Converting Unit/Cost Saving to Monetary Values

[victory1972]

Hi All,

Firstly, thank you for taking the time to help me out. Below is the problem.

We are implementing a new software solution at work which will be used by all workers in the organisation. The software will save 20mins/person/day in terms of productivity. There are 220 work days this calendar year. Our work days are composed of 7.20hrs/day. There is a total of 250 people in the organisation. The total annual pay cost budget (for all 250 people) is £20mln and total daily pay cost budget is £5mln.

How much is being saved in monetary values (using budgeted pay costs) per year due to the time savings (e.g. 20min/person/day)?

Thanks.

 

[mmm4444bot]

What have you tried or thought about, so far? :cool:

 

[stapel]

We are implementing a new software solution at work which will be used by all workers in the organisation. The software will save 20mins/person/day in terms of productivity. There are 220 work days this calendar year. Our work days are composed of 7.20hrs/day. There is a total of 250 people in the organisation. The total annual pay cost budget (for all 250 people) is £20mln and total daily pay cost budget is £5mln.

How much is being saved in monetary values (using budgeted pay costs) per year due to the time savings (e.g. 20min/person/day)?

How many people are there? (It's in the exercise.)

How many man-hours of work do they produce in one day? (Multiply the number of persons by the number of hours per person for one day.)

How many work days are there in a year? (It's in the exercise.)

So how many total man-hours of work do the employees produce in one year? (Multiply the per-day man-hours by the number of days in a "year".)

What is the annual payroll budget? (It's in the exercise.)

So how much is being paid, per man-hour? (Divide the yearly payroll total by the yearly man-hour total. This is the current per-hour rate.)

Now repeat the first four steps, but this time, assume that each person will be working twenty fewer minutes per day (or 1/3 hour less).

Multiply the new number of total man-hours of work for the year by the current per-hour rate. Assuming that people take off twenty minutes earlier, with the exact same amount of work having been done, the difference in the new value and the current value is how much will be saved from payroll.

If you get stuck, please reply showing your thoughts and reasoning so far. Thank you!