And I know that expecting your employees to be able to jump on something else isn’t always realistic.

When evaluating each project independently, those employees have no other jobs to apply their time to. You’re proposed costs need to take this behavior into account but simply saying “we’ll apply our time to something else” isn’t a real solution.

Although the first calculations is “simpler”, it returns the same result.

The second calculation is more accurate if and only if the number of “Total # of days in the project” differs from the “man days”. But, as I said in my example, I’m assuming this is the only project and the number of “man days” is the same as the “Total # of days in the project”.

We’re saying the same things in our calculation with one disagreement. The disagreement is whether you assume you can apply someone’s cost to another job.

When that happens, you can’t expect your employee to “hold off” on their pay check.”

Right, but the project costs you no more money as development has stopped (for the moment at least) and the employees should be applying their time to other projects (in theory).

If the customer’s lack of payment makes it hard for you to pay your employees in a timely fashion, thats another matter, but it doesnt increase the cost of the project as the formula you supplied states.

However, I suspect simplicity is the goal of the formula…

A more accurate “Total Project Price” would be (“Man-days” spent working on the project) * (Cost of “Man-day” + profit goal per employee per day).

The “net profit per day” FOR THIS PROJECT ONLY would be {(“Total Project Price”) – (“Man-days” spent working on the project) * (Cost of “Man-day”)} / (Total # of days in the project)

You would still divide by the # of days for the daily profit as the delay does affect it …

Projects come to a dead-stop when customers can’t sign off on changes or if they decide they can’t make a payment.

When that happens, you can’t expect your employee to “hold off” on their pay check. And, although there will always be other projects he can apply his time toward, you have to evaluate each project independently.

And I had a lot of fun at the pool party. Even though I can’t seem to get this water out of my brain.

This shouldnt affect the development time (unless I’m missing something) by your employees unless the customer hasn’t fully specified the requirements (which really should just delay the development, but doesn’t cost developer time … in a good development cycle paradigm).

These kinds of pushbacks shouldn’t hurt your bottom line too much IF you have ample enough projects to keep your employees busy even when one project gets delayed. Now, if it is the only project running, then you are correct.