Luis BrancoCEO| Business Insight, Consultores de Gestão, LdªCarcavelos, Lisboa, Portugal
Dear Rebecca
Interesting your question
Thanks for sharing
If we are talking about training the relationship between preparation time and execution is 3 to 1
that is:
To be able to teach 1 hour of training you need 3 hours of preparation
The ratio is 1/4 = 25%
The same applies to consulting (I don't mean body shopping) Saving Changes...
Stéphane ParentSelf Employed / Semi-retired| Leader MakerPrince Edward Island, Canada
My last employer did track non-billable time, with a specific emphasis on training. They wanted our non-billable time to be below 20% of all hours worked. and training to be at 10%.
I would not recommend dividing NBH by billable hours because increases and decreases will not be in a straight line anymore.
Think about it: if you reduce your non-billable hours by 25% (say you go from 8 hours per 40-hour week to 6 hours), that's a 25% decrease of your non-billable time (it goes from 20% to 15%).
If you divide by the billable hours instead, you go from 25% to 17.6%, which is a decrease of 29.6%. In other words, the reduction in percentage is bigger than the reduction in hours.
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2 replies by Luis Branco and Rebecca Potts
Jan 13, 2020 3:29 PM
Luis Branco
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Dear Stéphane
This 1/4 ratio for training was not created by me
The question is:
Does the price charged for each hour a trainer is providing training reflect this situation?
That is, for each hour in class should bill for 4 hours? (Which ones correspond to the actual work)?
Jan 14, 2020 2:13 PM
Rebecca Potts
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This is good evidence why one would use Non-Billable Time divided by Total time instead of Non Billable Time divided by Billable time. Thanks for putting it so clearly.
Background: At my current company we have a 70% billable target which is awesome because it is not that hard to achieve. We want resources to have time to train, learn, be coached.
One of our other targets is non billable time on Projects though. Sometime we comp time in good faith to a customer because we were learning something we should have known or we took the wrong approach and the new approach should be billed for only. It is important to track the metric of Non Billable time on project so we are careful to not give too much away for free. Therefore, we are paying closer attention to this metric now.
Saving Changes...
Luis BrancoCEO| Business Insight, Consultores de Gestão, LdªCarcavelos, Lisboa, Portugal
Jan 13, 2020 1:41 PM
Replying to Stéphane Parent
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My last employer did track non-billable time, with a specific emphasis on training. They wanted our non-billable time to be below 20% of all hours worked. and training to be at 10%.
I would not recommend dividing NBH by billable hours because increases and decreases will not be in a straight line anymore.
Think about it: if you reduce your non-billable hours by 25% (say you go from 8 hours per 40-hour week to 6 hours), that's a 25% decrease of your non-billable time (it goes from 20% to 15%).
If you divide by the billable hours instead, you go from 25% to 17.6%, which is a decrease of 29.6%. In other words, the reduction in percentage is bigger than the reduction in hours.
Dear Stéphane
This 1/4 ratio for training was not created by me
The question is:
Does the price charged for each hour a trainer is providing training reflect this situation?
That is, for each hour in class should bill for 4 hours? (Which ones correspond to the actual work)?
...
1 reply by Stéphane Parent
Jan 14, 2020 4:44 AM
Stéphane Parent
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Luis, I was answering Rebecca's question as to whether you divide the non-billable time by total time or by billable time.
Sadly - I was subject to this in a few past roles. In all of those, there were thresholds for billable work below which individual contributors were penalized.
This was unfair and myopic because:
1) Most contributors had little direct control over their billability
Kiron is right. Most consulting firms live or die by their non-billable hours, but rather than see it as they are not providing maximized value of their billable hours, they focus on better utilization of non-billable hours. Now if this is taken up by training, hackathons, other innovation workshops, that is ok. But invariably, they turn into the blame game and increased anxiety, competitiveness and misery. Saving Changes...
You need to count NBH that is clear.
But you may want to track how they are used.
Many unbillable hours will have a big impact on billable hours.
I think about training, meeting prospect, preparing a proposal.
I have also seen places where non-billable hours were almost not accounted for, people not reporting them getting close to a burn-out! Saving Changes...
Smaller firms live and die by billable hours, while massive corporations call it Overhead and manage it as an opportunity for cost reduction.
Unfortunately, often most of the overhead reduction becomes people figuring out how to charge their time against some billable project, instead of having to explain what they were doing. Rules are established such as, "If it doesn't take you away from your project more then X minutes..."
The metrics become self defeating. Developing more efficient processes itself is overhead, so if you punish people for working on it, they are unlikely to become more efficient.
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1 reply by Stéphane Parent
Jan 14, 2020 4:43 AM
Stéphane Parent
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That's why you should bundle associated activities' time with the substantive activity: time reporting, continuous improvement, ...
It also points to the need of including such time in your estimates.
Saving Changes...
Michael DelaneyPartner| Delaney Management LLCWest Chester, Pa, United States
Thank you for the insight, I have to agree that especially if you are working with new technologies there is a lot of non-billable hours required to deliver the billable work. Saving Changes...
Stéphane ParentSelf Employed / Semi-retired| Leader MakerPrince Edward Island, Canada
Jan 13, 2020 8:32 PM
Replying to Keith Novak
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Smaller firms live and die by billable hours, while massive corporations call it Overhead and manage it as an opportunity for cost reduction.
Unfortunately, often most of the overhead reduction becomes people figuring out how to charge their time against some billable project, instead of having to explain what they were doing. Rules are established such as, "If it doesn't take you away from your project more then X minutes..."
The metrics become self defeating. Developing more efficient processes itself is overhead, so if you punish people for working on it, they are unlikely to become more efficient.
That's why you should bundle associated activities' time with the substantive activity: time reporting, continuous improvement, ...
It also points to the need of including such time in your estimates. Saving Changes...
Stéphane ParentSelf Employed / Semi-retired| Leader MakerPrince Edward Island, Canada
Jan 13, 2020 3:29 PM
Replying to Luis Branco
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Dear Stéphane
This 1/4 ratio for training was not created by me
The question is:
Does the price charged for each hour a trainer is providing training reflect this situation?
That is, for each hour in class should bill for 4 hours? (Which ones correspond to the actual work)?
Luis, I was answering Rebecca's question as to whether you divide the non-billable time by total time or by billable time. Saving Changes...
