, laundry, stock rooms, staff dining etc. . A numerical fraction of the building can be determined for staff use.
Indirect costs to do with each staff member.
These costs are split into 2 sectors, those costs proportional to hours worked and costs irrespective of hours worked. The decision is often judgmental, and at different times can be assessed differently.
Costs proportional to hours worked are those such as holiday pay, maternity pay, supervision, meetings.
Costs irrespective of hours worked are those such as uniforms, training, cleaning, employee insurance, rates.
Method of converting indirect costs to an hourly rate of pay. First, the items listed above can be obtained from the accountancy reports and the cost for a period such as one year. For instance, electricity. The cost of this is judged to be proportional to the area of the building and proportional to the hours worked. The relevant data is; electricity costs £10,000pa, staff area ratio 25% of total building area, staff hours total to 100,000hrs/year. This data converts to an hourly rate of 2.5p/hr.
Second instance, employee insurance. The cost of this is judged to be proportional to the number of employees. The relevant data is; cost of insurance £1,000pa, number of employees is 100, Mr Smith works 20hrs/week, Mr Jones works 35hrs/week. This data converts to an hourly rate for Mr Smith 1.0p/hr and Mr Jones 0.55p/hr.
There will always be tiny amounts involved as well as the large amounts such as pay, it is just that there are dozens of the tiny amounts and they all build up. Even if you disregard the sums eventually, the reason why you disregarded them was because you had factual evidence that they were not relevant to your costs.
Hourly rates are the simplest to use, everyone who is paid an hourly rate will use a simple relationship such as £10 per hour, so that for every hour that the person is on the premises and working, they will receive £10. This value of £10 can be input into Visual Rota without amendment.
Salaries can be inaccurate if translated to £/hour, with an error of rate of 10-15%, unless it is done carefully. For example, a person working 40hrs/week translates into about 40x52=2080 hrs/year. Hence a person on £20,000pa could translate into £9.6154/hr. This ignores the extra day every year, 2 in leap years, which could occur in 5 years out of every 7, which equates to a reduction of about 0.3% or for our example £0.0288. Another way to look at these numbers is to multiply £20,000 by 0.3%, answer = £60 per annum per employee, and 100 employees makes for £6000 extra profit. So, where does the error of 10-15% come from? Almost all employees have paid holidays, and if a typical holiday was 5 weeks (25 days at 8hrs/day) plus 8 bank holidays, this equals a paid leave of 33 days out of 227 contract days, or 14.5%. In addition almost all employees have days off sick and these can be paid for or not paid for, also almost all employees arrive late at some time, or leave early at other times. All the above, and other types of paid leave (Compassionate, etc) is specific to each establishment, but can be costed fairly and accurately using past data and averaging out. For example, if a company has 33 days holidays including bank holidays a year, an average 3 days sick leave per employee and an average 5% lateness rate of 15mins, translates a salary of £20,000pa to £11.185/hr an increase of 16.3%. This type of exercise can ascertain the main expenses or detail all the expenses to the accuracy you desire. It is always worth going through the exercise to eliminate uncertainties.
Indirect costs to do with space and area.
Every establishment has a building and some of the building will be for staff use only, such as toilets, rest rooms, laundry, stock rooms, staff dining etc. . A numerical fraction of the building can be determined for staff use.
Indirect costs to do with each staff member.
These costs are split into 2 sectors, those costs proportional to hours worked and costs irrespective of hours worked. The decision is often judgmental, and at different times can be assessed differently.
Costs proportional to hours worked are those such as holiday pay, maternity pay, supervision, meetings.
Costs irrespective of hours worked are those such as uniforms, training, cleaning, employee insurance, rates.
Method of converting indirect costs to an hourly rate of pay. First, the items listed above can be obtained from the accountancy reports and the cost for a period such as one year. For instance, electricity. The cost of this is judged to be proportional to the area of the building and proportional to the hours worked. The relevant data is; electricity costs £10,000pa, staff area ratio 25% of total building area, staff hours total to 100,000hrs/year. This data converts to an hourly rate of 2.5p/hr.
Second instance, employee insurance. The cost of this is judged to be proportional to the number of employees. The relevant data is; cost of insurance £1,000pa, number of employees is 100, Mr Smith works 20hrs/week, Mr Jones works 35hrs/week. This data converts to an hourly rate for Mr Smith 1.0p/hr and Mr Jones 0.55p/hr.
There will always be tiny amounts involved as well as the large amounts such as pay, it is just that there are dozens of the tiny amounts and they all build up. Even if you disregard the sums eventually, the reason why you disregarded them was because you had factual evidence that they were not relevant to your costs.
Hourly Rate or Salary.
Salary Conversion to Hourly Rate
Articles on Creating Shift Patterns
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AJ Barr
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Cosmote
AJ Barr