imagine the result billability – billable hours, hourly billability and financial billability...
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Imagine the result
Billability – Billable Hours, Hourly Billability and Financial Billability
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Gross Revenue
Net Revenue
Net Revenue Multiplier
Financial Billability
Operating Income(Income after Corporate Overhead)
Return on Net Revenue (Income percent of net revenue)
Bookings
Backlog
DRO (Days Revenue Outstanding)
Key Financial Metrics
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Why Does Financial Billability Matter?
• Financial billability is a critical driver to our overall financial performance
• FB provides greatest ROI as the average billable hour generates 3 times its cost.
• Match staff levels to workload
• Workload forecasting or Billable Hours forecasting helps with management and delivery on projects
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Billable Hours
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Principles of How Billable Hours are Set
Annual goal for each employee based on hours per week, target billability percentage, plan overtime percentage and allowable benefit hours
1. Establishes direct hour targets for each employee
2. Provides a set number of hours for indirect activities (i.e. training, staff development, podcasts and business development)
3. Management over a longer time period
• More flexibility to tailor use of indirect time
• Employees must always meet project needs first
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Billable Hours Calculation
Example:• 40 hour per week employee, 10% overtime goal, (20 PTO + 9
holiday), 95% target billability goal• 40 hrs X 52 weeks = 2080 Regular Hours• 2080 X 10% = 208 Overtime Hours• 8 hrs X (20 PTO+ 9 holiday) = 232 Benefit Hours• Calculation: (2080 + 208 – 232) X 95% = 1953 Billable Hour Goal
Calculation: Total Available Hours (Total Regular Hours + Overtime Hours – PTO - Holidays) times Target Billability Percentage
• Total Regular Hours: Hours per week times 52 (2080 for most)• Overtime Hours: Total Regular Hours times Plan Overtime
Percentage
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Billable Hours Goal Change FormName Employee Number Start/Change DateSmith, John 12345 12/26/10
Year end 12/25/11Weeks 52.00
Inputs CalculationsHours per Week 40Total Regular Hours 2,080 OT % 10% - Total OT Hours 208 PTO Hours 120 (120) Holiday Hours (64) Available Hours 2,104 Billability % 80%Billable Hours 1,683
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Billable Hours - MyMetrics
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Billable Hours Report
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Hourly Billability
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Employee Ovt %
• 000 – Exempt employees that never get paid overtime, hours worked over 40 are considered EXTRA hours and are deducted from Indirect Labor
• 100 –Exempt employee that will get straight time overtime if 100% billable
• 150 – Non exempt employees will get paid time and a half for all overtime hours in a week
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Billability (Hours)
• Definition – A measure of an employee’s productivity based on hours
• Calculation: Direct Hours / Available Hours
• Direct Hours – hours charged to direct projects
• Available Hours – Total hours paid minus Benefit hours.
• Benefit Hours– PTO, Holiday, Other
• Percentage assigned to each employee to establish individual billable hours goal
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Billability (Hours)Overview
000 – Salary Employee
Direct Hours Divided by Available Hours
• 30 Hours Billable,13 Admin / Marketing Hours, and 8 Hours Holiday
• OT Percent = 27.5% (51-40=11 OT hours / 40 standard)
• Billability = 93.8% (30 Billable divided by 32 )(40 hours paid less 8 TOBE)
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Billability (Hours)Overview
100 – Paid straight time for billable hours over base
• 35 Hours Billable, 8 Training Hours, and 8 Hours Holiday
• OT Percent = 27.5% (51-40=11 OT hours / 40 standard)
• Billability = 100% (35 Billable divided by 35 )(43 hours paid less 8 TOBE)
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Billability (Hours)Overview
150 – Overtime Employee
• 30 Hours Billable and 13 Admin / Marketing Hours
• OT Percent = 7.5% (43-40=3 OT hours / 40 standard)
• Billability = 69.8% (30 Billable divided by 43 )(43 hours all paid)
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Weekly Labor Analysis by Department
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Labor Analysis
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Financial Billability
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Financial Billability• Definition – A measure of an employee’s productivity
based on dollars
• Calculation: Direct Labor $ / Total Accrued Payroll $
• Direct Labor $ – Billable hours times the employee’s direct rate (hourly pay rate)
• Total Accrued Payroll – Total Payroll(Direct and Indirect) + 11.9%(Benefit Accrual) – Benefits Taken
• Financial Billability will also vary based on employees status with regards to OT pay
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Financial Billability
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Financial Billability
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Financial Billability
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Financial Billability by Department
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Financial Billability by Dept/by Grade
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