AI Strategy & Governance for Business Leaders

Calculate the Cost of a Usable Result

Build a transparent cost model with human review, retries, setup effort, and explicit assumptions.

In this chapter

  • Calculate tool and labor cost
  • Distinguish capacity from cash savings
  • Test acceptance and volume assumptions
The full cost path
  1. Volume and time
  2. Tool and overhead
  3. Review and rework
  4. Usable results
  5. Sensitivity check

A small increase in review burden can outweigh an attractive tool price.

Use illustrative assumptions, not price claims

This exercise uses fictional currency units, abbreviated CU. They are not current vendor prices or a return forecast. Assume the manual process handles 300 tickets monthly at eight minutes each. At an illustrative labor rate of 30 CU per hour, the time cost is 300 × 8 ÷ 60 × 30 = 1,200 CU. Labor time has an economic value, but reducing it does not automatically reduce payroll or create revenue.

For the assisted process, assume five total minutes per ticket including drafting, review, and normal corrections. Its labor cost is 300 × 5 ÷ 60 × 30 = 750 CU. Add a fictional 120 CU monthly tool cost and 60 CU operating overhead, giving 930 CU. The difference from the manual baseline is 270 CU of modeled monthly value before setup costs. Label every input so another person can change it.

Count usable results and setup

Suppose only 270 of the 300 tickets produce usable summaries in the pilot accounting period. Dividing 930 by 270 gives approximately 3.44 CU per usable result. Do not divide by 300 and describe every attempt as successful. State what happened to rejected work and whether its rework time is already included. Double-counting or omitting that effort can change the decision more than the subscription price.

Now include 24 hours of setup and training at 30 CU per hour: 720 CU. Under the simplified steady-state assumptions, 720 divided by 270 is about 2.67 months to recover that setup value. This is a scenario calculation, not a promised payback date. If additional review adds two minutes per ticket, monthly labor rises by 300 CU, and the 270 CU advantage disappears. That sensitivity should be visible beside the headline number.

text
Manual labor = volume * manual_minutes / 60 * hourly_rate
Assisted total = volume * assisted_minutes / 60 * hourly_rate + tool + overhead
Cost per usable result = assisted_total / usable_results
Illustration: 930 / 270 = 3.44 CU
Extra two-minute review burden: 300 * 2 / 60 * 30 = 300 CU

Connect capacity to an actual plan

Released time is potential capacity, not automatically cash saved. Name its intended use. Different volumes introduce subscription, support, and quality costs absent from this small scenario.

Build the Harbor Pilot cost sheet

  • Use separate input cells to reproduce 1,200 CU, 930 CU, and 3.44 CU per usable result.
  • Recalculate with seven assisted minutes.
  • Separate cash spending, staff capacity, setup effort, and unmeasured assumptions.

Expected checks

  • The base difference is 270 CU; setup is 720 CU.
  • Seven-minute assisted cost is 1,230 CU, above the baseline by 30 CU.
  • All numbers remain assumptions, never promised savings or market prices.

Check your understanding

Why isn't shorter processing automatically a payroll saving?

  • Minutes have no value.
  • Subscriptions are free.
  • Released capacity may not reduce cash expenditure.
Answer explanation

Staff may do other work while payroll stays unchanged. Distinguish capacity benefits from realized cash savings.

Official tools & further reading

The curriculum

  1. Start with the Process, Not the Tool — Free preview

    Select a bounded workflow using evidence, reversibility, and consequences.

  2. Draw the Data and Accountability Map — Free preview

    Identify what enters the workflow, where copies travel, and who owns each control and decision.

  3. Turn Vendor Claims into Evidence — Sign-in access

    Ask precise security, service, and exit questions without confusing a sales response with a verified control.

  4. Measure Useful Work, Not Output Volume — Sign-in access

    Evaluate missing facts, unsupported claims, and reviewer burden against a baseline.

  5. Calculate the Cost of a Usable Result — Free preview

    Build a transparent cost model with human review, retries, setup effort, and explicit assumptions.

  6. Make Human Review a Real Control — Sign-in access

    Design review authority, evidence, workload limits, and escalation so approval is more than a checkbox.

  7. Roll Out with a Way Back — Sign-in access

    Plan a small, observable adoption sequence with staff training, feedback, rollback, and change control.

  8. Present the Harbor Pilot Decision — Sign-in access

    Assemble the evidence into an honest go, revise, defer, or stop recommendation that another manager can inspect.