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Utilization Rate Goals
Posted by ctompkins on March 8, 2021 at 8:23 pmSo I work for an engineering firm and we are adjusting the utilization goal rates across the entire company.
Does anyone have a good go by for a survey department? Does Survey Department head all the way down to instrument operator?
BStrand replied 3 years, 1 month ago 12 Members · 16 Replies- 16 Replies
Assuming that your people get 2 weeks vacation, and a week of sick time, and 5 paid holidays per year you are already down to 92%.
Are you going to allow some time for training/skill development? How about Work Standards and the documentation thereof? What about marketing?
Utilization rate is a number that I abhor. So easy for both sides to abuse. So easy to be unrealistic. So easy for it to lead management into unwise decisions. Above all, it’s a sign that beancounters are driving the engineering decisions.
IMO, if Utilization is much over about 70% you aren’t doing enough business development. But I always see these goal numbers much higher than that, and then the undershoot is used as a club. Which motivates the staff to run up their personal rate by camping on billable projects, making proper staffing and appropriate workload more difficult to determine. Leading to organizational bloat and overbidding the next job.
If you must I’d rather look at it from the other direction. See what it is and look at ways to improve rather than setting goals right away. Keep the numbers secret from the rank and file or they will become meaningless.
Do instrument operators work in a different department in your engineering firm?
Depends on the firm, size of the firm and management. I’ve worked at places that never once mentioned utilization and I’ve worked at ones that monitor utilization weekly. In my experience those with an eye on the utilization #s are ran much better as it helps the employee and the employer when implemented correctly.
There are many ways to measure this rate and that is a key component. We take out all our allotted vacation and holidays to establish each employees 100% baseline and then establish expected rates from there based on the position of the person. It varies greatly and can vary greatly from firm to firm. A firm shooting for 10% profit will be a a much lower overall utilization rate than one shooting for 30% profit.
I think at each place I’ve worked that used this strategy I was at 85%, but that’s when I was mostly in the field. Management was around 65% I think.
Field crew utilization rates should be 40/hrs/week, they’re the engine that pays the bills in construction & boundary surveying. Minus of course vacation, sick leave, etc. I worked at small shops at an hourly wage where sometimes on Thursday there was no work and we were sent home. Bad ju-ju and I moved on to an outfit which I was a 40/hr/week employee year round. The key was if inundated they’d pay us overtime for weekends and 10 hour days, then hire subcontractors to help with the load, and if times were good hire another crew for more profitability. Conversely if business contracted they’d not cut hours and instead lay off field crew members so they could get unemployment and maybe rehire them when things got better.
Upper management is susceptible to the same invisible hand in well run outfits. I was “Survey Supervisor” and ran 5 construction crews which was highly profitable until a building recession hit and we dropped down to one crew and my boss let me go, no longer needed. That was fair.
@norman-oklahoma Nailed IT!
you need to consider in the business style:
1. flat fee for each project (or task within the project)
2. hourly rate style (log time to projects, clients are charged for the Time)
3. some mix of the above.*the workers do Not necessarily need to know! only the Senior Management need be directly involved in those details
In my observation the majority of the Profitable firms are Type 1, exclusively.
tight project management is required: know when you are going Out Of Scope
of course a clear Scope must be determined, and sufficiently detailed in the contract.Big or Small. it matters.
I’m 80% with @norman-oklahoma
But…without realistic individual utilization rates you can’t get to the downstream metrics that you need to run a decent sized business (capacity utilization, optimal billing, ideal utilization, etc.). I studied a lot of process improvement theory (Six Sigma, etc) back in the early 2000’s looking at ways to adapt it to professional services and one element from all the reading that stuck in my head as a surveyor “If you can’t measure it, you can’t manage it”
The downside comes into play when people use them as a sole performance metric, rather than one data point (kind of like taking the temperature in a hurricane and saying “well it looks like a nice day, it’s in the low 80’s)
That said UR qua UR across organizations is meaningless, because my experience is that once you get past field crews and office technicians there is no standardization of roles versus titles in our profession. I’ve been a “Senor Project Manager” at firms where I was expected to be 80% billable and had no real overhead tasks other than proposals (which really should be considered overhead and should be tracked as projects so that the cost can be recovered – don’t start me on that), and I’ve had the same title at firms where my goal 50% and I performed long range planning, attended conferences, went on college recruiting trips, etc..
That’s a round about way of saying, first make sure you have a standardized series of tasks for each position/title, then make UR goals that fit what your corporate culture expects from the staff.
**And for everyone under the whip of bean counters who look at your UR on a weekly basis there is hope – I’ve finally made it to a position where my UR goal is 0%**
- Posted by: @james-fleming
I’m 80%
So, you are saying you are 80%.
@brad-ott You’re a troublemaker
I got a good laugh out of that one, mainly because some days it feels like we are just on the outer rim of the eye of the hurricane.
All good points. Thank you for all of the responses.
For attorneys who bill a quarter hour for taking a three minute phone call the rate needs to be somewhere around 300 percent as a minimum.
A friend of mine owned a high end print shop (4 color books mainly) where a bell rang each hour at a random time and everybody wrote down which project and what they were doing at that moment on their timesheets. It was a pure flat fee for each project billing scenario with hourly employees. He said after a few years he had an excellent handle on costs and preparing proposals was easy.
In my outfit utilization rate is characterized by either “busy” or “not busy.” (“Not busy” is also known as “having fun.”) The only number I look at is the net profit, and as long as there’s money in the checking account I don’t even look at net profit until tax time.
You can do that when your retirement nest egg is secured, the house is paid for, the kid’s off the payroll and Medicare is soaking up most of your health insurance costs.
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