Services firms have a profound need for business intelligence (BI) to make sense of vast information in order to make profitable decisions. Without this clarity, success is just an illusion.
So how do you move from busy to breakthroughs? The following article will discuss one of the five most critical metrics that every services business needs to understand—billable performance to target. Learn about all five critical metrics in our ebook, The Project Manager's Guide to Metrics. Below we will go into detail on how to define, measure, and calculate "billable performance to target."
What is Billable Performance to Target:
While utilization percentages are a key management metric, from a group or employee performance standpoint, the top performing companies watch individuals’ billable performance to target. Typically assessed on an annual or semi-annual basis, it’s important to watch trends from actual time spent on revenue producing projects, combined with the cumulative projection of future scheduled time on the same. As a result, you can see whether the person or group is likely to achieve their end-of-period goals.
To see if your resources are on pace to achieve their target billable hours for a given time period, you need metrics that display actual and scheduled billable hours relative to target billable hours. As opposed to the billable utilization report mentioned previously, this report is focused on the raw hours rather than percentages. With this report, you also have a view into the future to see if resources are on track to hit their targets or if they are falling behind, and can make key decisions to correct issues.
Decisions to be Made:
If the reporting indicates that an individual is not on track to hit targets, the types of questions to ask include:
1) Are they accurately tracking their time (impacting their projected time)?
2) Does this person have demand for their work ?
3) Are they working on enough revenue generating work versus promotional projects?
4) Is there need for counseling on work performance?
- Billable Actual Hours: Billable hours logged up to the day of reporting.
- Scheduled Billable Hours: Hours scheduled to a resource (past, present, future).
- Target Hours: The percentage of time that a resource is expected to be billable.
- Resource Work Weeks: Actual billable potential for a resource based on their work week (ie: 10 versus 50 hours).
A Look Inside the Report
In this example Mavenlink Insights report, we are assessing Kevin’s potential to meet his annual Billable Target of hours. It appears his Actual Billable Performance started slowly and was under target. That has picked up in recent months, and combined with Kevin’s project schedules over the next 2 months, it appears Kevin will exceed his annual target of 1,016 Billable Hours by 120 at end of fiscal year.