Posted on

Utilization Rates

Here is a utilization report that records the number of hours employees spent working on projects in a given date range.  You see how many of those hours are billable verses non-billable.  That results in a effective billing rate.  I.e. the true rate you are getting.

Why is a utilization report important?

Utilization reports tell you how effective your business is.  They tell you how much you are earning.

Let’s say you have ten consultants on staff.  They all bill out at about the same rate.   Nine of those employees have an average of 20% administrative time.  The other has only 15%.   Nine of them are working about 40 hours, while the tenth one is consistently working 50.  Sure, not all 50 are billable hours.  But still, 50 is huge.

You can easily imagine that the ‘star’ employee is pulling down a lot more dough than the other nine.  But how much?  Run a utilization report and you’ll see.

Here’s an example of two consulting scenarios below.  Your star consultant is banking a lot more than the other nine.  And the effective billing rate is higher.

180 hours 150 billable $100 per hour $15,000 revenue $83 effective rate
225 hours 191 billable $100 per hour $19,125 revenue $85 effective rate

But do you know the utilization and rates your consultants are working at?

It’s real easy to find out.  Just run one of these reports.  When you do, you must choose a date range.  Try running monthly reports, and then try quarterly, and finally yearly.  You’ll learn a lot about your actual track record.

Download from www.stdtime.com

But wait… people are not machines

There’s just one thing… people are not machines.  Don’t expect to measure things like horsepower and mean-time-between-failures and such.  If you want higher effective billing rates, more hours, and more revenue, you’ll have to inspire employees to want to do more.  You can’t wave a utilization report in front of them and demand more.  It doesn’t work; they’ll probably quit unless they really need the work.

Employees want to be inspired and be part of a cause.  That cause often includes stepping stones to more responsibility and promotions by becoming an integral part of the organization.  It involves fulfilling the long-term goals of the company and securing long-term viability in the marketplace.

So… utilization reports are nice.  And probably a requirement for viable consulting firms.  But are you using them to inspire, or just to demand more?  Something to consider…

 

 

 

 

 

 

Posted on

YouTube Video: Consulting Software

This YouTube video for consulting software is pretty neat. It covers a lot of ground in five minutes, and is worth taking a look at. Amateur, but neat. The premise starts with a timesheet and closely related time log view where consulting hours are displayed. Of course, the timesheet is a typical Monday thru Friday grid with client projects on the left. Things got cooler with the time log ivew. The time log displays the same records as the time sheet, but in a top-to-bottom view.

Consultants will drool over this. Trust me.

For every time log record (which is also displayed in the timesheet) you get a client field, project, category, start and end times, actual work field, client rate, client cost, billable, and billed columns. There are other columns not shown that can be added to this view. Plus, you can filter that time log view to show only the work you did for a certain client or project, or only the work for a selected consultant. Or only work for a selected date range. That’s slick! You can also filter out the non-billable records and only see what is billable to the client.

But this is only where the app just begins…

The video goes on to show a glimpse of the billing rates window. (Wish it showed more.) It seems that you can set the billing rates for each consultant, and for each project they work on. So every consultant has his own rates for every project. And they only see the project they work on. Nice. But again, the video is brief, so you have to check this out for yourself – it’s just a five minute overview.

If time tracking is not enough, there is a menu item to show project revenue over a 12-month timeframe. This lets you see trends for the coming months and identify bad months that require attention. If only it also showed historical results for the last 12 months… That would be cool, but probably not as useful. Every project has its own win/loss percentage projections so it acts like a sales funnel. But all that’s a side issue that consulting companies get for free. Sure, you’ll use it, but the real stuff is logging billable hours.

