Transcript Slide 1

Billability – Billable Hours,
Hourly Billability and
Financial Billability
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result
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result
Key Financial Metrics
 Gross Revenue
 Net Revenue
 Net Revenue Multiplier
 Financial Billability
 Operating Income
 Return on Net Revenue
 Bookings
 Backlog
 DRO (Days Revenue Outstanding)
(Income after Corporate Overhead)
(Income percent of net revenue)
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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
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
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
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Billable Hours Goal Change Form
Name
Smith, John
Employee Number Start/Change Date
12345
12/26/10
Year end
Weeks
12/25/11
52.00
Inputs
Hours per Week
Total Regular Hours
OT %
Total OT Hours
PTO Hours
Holiday Hours
Available Hours
Billability %
Billable Hours
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Calculations
40
10%
120
2,080
208
(120)
(64)
2,104
80%
1,683
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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Imagine the
result
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