TELEWORK RETURN ON INVESTMENT STUDY. May 8, 2009. Table Of Contents. Introduction Methodology Value Calculations Cost Calculations Risk Calculations Findings and Conclusions. OBJECTIVES. This study has two primary objectives:.
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May 8, 2009
This study has two primary objectives:
To provide a strategic framework and methodology for identifying the value of telework investments, cost justifications, and risk analyses in order to calculate the return on investment
To assist HAF/IM develop business case analyses that consider the multiple benefits of telework when making investment decisions
For this report, a sample business case analysis was developed with detailed costs, benefits, and risks. It includes a return on investment (ROI) analysis
The Capital Planning and Investment Control (CPIC) process and Value Measuring Methodology (VMM) value factors were used to outline and develop the BCA
Additionally, this report provides resources that project managers can use to develop their own telework-related business cases
EVALUATE the delivered benefits
CONTROL the benefits that are deliveredCAPITAL PLANNING AND INVESTMENT CONTROL (CPIC)
The CPIC process is the primary process for making investment decisions, assessing investment process effectiveness, and refining investment related policies and procedures. CPIC is mandated by the Clinger-Cohen Act which requires agencies to use a disciplined process to acquire, use, maintain and dispose of information technology (IT). CPIC accomplishes these requirements through three phases: Select Phase, Control Phase, and Evaluate Phase.
COSTVALUE MEASURING METHODOLOGY
Value Measuring Methodology
This section provides an overview of the four steps that form the value measuring methodology framework. The terminology used to describe the steps are common to developing, selecting, justifying, and managing IT investments
Potential Mitigation Strategies
Senior management leadership and support for telework program
Comprehensive security planning
Assignment of a telework advisory group or program management office
Comprehensive telework agreements
Regularly re-evaluating and modifying the program to meet changing circumstances
Designating a competent telework coordinator
Teleworkers work one additional productive hour in each workday spent at home (about a 12.5% increase). Source: Lessons Learned From The Network-Centric Organization: 2004 AT&T Employee Telework Results. This calculation assumes that 15 teleworkers who work one day per week annually, and 5 teleworkers who work 238 days per year (one day a month in the office).
Teleworkers average 3 fewer sick days / snow days annually per teleworker. Source: International Telework Association and Council (ITAC),1999.TELEWORKER PRODUCTIVITY CALCULATION
The total cost of recruiting one employee for a typical government agency is $7000. Source: OIG-01-13-AMR Assessment of Reducing Infrastructure Costs Through Increased Use of Telework, Equal Employment Opportunity Commission (EEOC), 2003.
The Federal Government turnover rate is 1.1% as of February 2009. Source: Department of Labor, Bureau of Labor Statistics JOLTS report, http://www.bis.gov/.
Typical reductions in turnover rates for organizations offering telework averages 54% of the government workforce per year. Source: Santa Barbara County Association of Governments (http://www.flexworksb.com) and The Teleworker, Jan 2009 edition, “Virginia, Leading by Example” (http://www.teleworkexchange.com).EMPLOYEE RETENTION CALCULATION
Office of Property Management (OPM), Performance Accountability Report, FY 2008 shows that leased spaces in the Washington DC area average 250 square feet per employee at a cost of $34.91 per square foot. Total per employee per year: $8727.50. Owned spaces in the Washington DC area average $10.67 per square foot. Total per employee per year: $2667.50. If using office hoteling where only one space is needed for each ten teleworkers, the average cost per employee drops by a factor of 10. GSA Office of Government-wide Policy: "Office Space Use“ recommends 230 square feet of space per person.
When hoteling space is used, one space for every ten teleworkers, then rentable square feet per person is reduced by 10 percent.REAL ESTATE CALCULATION
The average cost of domestic business trips in 2008 = $1,110.00; the average cost of international travel in 2008 = $3171.00. Source: American Express Global Business Travel (USA Today, Dan Reed, 4 Dec 2007).
Median US trips taken by Government employees is broken down as follows (Source: PayScale, Inc; The PayScale Report, 23 April 2009):
2-5 trips per week, average salary of $58,000, 8% of workforce
1 trip per week, average salary of $95,000, 6% of workforce
1-3 trips per month, average salary of $75,000, 19% of workforce
1 trip per quarter, average salary of $60,000, 16% of workforce
No trips or rarely, average salary of $44,000, .51% of workforce
Number of trips reduced by the use of telework collaborative processes – 50% (constructive).EMPLOYEE TRAVEL AND TDY CALCULATION
Real estate annual telework savings already calculated in this section is used to assign cost savings in re-acquiring office real estate. Composite General Schedule profile from this Appendix is used to calculate value of uninterrupted work for the month following the disaster. 25% of real estate savings is used as the saved cost of relocation.
Probability of a disaster (flood, fire, tornado, severe storm) = .04 (Source: US Geological Survey, Dr. Christopher Barton and Dr. Stuart Nishenko, “Natural Disaster Forcasting.”
Roadway service costs, law enforcement, safety and administration costs = .012 per mile (California Energy Comission); maintenance, gas, and oil = .48 per mile (American Automobile Association)
Non Green House Gas Air Pollution Cost (average car, urban peak travel) = $.062 per mile. Source: Transportation Cost and Benefit Analysis II – Air Pollution Costs; Victoria Transport Policy Institute (www.vtpi.org) and U.S. Environmental Protection Agency, National Vehicle and Fuel Emissions Laboratory, Nov. 29, 2007VEHICLE MILES SAVINGS CALCULATION
Bureau of Labor Statistics – Average Consumer Expenditures Per Year (2007)
Personal care products and services = $364 per person
Apparel, services, and footwear - Men = $452 and Women = $685 per person
Medical services, supplies, and medicines = $797
.5% chance of occupational illness or injury with 9 days of missed work
Fairfax County Statistics – Auto Accidents with Injuries
1.03% chance of being involved in an accident at an average cost of $8200
Journal of American Psychiatry
Depression sufferers average 27.2 lost workdays annually, medical costs = $4,426
Vehicle maintenance, gas, and oil = .48 per mile (American Automobile Association)
Consumer Federation of America: save 5-18% on auto insurance by not commutingEMPLOYEE VALUE CALCULATION
The Washington area Transit Subsidy pays a maximum of $230.00 a month, or $2,346.00 a year to supplement federal worker commuting costs. Teleworking one day a week reduces the need for 20% of the maximum benefit. Teleworking five days a week eliminates the transit benefit altogether.
COMPOSITE GENERAL SCHEDULE PROFILE Per Year (2007)
The acquisition cost of a laptop can be offset by the current cost of acquiring a desktop. The approximate annualized cost of a desktop, including maintenance, is $327.00 The laptop and printer / copier / fax unit costs are annualized and include refresh and annual maintenance expense. Recurring (i.e., maintenance) annual costs are assumed to total 15% of the acquisition cost of hardware and 20% of the acquisition cost of software. Refresh costs are calculated by dividing the acquisition cost of each element by its respective product lifecycle. On-line printer and fax service, plus electronic copying, could reduce this cost to zero.