Operating budget
Internal estimate of what the organisation needs to spend each year, with the assumptions and uncertainties listed. The funder document and the interactive planner are separate. Funding plan: an initial seed of £15–50k covers January to April 2027; the main £250k seed is intended to be in place from September 2027 (a target, not yet secured); the CIC is planned to be self-sustaining from late 2028.
Summary
Year 1: Phase One operating breakdown
Phase One assumes the three directors work part-time during the year, averaging about 50% of full-time between them, and move towards full-time as project revenue comes in. Associates are engaged per project and are not employees. Premises are a single room or small office. The figures cover setting up and running the organisation without drawing on the reserve.
| Line | Annual | Notes |
|---|---|---|
| Three directors at part-time (Phase One average) | £75,000 | ~50% FTE across the trio. Year-1 weighted toward client-manager and security/technical lead. |
| Associate engagements | £20,000 | Per-project specialists across the year. |
| Premises — modest operational base | £6,000 | Single room or small office; no prestige lease. |
| Insurance — PI, public liability, employer’s | £6,000 | Cover levels set for Phase One project values. |
| Tooling, software, hosting, infrastructure | £6,000 | Agentic development tool subscriptions, version control, monitoring, dev/test infra. |
| Accountancy, legal, CIC reporting | £6,000 | Year-1 annual return, audit-ready accounts. |
| Business development — travel, events, intake | £3,000 | Kept low; business development is limited to travel, events and intake. |
| Cyber Essentials Plus (annual recert) | £3,000 | Renewed annually from the start. |
| Total Year 1 operating | £125,000 | Funded from the seed. |
Capital and one-off setup: Year 1 only
| Line | Amount |
|---|---|
| IT hardware — workstations, networking, local-AI inference where useful | £9,000 |
| Initial Cyber Essentials Plus certification | £2,500 |
| CIC formation, legal, contracting templates | £3,500 |
| Total setup | £15,000 |
Reserve fund
The reserve is the largest single allocation in the seed. It is held on the balance sheet, is not used for routine operating costs, and is drawn on only when an existing client’s support commitment requires it and operating cashflow cannot cover the cost. It allows us to meet support commitments already made during a quarter with little new work.
Reserve target: enough to meet the active support commitments for all current engagements for at least twelve months. In Year 1, with few clients, the seed allocation covers this. Once the CIC is self-sustaining (planned from late 2028), the reserve is topped up from operating margin and kept at a level matched to the number of active engagements.
Steady state: Phase Two operating breakdown
No further funding round is planned for Phase Two; costs are covered by project income. The indicative steady-state operating budget assumes the three directors at full-time and an associate base that varies with project demand:
| Line | Annual (steady) | Notes |
|---|---|---|
| Three directors at full-time, plus employer NI and pension | £240,000 | ~£75–85k each loaded with NI and pension. Below market rates. |
| Associate engagements | £80,000–£200,000 | Varies with project work and revenue; associates are not employees. |
| Premises and operational base | £10,000 | Slightly larger footprint as the team grows. |
| Insurance — PI, public liability, employer’s | £9,000 | Higher PI cover for larger engagements. |
| Tooling, software, hosting, infrastructure | £10,000 | Agentic development tool subscriptions are the largest item. |
| Accountancy, legal, governance, CIC reporting | £10,000 | Audit, annual return, governance support. |
| Certifications — CE+, ISO 27001 path | £8,000 | ISO 27001 target Phase Two milestone. |
| Business development | £5,000 | Kept low, as in Year 1. |
| Capability development | £15,000 | Tooling investment, conferences, training. |
| Steady-state operating | £385,000–£505,000 | The range comes from associate spend. |
Revenue requirement
At cost-plus pricing with a modest operating margin (~25%), the project revenue needed to cover steady-state operating cost and replenish the reserve is in the region of £480,000–£630,000 per year. Translated into engagement counts at a mid-band weighted average of around £60–80k per engagement, that is roughly six to ten medium engagements per year, or the equivalent mix of small and medium engagements totalling that range.
