What You Don’t Know about Costs Can Hurt You - Part 2

In article one of this series, we discussed the dangers of price complaints and how estimating mistakes can come from inaccurate budgeted hourly rates (BHRs) and incorrect assumptions of standard times. How long it should take to perform a task (create an estimate, enter orders, etc.) has always been a mystery because there is little to no comparable data. Recently however, Chris Bondy and Wesley Odell from the RIT School of Media Sciences published a report entitled Estimating Systems Research (RIT College of Imaging and Sciences, February 2017) which reported some standard times.

Before looking at the standard times it's important to understand the respondents, because for years most of our benchmarks came from research with small printers (National Association of Quick Printers Ratio Studies). As you can see below, the study included a wide range of companies of different sizes who offered a wide variety of different services.

Below are the average time/tasks as estimated by staff. The problem however, when self-predicting time/task, is that they are typically under estimated. Today this is known as the "planning fallacy," which was first identified in 1994 ("Exploring the "planning fallacy": Why people underestimate their task completion times". Journal of Personality and Social Psychology. American Psychological Association. 67 (3): 366–381.)

The planning fallacy says that a person's prediction of the time required to perform a task is optimistic compared to the time required in past completion times. In other words, people tend to underestimate their times. We see this in our work, too and find that self-estimated times are underestimated by 33%. Assuming a 33% correction pushes the time/job from about two hours to close to three hours as illustrated below.

According to Bondy and Odell, the average administrative time before prepress is 130 min. or just over 2 hrs./job. As a result, they concluded, "The study identified that a great deal of time continues to be consumed with administrative tasks. Print service providers averaged 2 hours and 10 minutes per order on administrative tasks associated with job planning. Since many print service providers prepare hundreds of estimates per month, this cumbersome process equates to additional labor cost and cycle time that can be dramatically reduced when the estimating and planning process can be both integrated and automated." According to our predictions, it is closer to 170 minutes or almost 3 hrs./job, which is worse when compared to automated workflows.

Why is this important?

It is both the BHR and time/task that determines costs. When your prices are "too high," you need to understand if that is the result of the BHR or time/task. The data above can help you compare the average times to your times. Watching staff for two days can help you estimate your administrative time before prepress. If your staff is spending more than the RIT estimated two hours, or even more than our predicted three hours, you have a problem. Companies using Web to print, Print MIS, or PDF workflow accomplish this in a fraction of the time and cost. Take two days to figure this out or call us and we can help you figure it out.