AI coding tools: worked out examples

Confirm the decision first: “You want to assess whether company-wide coding licences would justify their cost.” Then ask:

“For this approval, does the company need lower cash spending within a year, or would additional delivery capacity count as the return?”

The interviewer replies:

“Lower cash spending within twelve months. Permanent staffing is fixed, but contractor spending could fall.”

That answer gives you a specific route to financial value. You need to show that the tool allows the company to avoid contractor work it would otherwise purchase, while preserving the required output and quality.

Permanent employees’ saved time still matters operationally. It simply does not become a payroll saving under the case’s staffing condition.

A useful follow-up is:

“Did the trial measure net time through review, testing and rework, and whether that time could replace contractor work?”

Suppose it did not track those consequences. The interviewer invites you to make a working assumption.

State one and use it transparently:

“I’ll model one net hour released per developer per working week, after review and rework, then calculate how much must replace contractor work to cover the cost.”

This is a hypothesis for the business case, not a claim that the trial proved the saving.

Measure completed work in the company's actual workflow. Perceived speed can miss time spent checking output, correcting mistakes or juggling concurrent tasks.

To put a cost against the proposed rollout, ask for licence coverage and setup spending. The interviewer gives 100 developers, licences at £30 per person per month, and £12,000 of first-year integration and training. The table below calculates the resulting first-year cost.

The interviewer also confirms that avoidable contractor work costs £60 per hour. To recover £48,000, the tools must eliminate 800 purchased contractor hours within the year.

That is a sharper decision threshold than “AI needs to make developers more productive”. You know exactly what must change in the budget.

For the capacity estimate, assume 48 working weeks a year. Combined with the earlier assumption of one net hour released per developer per week, that gives 100 × 1 × 48 = 4,800 employee hours over the year.

If all of those hours could replace contractor work at £60 an hour, the potential avoided spending would be £288,000. But that requires an assumption about substitutability. Permanent staff may save time on tasks contractors never perform, or the released time may arrive too late to change a signed contract.

The break-even requirement is 800 divided by 4,800, or 16.7% of the released hours becoming avoided contractor hours on a one-for-one basis.

To test the uncertain conversion into cash savings, calculate three hypothetical replacement rates below. The 10%, 20% and 30% cases are sensitivities, not trial findings.

The table tells you what to investigate: the amount and timing of contractor work that employees can genuinely absorb.

Ask which contractor engagements are variable, when they renew and whether the work requires specialist skills. A fixed-price contract already committed for the year may not shrink because internal capacity improves.

Also check whether the saved hours can be assembled into useful blocks. Ten people each saving a few minutes at different times may not replace a specialist’s day of work. The manager needs a plan to reassign the relevant tasks.

If the tool frees time in a bottleneck team but the contractor work sits elsewhere, the operational benefit may be valuable while the specific cash-saving case remains weak. Present both consequences clearly and answer the approval criterion the finance director supplied.

I would extend the trial around a defined set of tasks that currently consume contractor spending. Measure the whole path to accepted work, including code review, tests and corrections, and record the contractor hours actually avoided.

Do not count increased code volume as the benefit by itself. More code can create more review and maintenance work. Use the required delivery outcome and quality standard to decide whether the task is complete.

You can then recommend approval if the measured improvement and avoidable contractor demand support at least 800 hours of first-year reduction under these assumptions. If they do not, the company can still consider the licences for delivery capacity, but that would be a different investment justification.

A useful opening does not hide the trial’s missing information. It turns it into an explicit assumption and a testable threshold.

Practise with the partnership case-opening drill, focusing on what counts as incremental value. For another example of measuring useful output against total AI cost, read the AI inference cost framework.