The revenue estimate depends mainly on the average engagement value. If most engagements are small (1–4 day projects at £1–4k each), many more are needed to reach the same revenue. If most are in the largest (“meaty”) band, fewer engagements are needed, but each one adds a larger support commitment against the reserve.
Sensitivity scenarios
Quiet pipeline year
Project revenue ~£250k. Three or four engagements, mostly small or platform. Directors work fewer hours; little associate work.
Operating cost ~£320k. Operating loss ~£70k.
The loss is covered from contingency and from margin retained in earlier years. Reserve untouched: support commitments to existing clients remain funded.
Expected steady year
Project revenue ~£480k. Six to seven medium engagements plus a handful of small. Directors at full-time, associate base flexed up.
Operating cost ~£420k. Operating margin ~£60k.
The reserve stays at target, with some spending on capability development.
Strong pipeline year
Project revenue ~£630k. Eight to ten engagements across the size mix.
Operating cost ~£500k. Operating margin ~£130k.
The reserve is topped up above target. The surplus pays for capability development and could fund early work on a Phase Three, if one is planned.
The lean-year scenario tests whether the model can absorb a year with little work. In that scenario the loss is covered without drawing on the reserve, so support for existing clients remains funded.
Working assumptions
Costs and rates
- Client-facing day rate: £1,200 per engineering day.
- Internal directors’ effective day cost (loaded): ~£320–380 in steady state.
- Associate day rates: £350–£600 depending on specialism, paid at market rates.
- Operating margin target: ~25% of cost, which is low for the sector. It is intended to maintain the reserve, pay for capability development and cover a lean year.
Capacity and pace
- One engineering day = 4 × 2-hour client-facing sessions, spread across the calendar.
- Each engineer takes 2 × 2-hour deep-work sessions per day for concentrated work.
- Effective project-billable days per director per year: ~120–150 (the rest is intake, scoping, governance, recovery, capability development).
- Engagement size assumptions: ~40% simple, ~35% platform, ~25% meaty by count.
- Reserve-fund target: 12 months of cumulative active support commitments.
Governance and structural
- The asset lock prevents assets being taken out of the company; on wind-down, remaining capital transfers to another community-interest body.
- The three directors are equally accountable, and there are no non-executive directors.
- The annual CIC report is the main public account of the company’s work; audited accounts are filed annually.
- Director pay is disclosed and kept at a reasonable level.
Open questions and uncertainty
The figures above are working estimates. Each item below could change them significantly.
- Pipeline timing. The start date of the first one or two anchor engagements decides whether Year 1 is closer to the lean or the standard scenario. This could be three months away or twelve.
- Engagement mix. The balance of simple, platform and meaty work has not been tested against real demand, and the revenue estimate depends on the average engagement value.
- Director-time ramp. When the three directors move to full-time depends on funded work. The Phase One assumption is ~50% on average; the steady-state assumption is 100%. The change could be more gradual or more abrupt than the single step modelled here.
- Associate fees. Most associate rates are expected to fall within the assumed band, but some specialists (clinical safety officers, security clearance holders) will charge more than £600/day.
- Reserve target. The “12 months of active support commitments” rule of thumb has not yet been tested against actual support load. It will be revised after the first year of operation.
- Inflation and rate drift. Figures are in 2026 prices and are rebased on actual costs at each annual review.
- Regulatory cost changes. ISO 27001 path costs are estimates. Engagements with clinical safety requirements carry significant certification costs of their own, which are scoped per project.
Relationship to other documents
- The interactive engineer-budget tool models specific client × developer scenarios at the engagement level. It shows the monthly financial result of a given team configuration; this page covers the organisation as a whole.
- The funding-area budget is the funder-facing summary of this material, shorter and less detailed, for use in proposals.
- The funders research lists the funders researched for the initial seed (£15–50k, January to April 2027) and the main £250k seed (target from September 2027).