The video sticks right to the point: client receivables and consultant utilization rates. That’s is the heart and soul of consulting. Get those wrong and you fail. So those reports let you see where your money is coming from, and what your effective billing rate really is. In other words, how much is your organization is billing for the work it does. Reports like this naturally raise the question, “How to increase your effective billing rate?” Edging out small increases is what consulting is all about. If you spend too much time on non-billable or in-house jobs, you die. If your effective billing rate is too low, you die. If you don’t book gigs, you die. If you don’t invoice billable hours, you die. This program seems to get that.

What is not mentioned in this video is equally valuable: expense tracking, client invoicing and QuickBooks integration. Yes, the product has those things, but the video fails to highlight them. Why? Not enough time, I suppose… I’m not sure. But it’s nice to know that there’s more to this product than the basics that can fit in a 5-minute video. Definitely worth a look.

Check it out: Consulting Software

Posted on

Should You Go Cloud?

That is the question…to cloud, or not to cloud?  I recently read an article by Sarah Fister Gale, found here: http://www.pmi.org/~/media/PDF/Publications/PMN0312%20cloud.ashx
It is interesting how many people go to the cloud without knowledge of security, back-up, redundancy, and so forth.  There is little doubt that the cloud has many positive attributes.  That is why cloud usage continues to experience robust growth.  However, too often people just assume the cloud is a magical solution with hardly any issues.  Well, that is normally the case…unless you happen to be my brother-in-law.  His company was utilizing a cloud hosted credit card processing service.  And things were great for nearly two years, until the cloud server went down and there was no back-up plan in place.  It took 3 days of hand wringing and lost sales to get back online.  In addition to immediate lost revenue, he lost long term customers.  The article above will certainly give you an idea on specific questions one should ask and a basic outline to help you make a solid choice for your cloud solutions.

�

Posted on

Ethics in Project Management

With all the pressures of managing a project, it is easy to be swayed and make poor decisions. Pressure can cause a person to rise to the occasion, or crumble in a pile of heap. Most often, however, a person may do things they thought impossible…cheat, lie, twist the data? Unfortunately, this happens more often than we would like. As a project leader it is important to maintain character and integrity. Short term gain based on any type of shenanigans will cause long term pain. For example, say you’re leading an IT project and your developers are having trouble meeting deadlines. You instruct them to “dump” a few outlying features…the customer won’t even notice or use that feature until long after we are done. It’s not a big deal. Two things are going to bite you, one is obvious, the other not so much. The obvious gotcha will come when the customer realizes you didn’t fulfill one of the expected features and becomes upset and makes some waves. The other less obvious problem, your team won’t trust or respect you. They see clearly how you manipulated the situation and trust is broken…even if they agree and would have cut corners too! Take the issues head on. Consult the customer on the scope and change and instruct your team accordingly. You may disappoint the customer now, but your project will keep integrity and your project team will respect your leadership.

Posted on

Project Portfolio Management

Project portfolios are helpful for grouping work and managing projects individually and as a whole. Many companies start out not utilizing project portfolios. Then, as the company grows projects become unmanageable and the need for project portfolio management becomes clearer. Portfolio management helps companies maintain efficiency and breaks project work load into manageable pieces. It is vital that whatever project management software you utilize, be sure it is scalable to include project portfolios. It is likely you will need it! There is way too much to cover in this short blog. However, a pretty good white paper can be found from Mosaic Project Services at the link below.

http://www.mosaicprojects.com.au/WhitePapers/wp1017_portfolios.pdf

Posted on

Planning for Pathological Issues

One of the more recognized terms in any business is Paralysis by Analysis…or Analysis Paralysis. You know, when nothing moves forward because too many people have to buy off on an idea, or a single person is the team lead and afraid to jump in with both feet. Well, I believe one way to identify Analysis Paralysis is to look for the most common symptom…pathological cases/scenarios. This is easy to spot. When “what ifs”, that are highly unlikely continue to pop up, then you can get stuck in the “what if” cycle, causing Paralysis by Analysis. These pathological cases have a sliver of possibility but cause an overwhelming fear for the project team. Then you’re off trying to plan or prevent the impossible. I have seen this happen many times and more often than you may think. Project leaders and team members can easily become myopic when focusing on their work. In my experience the best way to tackle pathological cases is head on. Politics is one thing, but a never ending project is another.

