Cost accrual ratio
What is cost accrual ratio?
The cost accrual ratio is the average cost of an employee’s services for a specific unit of time. A common example is the average cost per day per person.
Where have you heard about cost accrual ratio?
It is useful as part of the risk assessment and mitigation on small projects where average wages are roughly equal. For example, a project manager can use it to calculate the cost associated with a risk if it materialises, so could calculate it as employee costs per unit of time lost (e.g. days).
What you need to know about cost accrual ratio.
Although the cost accrual ratio provides visibility of the costs associated with project slippage, and can help to focus risk mitigation on those risks with highest employee cost impact, there are other factors which need to be considered as part of overall risk management and mitigation. These include the probability of risk occurring, and other consequences of the risk (e.g. reputational, other non-employee costs, critical dates and milestones).
Find out more about cost accrual ratio.
Read our guide to risk assessment for more background on cost accrual ratio.