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Had 2 hours of billable work today 💀
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I believe it's billable hours / 40 hours a week. But there are some charge codes that count as billable but instead deduct the denominator (I.e. Doing a project that helps with admin work that's not directly billable to a client (yet)).
D1- what PwC1 said is in fact accurate for assurance here. But then to be extra clear, our staff utilization goals are somewhere around 70%.
PwC1 is correct. For example - if you have 50 charge hours during a week in busy season (i.e. 50/40 standard hours available), your utilization for the week was 125% for the week. You see people with over 100% utilization all the time in busy season. The utilization calculation has nothing to do with total hours worked or your billable goal for the year D1. In simple terms one's actual annual utilization % would be total actual charge hours worked / 2,080 (total standard hrs available), so why even say anything D1 if you don't know what you're talking about? 😉
Utilization - what MA1 said
Productivity - charge hours over total hours
Realization - billed dollars over total total dollars charged.
@Deloitte 1 - do you like apples?
Sorry PwC3 - you are going to need to pick your mic back up because Moss Adams 2 is correct. Let's say you had 1,600 actual charge hours, 1,200 of which you can bill for, and you worked a total of 2,500 hours for the year including non-chargeable hours.
Utilization = 1,600 / 2,080
Productivity = 1,600 / 2,500
Realization = 1,200 / 1,600
Client service hours billed over billable hours goal for period/FY.
@PwC 1. Your method makes zero sense. I doubt their billable goal is 2080 and neither is their total hour goal. For example, at Deloitte for a tax senior billable goal is 1750, and total hours is 2400. 52x40 doesn't have to do with either of those numbers. Why even say anything if you don't know what you're talking about?
OP, no, think about it.
Production is what you produce. If I work 100 hours in a week, and only 80 of them are chargeable to clients, and the other 20 are various administrative tasks - I am only 80% productive. (80/100). 20% of my time was not directly productive to any single client. (It could be argued that certain administrative tasks are actually necessary to get revenues in, but simplistically, you're just looking at what you can directly bill to a client).
But if my standard workweek is 40 hours, and I put in 80 chargeable hours, that means my time has been utilized 200% - I'm doing the work of two FTEs - full time employee. At some point, that's the purpose of understanding an office's utilization - how many FTEs is it taking to get the work done. Office utilization drops too much, and you would be considered overstaffed.
Understanding those three ratios - utilization, productivity, and realization - and what your firm is looking for - will go a long, long way in understanding what you bring to the bottom line. The higher ups who get paid to analyze those kinds of things don't know you - you're just a number. Be a number that stands out on the top end, rather than the bottom.
I don't believe so. One is based on the total hours you worked, while the other is based on the standard hours. 40 hours is a standard work week. Utilization has to do with FTE equivalents. Productivity is individual.
They could be one and the same if you've only worked 40 hours. You can be 80% productive and 80% utilized, but once you go over the standard hours (that are chargeable), you start dipping into a higher utilization.
These people have way over complicated this. At Deloitte your utilization is client service hours over goal client service hours. Other stuff like PRD an GAA helps you get to your total hour goal. I've never heard of taking 40 hours a week as part of utilization. Don't you have goals by period (which makes 40 hours per week benchmark useless?). I stand by my posts above.
40 hours x 52 weeks = 2,080 total standard hours for any FTE position.
It really all depends on what you're trying to measure. Every firm is going to look at it differently - the key is understanding what metrics your particular firm is looking for. The firms I've worked at have focused on productivity - how many hours you're staying focused on chargeable work - and realization - what can they actually bill for the work that you've done. That's on the individual side.
Utilization is (or has been in my case) more about staffing and if we need more or less people in chairs in order to reach a targeted bottom line.
*that don't count as
^ wouldnt that make utilization and productivity the same thing?
Lol. I read all these responses and everyone seems to be wrong except for Moss Adams 1 but only because they repeated what Pwc 1 said but with the correct terminology. Utilization is client code charged hours / total hours for employee charged. The difference here is that you are charging the client say 35 hours a week but to cover on the 40 hour minimum you put in 5 hours for admin tasks or PD work or whatever.
With that being said, pwc1 the correct terminology is client chargeable hours not billable. What gets billed to the client is not always what is charged. Billed/charged is realization which makes moss adams 1 correct.
Moss Adams 2 you are wrong. Your utilization and productivity is the same calculation as you defined it yourself. For example for utilization you said what MA1 said. Looking at what he said his message is charged/total hours. You said productivity is charge hours over total hours. Hence OP is correct.
Deloitte 1. It is apparent to me that Pwc was using the wrong terms in their explanation. The fact you didn't get that makes me question the quality of your work if you are not correctly picking up on these subtleties.
Drop mic* Pwc 3 out
I'll take partial credit