As a time-billing organization, you’re constantly looking for ways to improve business performance. How do you maximize billable time? How do you better deliver on work? Fortunately, you have the answers at your fingertips. You just need to surface them. Here are five essential reports for your time-billing [#section-one]business.[#section-one]
Utilization Report
For time-billing companies, I would argue that utilization rate—or billable vs. non-billable time—is the most important metric. Utilization rate is a simple calculation, but it’s paramount that you view utilization at an organizational level—and that’s rarely so simple. If your current planning or firm management software doesn’t have a visual, high-level utilization report, then it’s time to find a system that provides that kind of visibility.
Use this report to examine rates by discipline, department, role, and the entire organization over any time period. You can view historic utilization trends to pinpoint ebbs and flows and better account for those in the future. And you can set incremental goals.
Ultimately, making sure everyone is busy with billable work is the most surefire way to increase utilization, and you don’t need to increase overall utilization by much to see a major impact on the bottom line. (Learn more about the power of utilization here.) But you can’t improve what you aren’t measuring, so that’s why this valuable report makes the top of our [#section-two]list.[#section-two]
Variance Analysis
It’s human nature: people are optimistic planners. Everyone assumes that things take less time than they do, which isn’t an ideal approach for time-billing companies. If you’re always underestimating how long a project will take, then the work is never done on time, and that throws off the timelines—and budgets—for everything else.
Enter variance reporting. You can run analyses on time, budgets, and schedules to improve the accuracy of your future plans. Take time variance, for example: Compare the time spent on completed projects of similar scope to the time estimated on the original plans, and you’ll quickly see projects that don’t have enough time spent. With variance reporting, you can even drill down to a specific time period to see how things are progressing against the plan or see how a specific person is tracking against their planned [#section-three]time.[#section-three]
Profit Report
When time is money, it’s critical to understand which projects are most profitable and which aren’t. With a profit report, you set the profit target for projects and track against it. Assess overall project profits by department, client, market sector, project manager, or executive-in-charge to identify trends and opportunities for improved pricing of work. Or, drill down into projects or phases specifically to understand margins at a micro level.
This report can also surface any complexities in scope, so you can identify additional services. For example, you may not charge for rounds of revisions on creative. This report would show how much time is consumed by those revisions, so you can then account for that as a service within your [#section-four]proposals.[#section-four]
Workload Report
With a time-billing business, you need to closely track if everyone has enough work for the next quarter. The workload report shows you just that—workload now and upcoming across the organization. Use this report to see which staff or teams have too much or too little, so you can balance the workload across departments. Of course, to access this information, you’ll need to do resource planning to estimate and quantify the workload of your organization. At a minimum, you’ll want to account for contracted and un-contracted work going forward as well as holidays and paid time off.
Now, if you’re a time-billing company and you don’t have a resource planning process—or you’re attempting to plan on spreadsheets—then it’s time to formalize your process on software. Using a resource planning tool is the only way to accurately assess workload and therefore, understand what your organization can and can’t accomplish. Having greater visibility into workload will help ensure staff members are always busy—without burning them out.
Take the workload report one step further: The best planning tools will analyze historical project, planning, budget, and invoicing data to synthesize and accurately predict workload, so you can confidently plan beyond just the next quarter. Workload forecasts provide certainty in an uncertain [#section-five]world.[#section-five]
Demand Analysis
But what about backlog projections for next quarter? That’s where Demand Analysis comes in.
As a business leader, you constantly need to understand if you have the people required to staff projects and deliver work on time. Make that determination too late and you’ll undoubtedly have current staff working overtime to hit deadlines. But, if you hire too early, then you run the risk of having people on the bench, not billing their time.
Many times I’ve gotten in trouble taking on more work than we could handle and stuck working weekends because I thought we needed the work to pay the bills. My approach was to hire when it hurt, but that wasn’t sustainable and morale suffered.
Analyzing demand enables you to perfectly time hiring. This report compares upcoming demand for each role against the capacity of staff in those roles. When demand exceeds capacity, it’s time to hire. Conversely, when the work backlog isn’t enough to keep staff busy, then it’s time to bring on more work or allocate staff to projects elsewhere in the company. The best workforce planning systems will even offer specific recommendations, like “Hire a project manager in the next 60 days,” and highlight the needed skills of that project manager role.
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