Posted on

The Collaborative Process in Project Management

I understand the latest fad in management styles is the collaborative process. Part of the collaborative process is encouraging multiple people to arrive at a decision as a unit, or on behalf of the unit – where, in times past, there was a “buck stops here” person. Now there is a buck stops here, over there and just about anywhere group of people. While the collaborative process has a place and is effective in many scenarios, it is dangerous when it bleeds over into a non-collaborative project structure. I’m not saying project teams shouldn’t work together to collaborate and solve issues. In fact, just the opposite! Project teams are a TEAM by definition, working together towards a common goal. However, with a younger generation being taught the collaborative process so heavily, it can cause issues when they veer out of their lane and bypass a structural hierarchy or chain of command. The collaborative process is great until a person makes a decision without actually collaborating with the person/persons responsible for that particular area of concern. By the time the “true decision maker” finds out, the decision has been made, announced and partially implemented. Now we have a real mess. Collaborate on that!

Posted on

Project Tasks and Issues Tracking

You identify the scope and nature of a project. Design the project plan and assign resources and begin the process of real work and plan executions. Many tasks follow a predicted path and glide down the slope toward completion. Others hit speed bumps and issues arise. If you only encounter a few issues along the way, they are fairly easy to manage with emails and spreadsheets. The issues still require special attention and follow up costing time and energy, but manageable. What happens if you 130 issues arise in a short period of time (as is often the case in software development and bug fixes)? Spreadsheets and emails won’t cut it. In no time you lose track of events, issues and milestones. I am pointing out the obvious. But I have counseled hundreds of project managers using outdated tools and methods to track issues. Maybe project management and issue tracking software/tools cost a little money (others cost a lot of money), but believe me, they will pay for themselves many times over in saved projects, efficiency and ultimately the bottom line.

Posted on

Trust Me, I’m a P.M.

An often overlooked step in the project management team is the project/client representative. The person responsible for being the messenger, intermediary between the project team and the client is a critical role. Larger companies pay professionals to strictly fill this role, while smaller companies often let the PM handle that role. This is fine in most cases, unless your PM is not good at customer relations. Customer relations’ professionals spend their entire day thinking of how to build trust, gain confidence, and maintain a relationship. Project managers spend their day doing this on some level within their project team, but it is not their main focus. If you are good at customer relations it will make the project run smoother because the client will have a certain level of trust. If you are not, the project becomes hindered. Why? Because, the client doesn’t have a needed level of trust in you, they begin to question your work. Now the client wants more status meetings. Maybe the client begins to micromanage your project and requires more of the project manager’s time and attention? This can quickly snowball because of one misunderstood statement that breaks a fragile trust. Whoever is communicating with the client, make sure it isn’t General Patton. While he gets the job done, in the project world he would make the job more difficult.

Posted on

Negotiating and Managing Project Expectations

One of the many factors in project cost overruns is due to setting unreasonable expectations. Whether working as a consultant outside a company or as a project manager within a company, all too often we become “yes” men to secure a deal or please superiors. We may win in the short term by getting the job or by delaying management’s wrath by telling them what they want to hear, but, in the long run, both scenarios are losers. As a consultant you land the gig and wind up with bad word of mouth advertising as being late and over budget. As an internal project manager you develop a reputation of being unreliable and/or overly optimistic. Instead, be real and upfront about duration and costs of expected projects. Give pushback to help set reasonable expectations. Maybe someone else will promise the moon? You should challenge competitors’ unreasonable assertions. You may still wind up losing the deal, but in the long run you will maintain your reputation and eventually land more deals because of it. Short term pain for long term gain is tough in this economy. What is your word worth and where do you go to get your reputation back?