The second most popular blog I’ve ever written was called “How to Maximize Labor Utilization”. Despite being posted in October 2012, it’s still one of our most read blogs and included a link to the Labor Utilization Guide.
The premise of the blog was how to end the vicious cycle of over and under capacity for service delivery teams and get off the profitable-unprofitable months roller coaster. The move toward Managed Services has helped many companies smooth out part of the revenue cycle, but most channel partners are still providing a mix of Project based professional services and Managed Services and so the problem of how to maximize billable hours and professional services revenue is still a high priority.
3 Common Sense Approaches to Maximize Billable Utilization:
Approach #1): You need to be able to book and forecast resources based on specialization or skill set: If you have 10 engineers or technicians, it’s not as simple as adding up 40 hours per week, multiply by 10 tech’s and then trying to book 400 hours of work for them to do. The truth is, most organizations either have specialized resources (cabling, project managers, trainers, NOC, .net programming, etc.,) or they have certain resources who are stronger at certain tasks. So you don’t really have 400 hours of “generic work hours” available, what you really have is 120 cabling hours, 120 project management hours, 40 Training hours, 80 NOC hours and 40 .net programming hours.
So in order to maximize billable utilization you need to be able to do two things; a) You have to be able to see the current number of hours of ‘booked work’ by specialized resource type per calendar week or month and, b) you have to be able to Forecast what’s in the sales funnel by resource type that has a high probability of closing in each calendar week or month. By combining those two pieces of information, you’ll know how close you are to capacity for any specific skill set in a particular time frame and this may drive decisions to discount (better to break even on work than have people sitting on the bench), subcontract (if over capacity), or start planning for new hires (if really over capacity).
Approach #2): You need to be able to map specific skill sets to specific resources: Each of the engineers or technician needs has to have a ‘library’ of skill sets associated with them. This allows the scheduler or Project Managers to see which resources with specific skill sets are available for tasks that need to be scheduled in specific time frames. For example, a particular task may require a Cisco CCIE certification, and so the scheduler or Project Manager needs to know which resources have that certification AND which ones are available in the time frame the task needs to be completed.
If you are manually tracking who has the certification and then try to map that to a shared Outlook or Google calendar (and accommodate the inevitable schedule changes) that’s going to be a very difficult job. What you really need is an automated solution that will only show you the resources who have the skill set to do that task and better yet, only the ones that are also available in the required time frame.
Approach #3): You need to be able to track estimates to actuals in close to real-time: The most accurate plans in the world are seldom executed without any changes or modifications. Emergency service work, unexpected delays and customer driven changes are the norm, not the exception. So if you can’t see on a near to real-time basis, how your actual hours are progressing compared to your estimates (by specialized resource type), then you’ll be back on the profitability roller coaster again in no time.
Finding out at the end of a project or task that you’ve over-run the estimate is a lot like driving a car by looking out the back window and only finding out there’s a problem once you’re in the ditch. It’s hard to make a course correction at that point. Having visibility into the progression of actuals hours vs. estimates makes it much easier for the scheduler or PM’s to make course corrections and balance resource allocations across multiple projects or tasks.
In the early stages of a business, yelling updates across cubicle walls, forecasting on a white board and scheduling manually will work to a certain point, but once resources start to get more specialized and once you start to moving towards multiple lines of business (Project based work and Managed Services), then you really need to consider some type of automated support for resource management if you hope to have a real shot at maximizing billable utilization.
For more information about the best approach to tracking billable resource utilization, download the PROMYS Labor Utilization Guide.