Understand how savings are man hours are calculated with the help of an example.

Annual labor savings are calculated as: Runs per month * 12 * Hours per run * % automatable * Hourly cost * Number of people.

Consider the following values:

  • Runs per person per month = 200
  • Number of people = 5
  • Hours per run = 0.15
  • % automatable = 90%
  • Hourly pay = 50 dollars

Annual savings calculation:

  • Total runs/month = 200 * 5 = 1000
  • Total runs/year = 1000 * 12 = 12,000
  • Total hours/year = 12000 * 0.15 = 1800 hours
  • Automatable hours = 1800 * 0.9 = 1620 hours
  • Annual savings = 1620 * 50 = 81000 dollars

Forecasted savings is 81000 dollars and forecasted hours saved is 1620 hours.