Costing for projects has never been the easiest of tasks. Even if you presume that you have covered everything that is there to cover with a healthy contingency mark-up, new costs will mushroom as the project goes through its implementation cycle. These will arrive and haunt you in various hues and shapes from sudden forex fluctuations to a virus attack. Project costing takes into account multiple components with respective weightages depending on the industry being considered. This could include the entire gamut of direct and indirect expenses, ranging from stay and travel to intellectual property and other sunk costs. This article focuses on the hidden cost components and the most difficult one of them all, the cost of employee attrition.
 

The More Hidden amongst the Hidden

While assessing contingency mark-ups on a project specific basis, the foremost factor on any costing exercise is the cost of time delays. Time delays are typically associated with inadequate user understanding, incorrect effort estimation and project team changes. Another aspect of time delays is the opportunity cost of keeping team members tied up in delayed projects.

On top of this is the marketing costs for which putting a cost tag becomes next to impossible when faced with complexities like costs of a dozen draft copies of a 1000-page proposal or costs of 100 sheets of faxes for clarifications.

To come back to our central theme, something far more difficult to tangible-ize is the costs of employee attrition.

When an experienced employee leaves the company, which are the ways in which the company gets hit? For starters, the knowledge repository of the company is lowered by a few points especially if the quitting employee happens to be fairly senior. His/her replacement will be, more often than not, a fresh employee who would have joined the company as a trainee.

There are three angles to company’s resource drain vis-a-vis this new employee. For one, there is the cost of recruitment itself, when you consider the organization’s processing costs as well as top management time invested on this process. A lot of organization still practice formal induction courses which happens within a month of the new joinee’s arrival. Thirdly, there is job specific training which could be conducted in-house or through a professional training centre. There could be training programmes, for instance, in software packages, development methodologies and standards and so on.

Over and above all these one time cost elements is the inevitable journey of the employee is understanding and getting skilled in the tools and platforms he is expected to work. For packages that require high learning curve by default, this process could take up anything between three to six months of the employee’s tenure. This could be what the organization ends up investing for seeing through the familiarization process of the employee.
 

Softening the Blow

Companies take recourse to several proven methods to cope up with this assault on the workflow of the ongoing project. One typical method is to entrust the responsibility of training the newcomer to the leaving employee. The term often used here is Transfer of Technology since this training covers the entire spectrum of activities covering the software tools used, the design documentation, the software design, list existing bugs and planned fixes, the module life cycle stage and

A supplement to this is ensuring that Quality systems are implemented across the project involving the entire team. Quality aspects can come into every avenue of the project ranging from prime activities like monthly / weekly progress reports and documentation / manuals to sub-activities like naming conventions and minuting formats.

The departure of any team member, especially while the project is well into development, hurts the development flow as well as team morale. But, companies should accept this reality and accordingly plan to mitigate the effects of cost escalations as well as time extensions in time schedules.