Consultant Utilization
Sunday, April 18, 2010
I have had a number of conversations with our partners recently about acceptable utilization percentages for their consulting teams. There is no golden answer to that questions and the perfect target will depend on many factors. I have seen targets range from 60% to 95%. I want to share you you the one little gem that I have shared with these partners. Daily Timesheets.
DAILY TIMESHEETS. If you want to add up to 20% utilization (20% profitability) to your ERP practice move to Daily Timesheets today. Do not wait, do not trial it, just make it happen.
WHY: On a Monday morning a consultant has just had a weekend at the beach, playing football, reuniting with the kids. Monday is a time to attack a new week with new enthusiasm. So when you look at completing last weeks time sheets you aim to fill in 40hrs. Consultants gloss over the fact that they were onsite until 9pm on Tuesday redoing those reports after the IT department deleted them all by mistake. As long as they record 40hrs no one will ask any questions.
On a Friday evening when you are in a rush to get to your first Pina Colada it is easy to forget that: you worked through lunch, started at 7:30am 2 days in row or dialled into 2 clients from your hotel room. On a Friday it is very easy to forget that 4 hrs of time was clearly out of scope, but to keep the Grumpy Financial Controller happy you stayed back and did the work, plus you have to come next week and it might cheer him up if you do not bill them!!!
A consultant does not mean to forget time or under bill. It is not their fault but if you allow time to be entered once a week it will happen.
CONSULTANTS WILL COMPLAIN: 100% guaranteed. They will complain bitterly and repeatedly. There are plenty of reasons why your request is totally unreasonable and even irrational. You will hear the following : We have enough to worry about! It is too hard to enter the time sheets! The client will not let me on the internet! I am too busy! Are you trying to be some sort of big brother! Consultants will hate it and possibly hate you.
ENFORCE IT: This is where you MUST follow through. Insist on Daily time sheets, and call by 9am the next morning if they are not complete. Do it Every Day. Do it Every Day and the day after that. Nag Nag Nag until your message gets through.
THE RESULT: Utilisation and billable hours will increase by 20%. Do you believe me? We did it a few years ago and that is exactly what happened. When a consultant finished up at 9pm and immediately enters the time sheet – it will be for 12hrs not 8hrs. (to the consultant: it does no one any favors to flog yourself hard and then give you time away).
If a consultant knows you are going to review their time sheets every day, they get cleverer. Instead of finishing their job, and running off for an early mark at 4pm they take a walk and starting asking end users about reporting needs, new smart lists, and setting up favorites menus. That means 1 more billable hour in the day.
To the Practice Manager:
1. Make time sheets easy to enter
2. Always have projects entered and budgets set on time
3. You must be diligent and follow up.
4. Lets say you have 10 consultants, and you can add 4 hrs utilisation per week/per consultant. That’s 40 hrs per week. Assuming you allow some holidays and training lets say thats 46 weeks. Let’s assume a billable rate of $180p/hr. $331,000.
To the Consultant:
1. Please do not hate me for this.
2. It is in your favour. Assuming you have negotiated the correct remuneration package – the more you bill the more you get paid.
3. Clients almost never respect Freebies. Set the tone early that your time is valuable and they will pay for it.
4. Accuracy in time sheets accurately shows the Practice Manager true capacity. If the practice manager know’s what you ‘really do’ then they can make sensible decisions to support you or grow the team.
DAILY TIMESHEETS. If you want to add up to 20% utilization (20% profitability) to your ERP practice move to Daily Timesheets today. Do not wait, do not trial it, just make it happen.
WHY: On a Monday morning a consultant has just had a weekend at the beach, playing football, reuniting with the kids. Monday is a time to attack a new week with new enthusiasm. So when you look at completing last weeks time sheets you aim to fill in 40hrs. Consultants gloss over the fact that they were onsite until 9pm on Tuesday redoing those reports after the IT department deleted them all by mistake. As long as they record 40hrs no one will ask any questions.
On a Friday evening when you are in a rush to get to your first Pina Colada it is easy to forget that: you worked through lunch, started at 7:30am 2 days in row or dialled into 2 clients from your hotel room. On a Friday it is very easy to forget that 4 hrs of time was clearly out of scope, but to keep the Grumpy Financial Controller happy you stayed back and did the work, plus you have to come next week and it might cheer him up if you do not bill them!!!
A consultant does not mean to forget time or under bill. It is not their fault but if you allow time to be entered once a week it will happen.
CONSULTANTS WILL COMPLAIN: 100% guaranteed. They will complain bitterly and repeatedly. There are plenty of reasons why your request is totally unreasonable and even irrational. You will hear the following : We have enough to worry about! It is too hard to enter the time sheets! The client will not let me on the internet! I am too busy! Are you trying to be some sort of big brother! Consultants will hate it and possibly hate you.
ENFORCE IT: This is where you MUST follow through. Insist on Daily time sheets, and call by 9am the next morning if they are not complete. Do it Every Day. Do it Every Day and the day after that. Nag Nag Nag until your message gets through.
THE RESULT: Utilisation and billable hours will increase by 20%. Do you believe me? We did it a few years ago and that is exactly what happened. When a consultant finished up at 9pm and immediately enters the time sheet – it will be for 12hrs not 8hrs. (to the consultant: it does no one any favors to flog yourself hard and then give you time away).
If a consultant knows you are going to review their time sheets every day, they get cleverer. Instead of finishing their job, and running off for an early mark at 4pm they take a walk and starting asking end users about reporting needs, new smart lists, and setting up favorites menus. That means 1 more billable hour in the day.
To the Practice Manager:
1. Make time sheets easy to enter
2. Always have projects entered and budgets set on time
3. You must be diligent and follow up.
4. Lets say you have 10 consultants, and you can add 4 hrs utilisation per week/per consultant. That’s 40 hrs per week. Assuming you allow some holidays and training lets say thats 46 weeks. Let’s assume a billable rate of $180p/hr. $331,000.
To the Consultant:
1. Please do not hate me for this.
2. It is in your favour. Assuming you have negotiated the correct remuneration package – the more you bill the more you get paid.
3. Clients almost never respect Freebies. Set the tone early that your time is valuable and they will pay for it.
4. Accuracy in time sheets accurately shows the Practice Manager true capacity. If the practice manager know’s what you ‘really do’ then they can make sensible decisions to support you or grow the team.
Very nice article……
Excellent article, I agree. I previously managed a consulting practice with 6 consultants, and can confirm that those who did not track their time on a daily basis failed to record all of their billable time and had lower utilization.
The top three consultants recorded their time every day using Excel or the web-based timesheet system. These consultants were more organized, more
Thanks for the input Steve. I have intentionally stayed away from discussing the mechanism or recording the timesheets. This is something for each organisation to work out.
The other thing that daily time sheets help with is identifying out of scope work, and ensuring there are separate budgets in place for this, and it is not all rolled up into one weekly number.