Workload vs. staff

May 12, 2016

Screen Shot 2016-05-12 at 3.05.45 PMHow do you get a handle on billable hours and overhead without losing yourself in spreadsheets? Rely on the gut instincts of your department managers. I’m honored The Zweig Letter asked me to be a contributor. In the 15-plus years since Crafton Tull began our subscription, we have drawn on the newsletter’s wealth of information to help our business too many times to count. I hope I can live up to the high standard of this newsletter. First, the obligatory disclaimer: I’m the CEO of a mid-sized architecture, engineering, and surveying firm located in the central part of the United States. Like anyone, it is my personal experiences that shape my views, and my opinions may or may not be applicable to your firm, depending on its size, location, or services offered. Many of the needs and processes of larger firms are decidedly different from those of mid-size or small firms. I think probably the most difficult issue managers in the A/E/P and environmental industry have to grapple with daily is workload versus staff. The fastest train to the poorhouse as professional service providers is to have a bunch of people without enough billable work to do. It takes revenue generating work to cover expenses (especially that of payroll), so the more our people charge time to overhead tasks, the less revenue we produce, and the harder it is to make a profit. Industry managers use many metrics to gauge whether their business is operating as well as it should be. From reading different publications and talking to my peers, it seems that each firm uses its own variety of measures to varying degrees. Our firm is no different. We look at project variance (budget overruns), as a measure of project management effectiveness. Our departments have goals for revenue, income from operations, and sales (new contracts). However, for my money, pound for pound, staff utilization (billable hours divided by total hours), gives the quickest insight to profitability. I know when we hit a certain percent utilization, we’ll be profitable, and if we don’t hit that number (say, during the holidays), we aren’t profitable. Granted, like any other metric, staff utilization can be manipulated by the unscrupulous. You can pump up your utilization by charging an excess of hours to jobs, but then you risk running out of fee quickly. Or, you can charge actual billable time to overhead to keep your budget looking good, but your utilization suffers. We tell our people to ‘charge it like you work it’ and let the numbers fall where they may. Most firms I know include “Integrity” as a core value, so being honest on time sheets should be a given. If you’re going to have the word Integrity on a poster on the wall, then you ought to practice it throughout your business, including the time sheet. So, how to manage workload vs. staff, and better yet, how to predict what it’s going to be over the coming months? We used to spend many hours in spreadsheets in the pursuit of estimating our revenue vs. costs over future time periods. Each project manager had a workload spreadsheet showing each of his or her projects, and each month they were to estimate the revenue for certain time periods. Those PM workload projection spreadsheets linked to department spreadsheets which then rolled up all the PM numbers for that department. We then added “marketing projections” for projects we were “sure” would be in-house in future months; and all departments were then linked and rolled into one giant spreadsheet showing projected company revenue for the coming months. I know firms that use similar systems, whether spreadsheets or enterprise software, to do this. You can get really intricate by projecting the hours each person will work on each project in each week. You can then roll that information into summary spreadsheets and reports to project how busy each person, department, office, or division will be. I’m not opposed to that. PM’s and department managers gain real, useful insight by analyzing the amount of work and whether the right staff is on hand to get the work done. However, from a top level management perspective, over many years of experience, we found a much simpler system that is about as accurate as the intricate. Each month, I ask our department managers to give me a quick guesstimate of their workload over future months 1-2, months 3-4, and months 5-6. Those estimates are represented using arrows: an up, green arrow means they will be busy and will meet or exceed their target; a side-to-side, yellow arrow means they will be steady and may or may not meet their target; and a down, red arrow means they need work and will struggle to meet their target. Put them all together and you’ve got a pretty good picture of what the coming months will look like. Too simplistic? Maybe, but it works for us. We’ve found that this approach gives us a fairly accurate picture of what our workload will be for the coming six months. It also means we don’t have legions of people spending hours and hours in intricate spreadsheets trying to project revenue and costs down to the penny. And honestly, we’ve found we get as much accuracy with the simple system as we did with the complex. Granted, this system, like any other, requires integrity and accountability. Our managers know that I expect honesty in their “arrow projections.” If a manager paints an all green, arrows up, rosy picture but doesn’t meet their target utilization, they know we’ll be having a talk about that. Again, I’m not at all down on PMs and department managers getting into the nitty-gritty of project planning. I’m all for it. But, from the top level perspective, this simple, gut feel approach works for our business. Matt Crafton is president and CEO of Crafton Tull – an architecture, engineering, and surveying firm based in Rogers, Arkansas. Contact him at

This article is from issue 1146 of The Zweig Letter. Interested in more management advice every week from Mark Zweig, the Zweig Group team, and a talented list of other guest writers? Click here for to get a free trial of The Zweig Letter.

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