Man-hours, also called person-hours, are the unit of measure that is used in project management to measure the efforts needed to complete a task.
1 man hour = work completed in an hour of uninterrupted effort by an average worker.
Calculating man hours is the basis for being able to measure the cost per project of each type of expert and his contribution to the result.
The total man hours per task is obtained by multiplying the number of people assigned to a task by the total time it takes to complete it.
Let’s say, for example, that 15 workers at a metal plant and devote 10 workdays to complete an order of 800 product units.
Estimating 6 working hours per day, the total man hours is obtained from multiplying the following:
15 x 10 x 6 = 900 hours
Therefore, productivity is equal to 800/900 = 0.89 units per hour. As we know with the cost of man-hours, it is easy to calculate how the labor force contributes to the unit cost and the profitability of the product line.
In addition, this ratio can be taken as a starting point for measuring productivity improvements, introducing new processes and cutting costs.
However, in a more complex project it would also be necessary to consider that the cost of man-hours is variable, depending on the professional category to which it corresponds.
Not all team members cost the same
A requirement to be able to calculate the total labor cost of the project is to consider different hourly rates for each professional category. In an IT project, for example, it will not cost the same for one hour of a junior programmer as a senior one.
Therefore, when calculating the cost of the project from man hours, you must take into account that the multiplication of the cost must be factorized by each category:
Total cost = (CH1 x HH1) + … + (CHn x HHn)
Where CH1 is equal to the hourly cost of the professional category 1 and HH1 is the total of man hours estimated by the professional category 1.
Cost per project calculation with ITM Platform
ITM Platform allows you to calculate the costs of tasks and projects with man hours. For this you only have to define the values of 3 variables:
The professional profiles of your organization
The fees associated with each professional profile
Standard costs, which will be calculated when a generic worker is assigned.
See in this tutorial how to define professional profiles, rates and standard costs in order to calculate the cost of all your tasks and projects.
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