Performance Improvement Calculator
Use this simple calculator to analyze changes in the most critical levers of your Professional Services business. It is a simple yet powerful tool and it only takes a minute to get started. You will find it easy to make adjustments and get instant visual feedback on what your Services P&L may attain.
- Enter the following information to establish a baseline for your business.
- Use the P&L Statement to confirm it looks about right.
- Click on the 'Go to Calculator' button at the bottom of the page.
- Have fun!
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Use this simple calculator to analyze changes in the most critical levers of Professional Services. As a simple yet powerful tool, it only takes a minute to get started. You will find it easy to make adjustments and get instant visual feedback on what your Services P&L may attain.
- The calculator is pre-populated with a set of data to serve as a reference example. You can depress the Reference Example Notes link for further details and notes.
- Complete the five data points included in the Resource Profile and Delivery Profile sections to calculate a pro forma of your Services P&L. A pop up box is available for the definition of the required data input. Further information is available in the Reference Example Notes.
- As there may be some variation in your P&L and the calculator's P&L, it likely indicates where there may be some inconsistencies in the metrics populated. Using your best judgement, make adjustments to the data points so that resulting P&L is a reasonable approximation of your Services P&L.
- Complete the questionnaire and depress the button "Go To The Calculator".
Company X is an established $100 million services business staffed with 500 billable headcount. Current visibility suggests it is able to achieve an average bill rate of $180/hr when it is sells projects to its customers. Its average fully burdened (salary, benefits, bonus) cost per resource is $120,000 annually. Billable utilization and delivery overruns, respectively 65% and 20%, are not at desired levels and the resulting P&L is about 41% of revenue.
The following P&L impacts can be modeled by making adjustments to the levers on the Calculator page:
Billable Utilization :
Holding As Sold Bill Rate and Delivery Overruns constant, every single point change in Billable Utilization increases margin by $1.56 million or 0.9%. If the business were to attain a Billable Utilization of 70% from its current 65%, the business would be almost $8 million more profitable with its business margin increasing from 40.8% to 45.1%.
Delivery Overrun :
holding As Sold Bill Rate and Utilization constant, every percentage point reduction in project overruns provides margin increases of $852k or 0.5%. If the business were to reduce overruns from 20% to 15%, the business would be $4.4 million dollars more profitable with its business margin increasing from 40.8% to 43.3%.
As Sold Bill Rate:
holding Utilization and Delivery Overruns constant, every dollar increase in As Sold Bill Rate increases margin by $560k or .7%. If the business were to increase As Solid Bill Rates by $5, the business would be more than $2.8 million more profitable with business margin increasing from 40.8% to 42.4%.