When I first set out to start my company, I basically did the time calculation as follows:
w = Number of hours of work
m = Number of months I want to finish in
h = Number of people I have to hire.
The calculation is then simply
h = w / (m*hoursPerMonth)
Before doing that calculation, I actually doubled w, to account for time in beta. I also increased h a bit, to account for lost time to to communication, since programmers do not scale linearly, but inverse exponentially.
The final total was about 4 months for 3 people. This was about 50% on me, and 25% for each of the other two programmers. I didn’t account at all for things I considered to be trivial / intangible – billing, hosting, finding artists, setting up a server, finding tools for communication and development, time off (just assumed a 4 month crunch), delays due to sickness or hardware failure. It wasn’t that I didn’t know about these things, but that I considered them to be too trivial to schedule. My concept was “How long could it possibly take to find, do, or manage [x]? Just post an ad (or do a web search), interview a few guys (or read a few websites), and go with it.”
In the optimal scenario this is actually true. The problem is that the world is filled with people who have nothing better to do than waste your time. This ranges from hosting services that take your server down without warning, to Linux programmers that don’t even know how to open files in windows, to people that spend weeks discussing a project only to ask for 4X more money than is reasonable.
So each of these steps of running a business become very time consuming, and there isn’t always an easy way to tell the difference between the guys who are wasting your time, and those who are not. For example, if I want a quote on my art assets, I really need to spend a lot of time explaining the contract every time, because no matter how detailed my asset list is, people will not understand or appreciate certain aspects. This is especially true if you are trying to save money (as I am), because at the low end of the totem pole there’s a lot higher noise to signal ratio.
As a result, I’ve learned to appreciate the value of businesses beyond the amount of intellectual property they own. Each programmer represents not just any dude off the street, but a long, careful, and expensive search both to find and retain a worker. Making a new programmer productive costs about that much again, when you account for the months of initial downtime required to train someone to really be productive. Getting a working setup and source control reflects many hours of work, from setting up the server, to finding a reasonable host, to purchasing the license, to training everyone how to use it. Having a team handle your art outsourcing takes many hours to find a qualified team, one that can do the job cheaply, setting up communication channels, explaining the requirements (including documentation), and sweat and worry that you might get ripped off anyway.
My initial schedule of 4 months with 3 programmers is now 6 months with 4 programmers (double the man hours) and even with that I don’t think beta will be long enough, and time is of the essence. Half my time currently goes towards intangibles. Tasks originally assumed to be trivial (a few hours) sometimes end up taking weeks. And other problems come up, such as sick time, people quitting, and bad hires. For example, nearly a month of productivity was lost in the first two months just from dealing with bad hires.
My advice to would-be game companies is to add 3-4 man months on to the total schedule to account for these kinds of things.