Include Idle Staff in Break-even Point Analys
Jaap de Jonge, Management Consultant, Netherlands
The basic principle of a BEP is that you want to give a realistic picture of a project by calculating how long it takes to recover the money that you have invested.
In doing so, you should include all the cost and all revenues that are related to undertaking that project (or not).
Now to your idle staff:
- If this staff is there to be available when needed for this kind of projects, then I think you should include (a reasonable percentage of) their cost. Even if they are probably not needed for this particular project.
- But if they are totally unrelated to a small-scale project and are plain HQ staff, then you shouldn't.