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.