Cost of people

Employees will be a large cost to the practice due to the professional nature of staff needed with qualification. Any temporary staff brought in will also have to be considered when calculating fees for projects. A way of reduce cost is to have employees paid on an hourly rate, this would need to have a time record keeping system in order to keep track of the hours and pay only for the time worked.

The business needs to also be aware of the difference between a ‘direct cost’ and a ‘charge out’. A charge out includes allowance for indirect costs, non-fee earning time as time is a cost to the business. For example the time the Marketing Director spends on Marketing cannot be charged to the client’s fees but needs to come from somewhere, this should be included in the overheads as a resource.

The wage is based on a thirty-five hour week and a forty-four week year.

Additional to the wage paid to the employee are overheads that need to be paid to various institutions these have been calculated in to the wage to create a total cost to the business of each employee will and are as follows:

o    National Insurance Cost Category D (10.6%)

o    RIBA Subscription (to be paid every 18 months)

o    ARB Retention Fee (annually)

o    Life insurance (annually)

o    Health insurance (annually)

Full Time Employees

Paid via salaries, full time employees tend to be professional bodies who are long term within the business as retraining of staff with such responsibilities will be a cost to the business. The five directors are included within full time employees.