How Much is Your Time Worth?

When you think about it, your time is the only asset you truly own, and it has a monetary value which I refer to as the Money Value of Time (not to be confused with the time value of money). Money Value of Time (MVT) is the sum total of your carrying costs to your organization. These costs include salary and benefits as well as proportional overhead, borrowing costs etc. assigned to you, your team, division etc.

MVT is an important factor that should be used by management when determining how projects and assignments are made. All things being equal, the person or team with the lowest MVT should be selected for projects over those with higher cost. Moreover, projects should be delegated when there is a MVT advantage. Additionally, MVT should be evaluated against the cost of having a third party accomplish a project.

Finally, MVT should figure into the return on investment calculations when choosing which task or project should be undertaken.

Project Cost Calculation Using MVT
In order to accurately determine the true costs of a project the money value of employee’s time must be determined and then added to the project’s variable costs.

Money Value of Time is (Staffer Salary + Staffer Overhead Cost) + Overtime Costs for non-salaried staff (OTC) which is a staffer’s overtime rate/hour. (You may have to estimate the overtime required based on past history). Overhead costs include prorated energy costs, benefits, equipment depreciation etc.

Total Time Cost (TTC) then is the aggregate cost for all staff assigned to a task or project.

Variable Costs are things such as paper, ink, postage, advertising, etc.
Project Cost is Total Time Cost and variable costs.

To determine the Total Time Cost (TTC) you would use (MVT StafferX) * time spent on project) + (MVT StafferY) * time spent on project) + etc….
The Project Cost (PC) would then be total Total Time Costs (TTC) + Variable costs (VC)
MVT=(Staffer1 Salary + Staffer1 Overtime Pay+ Staffer1 Overhead Cost)=BC + OTC
TTC=(MVT StafferX) * time spent on project) + (MVT StafferY) * time spent on project) + etc….
Therefore: PC= TTC +VC