Industry Average Day Rates and starting a business case

During a recent business planning session, I had to calculate the net benefit of our solution in rough - getting ready for me to create a formal board-ready business case that we can use in the programme.

I used a market trends website for job salary comparison in London/UK as below - working with the typical (and expected) understanding that cost to a business is approximately double the salary band of the employee - I worked out a table as below: (values in UK pounds)

Sub-sector	Salary/year	Cost to business
Desktop Support	£26,300	£52,600
Technical  Author	£35,250	£70,500
Project Manager	£44,000	£88,000
Developer	£31,825	£63,650
Consultant	£43,875	£87,750
Database  Administrator	£27,500	£55,000
Database  Developer	£31,000	£62,000
Helpdesk	£19,625	£39,250
Systems  Manager	£42,075	£84,150
Marketing	£34,750	£69,500
Network  Security	£42,220	£84,440
Software  Developer	£30,650	£61,300
Systems  Testing	£33,275	£66,550
Telecoms  Engineer	£32,275	£64,550

Next I needed the average working year in hours - in Western Europe  and the US, this is as below:

Full year (no leave)
Work hours -- 2,088
Work week -- 52.2
Work days --  261

Full year (with leave)
Work hours -- 1,928
Work  week -- 48.2
Work days -- 241

Combining the two, assuming a full time employee (FTE) you can calculate the following: (US $ rate to UK £ = x1.5)

Sub-sector	Salary/year	Cost to business	Day Rate Cost to Business	Day Rate Cost to Business ($)
Desktop   Support	£26,300	£52,600	£218.26	$331.75
Technical   Author	£35,250	£70,500	£292.53	$444.65
Project   Manager	£44,000	£88,000	£365.15	$555.02
Developer	£31,825	£63,650	£264.11	$401.44
Consultant	£43,875	£87,750	£364.11	$553.44
Database   Administrator	£27,500	£55,000	£228.22	$346.89
Database   Developer	£31,000	£62,000	£257.26	$391.04
Helpdesk	£19,625	£39,250	£162.86	$247.55
Systems   Manager	£42,075	£84,150	£349.17	$530.74
Marketing	£34,750	£69,500	£288.38	$438.34
Network   Security	£42,220	£84,440	£350.37	$532.57
Software   Developer	£30,650	£61,300	£254.36	$386.62
Systems   Testing	£33,275	£66,550	£276.14	$419.73
Telecoms   Engineer	£32,275	£64,550	£267.84	$407.12

From this you can start to prepare a business case - for example, in the project I was working on, we worked out that we can take 15 people per year out of the provisioning process - they are equivalent to system managers and engineers (about $500 per day) - average days per year = 241, so you get 15x$500 = $7500x241 = $1,807,500 per year in costs.

That is the start of a business case - next you need to start looking at hurdle rates and all that jazz!

Ok, so these calcs work off a year including leave - not everyone does that - you may need to work it out over a full year = 261 days. This will reduce the rates above, but we are trying to build a strong case so need  day rates that reflect reality - its your call with the business case, but make sure that the business managers agree.

After that you can start working on the real case if the above indicates that it might work for the company you are helping. Working a board ready business case is more complex and involves quite a bit more planning and work - I've spent a long time working with a team of people to create a full Business Discovery Methodology that allows you to create a board ready business case with evidence and science behind it.