Project management is such a broad term that it can include a lot of activities. And everyone has a unique perspective or opinion of its meaning. But it’s basically everything related to doing a project. Please comment on the video below.
Define Project Management: The activities and methods used to successfully complete a project or job, usually constrained by time, cost, or scope.
The constraints listed above are the biggies! We all have an idea what the activities are. But often the constraints are not given the priorities they should. Consequently, projects go over their budgets, both from a time and cost perspective. This usually happens when the scope becomes a moving target you can never catch up to. The customer wants more and more, but forgets that it costs more and more, and that it takes time to reach that elusive goal.
Consider these two videos to learn more about project management and the constraints you’ll face:
Your effective billing rate is how much you make per hour, even when you’re not working. Average all your revenue over all your hours, and you have the amount you’re effectively getting. Watch the video below and comment on it.
Define Effective Billing Rate: The billing rate you are actually getting when all working hours are included in the calculation of revenue divided by hours.
Here’s the deal… consultants usually can’t bill for every hour they work. They perform in-house tasks. They attend company meetings. They have admin overhead. Those are usually not billable activities, so you don’t get paid for them. You only get paid for the billable activities. So divide your total revenue by your total (billable and non-billable) hours and you have your effective billing rate.
Here’s an example: Say you worked 40 hours and charged $100 per hour. All the hours were billable. Your total revenue for the week is $4,000 and your effective billing rate is $100 per hour. Nice!
But what if only 30 of those hours were billable? The other 10 were admin. Your total revenue is now $3,000. $3,000 divided by 40 (total hours) is only $75 per hour.
Your effective billing rate includes admin and other non-billable time.
Fixed-price contracts can be beneficial to both consultants and clients. Both parties know exactly what they’re getting. Scroll down for the video.
Define Fixed-bid contract: An employment deal where the price is agreed up before the work begins, and cannot change.
Most fixed-bid or fixed-price contracts are paid on milestones. Clients usually agree to pay in three installments: 1/3 up front, 1/3 at beta, and 1/3 at completion. But milestones can be anywhere in the middle for any reason. The contract total will always be the fixed agreed-upon price.
Why are fixed-price contracts good for clients?
The most obvious reason is that fixed-price contracts can never run away into huge cost overruns. The supplier will never get more than agreed.
Why are fixed-price contracts good for consultants and suppliers?
The supplier has fewer incentives to accept a deal like this, but there are some upsides. One is that the deal cannot be canceled partway, leaving the consulting party without revenue. Another is that the deliverables are tightly fixed, and scope creep is less likely to occur.
Have you tried the invoice milestones on Standard Time®. Good news, you can do it today. Just download a plug in your milestones. Then run a client invoice for each payment milestone.
I’m scheduled for 40 hours this week, but I’ll probably work closer to 90. If those are billable hours, then that over 200% utilization! Awesome! Unsustainable, but awesome.
Define Consulting Utilization Rate: The percentage of scheduled hours spent on client billable work.
A 200% utilization rate is pretty amazing, and also completely unsustainable over the long run. That is why Standard Time® forces you to choose a date range when examining the utilization rates. It’s not going to be the same for every week, or every month, or even for ever year. It changes all the time, depending on how much time you spend on client jobs.
How to calculate utilization rate: Divide client billable hours by scheduled hours. The results is a percentage of utilization.
Employee utilization is also closely connected to effective billing rates. If you are scheduled for 40 hours, but only work 20, then your billable amount must be spread over the full 40. In that case, it’s 50% of what you got. In other words, for every scheduled hour, you got only 50% of your total billable rate.
How to calculate effective billing rate: Multiple total client revenue by utilization percentage.
Crazy stuff? Don’t worry; there’s a simple report in ST that calculates all this. Just click it and go. But you may not want to know the results. Just kidding… you’ll be just fine, and probably happy that you knew.
Honey, you have to work again? Yes, but I get all those comp time hours. We’ll take a nice vacation to the south of France. (Hint, hint) That pretty-much sums up compensatory time, or time off in lieu.
Define Compensatory Time: Employee time off given in exchange for overtime.
Getting comp time always feels good. It’s like a free holiday. Of course everyone is expected to work a little extra from time to time. So that’s only natural. But getting a three-day weekend is golden!
But what software are you using to keep track of this? Let’s say you have fifty employees. Each one gets comp time at least twice a year. That’s one hundred special-case time off situations you have to juggle. How do you handle that? Is there some software to do it? Or do you use a spreadsheet?
Did you know that your project tracking app has it? Yep, ST can track PTO and comp time. Watch the video below, and then click the link at the end. You will like this almost as much as a three-day weekend. 🙂