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Cost-Benefit Analysis for Off-Site Teleworking

A cost-benefit analysis is often a primary driver of the teleworking process, because the company wants to achieve cost savings over costs associated with the traditional workplace setting. Most often, cost savings are attributable to increased productivity, decreased staffing needs and reduced office space requirements. To help gather data on the costs and direct benefits associated with a potential telework, please answer the following questions, then click "Continue" when you are ready to enter dollar amounts for individual costs and savings.

Costs
Can you determine/estimate the average salary of potential teleworkers?
Can you determine/estimate the average number of days per week potential teleworkers would be working out of the office?
Will the employee be responsible for providing computer hardware (ex: computer, monitor, printer)?
If no: Can you determine/estimate the average company expenditure on computer hardware per teleworker?
Will the employee be responsible for providing a broadband connection while teleworking?
If No: Can you determine/estimate the average cost of a broadband connection per teleworker?
Will the employee be responsible for providing copies of applications/software (Microsoft Office, virus software, etc.) while teleworking?
If no or Yes, Some: Can you determine/estimate the average cost of providing copies of applications/software (Microsoft Office, virus software, etc.) per teleworker?
Direct Benefits
Can you determine/estimate the average increase in productivity you expect to receive from potential telework?
Can you determine/estimate the average decrease in sick leave usage you expect to receive from potential telework?
Can you determine/estimate the average increase in organizational effectiveness you expect to receive from having employees teleworking?
Can you determine/estimate the average decrease in turnover rate you receive/expect from allowing employees to telework?
Can you determine/estimate the average savings per teleworker due to reduced parking requirements?
Can you determine/estimate the average office space savings per teleworker that you receive/expect from having employees teleworking?
Assumptions
Average Teleworker Salary $ Default: $40,000
Teleworking days/week: Default: 1.5 days/week

Costs to Employer PER TELEWORKER

Direct CostsOne TimeRecurring (annual)Notes
Selection and Training $ $ Both teleworkers & supervisors trained
Computers and Equipment $ $ Default estimated cost of voice and data equipment: $420 annual lease
(includes cost of laptop, printer and firewall). Addition of broadband internet: $720
Software License Fees $ $ Zero if software license in effect
Otherwise, default: $300 one-time expenditure
Total Direct Costs      

Benefits to Employer PER TELEWORKER

Direct BenefitsPercentage (%)Calculated ($)Notes
Increased Employee Productivity % Default: 15%
Increased Organizational Effectiveness % Default: 2%
Decreased Turnover Rate % Default: 5% Reduction of average salary for search/training costs avoided
 FixedAnnual (recurring)Notes
Decreased Sick Leave   days Default: 2 days/year
(based on 230 work days/year a year)
Reduced Parking Requirements $ $ Default: 30% reduction of an assumed $100/month parking cost
Office Space Savings $ $ Default based on 150 square feet @ $6/month per square foot proportionally reclaimed
Total Direct Benefits      
Indirect BenefitsFixedRecurring (annual)Notes
Decreased Air Pollution Put your own number here for compliance with Air Quality regulations
Increased Competitiveness Put your own number here for the effect of your new productivity
Total Indirect Benefits      
Results
Assumptions
Average Teleworker Salary $40000
Teleworking days/week: 1.5

Costs to Employer PER TELEWORKER

Direct CostsOne TimeRecurring (annual)Notes
Selection and Training $175 $0 Both teleworkers & supervisors trained
Computers and Equipment $0 $0 Cost of docking station, extra monitor, laptop instead of desktop computer, and broadband internet
Software License Fees $0 $0 Usually zero if employee handles this
Total Costs $175 $0  
Benefits to Employer PER TELEWORKER
Direct BenefitsPercentage (%)Calculated ($)Notes
Increased Employee Effectiveness 15% $6000 Average 15% relative to non-teleworkers@ 1.5 days/week
Increased Organizational Effectiveness 2% $800 Average about 2%
Decreased Turnover Rate 5% $2000 Equivalent to 5% of salary in search & training costs avoided
 FixedAnnual (recurring)Notes
Decreased Sick Leave 0 0 Assumption: 2 of 230 work days per year (1/115th of annual salary)
Reduced Parking Requirements $0 $360 30% reduction in $100 per month space requirements for non-carpooler
Office Space Savings $0 $3240 Assumption: 30% of 150 sq. ft. @ $6/month
Total Direct Benefits $0 $12748  
Indirect BenefitsFixedRecurring (annual)Notes
Decreased Air Pollution (Enter your own for compliance with Air Quality regulations) 0 0 Put your own number here for compliance with Air Quality regulations
Increased Competitiveness (Enter your own number for the effect of your new productivity) 0 0 Put your own number here for the effect of your new productivity
Total Indirect Benefits $0 $0  
Summary   
First year return:   $12573 Per teleworker with these characteristics
Annual return after first year:   $12748