Hang in there, this might be a little verbose...
You will read much of the company's obsession with billability. Here is a high level look at it:
- The entire production staff (drafters, designers, engineers, etc.), those who do the work, must maintain a billability ratio (BR) of +/- 95%. The PMs and Senior PMs, those who are tasked to find, manage, and held accountable for the work, must maintain a BR of between 60% to 85% depending on level. This is above industry standard based upon the billing rates (not salary) of the production and management staff.
- Here in lies the issue, when the economy is weak, and clients begin to look for ways to economize, one of their initial steps is to cut engineering consulting costs. You are told by your client of many years, "Company ABC can do this for 80% of what I am paying you." However, you have to maintain BRs and profit margins and hold the company line. This is what this company tells you that you need to do in order to be successful.
-Here is what you are not told, this company sets it BRs high so that the corporate staff (CEO, COO, Executive VP of this, Director of that, IT, