Effort costs are not just the salaries of the software engineers who are involved in the project. Organisations compute effort costs in terms of overhead costs where they take the total cost of running the organisation and divide this by the number of productive staff. Therefore, the following costs are all part of the total effort cost:
- the costs of providing, heating and lighting office space;
- the costs of recruitment, proposal preparation and marketing;
- the costs of support staff such as accountants, administrators, system managers, cleaners and technicians;
- the costs of networking and communications;
- the costs of central facilities such as a library or recreational facilities;
- the costs of Social Security and employee benefits such as pensions and health insurance.
This overhead factor is usually at least twice the software engineer’s salary, depending on the size of the organisation and its associated overheads. Therefore, if a company pays a software engineer $110,000 per year, its total costs are at least $220,000 per year or about $18,000 per month.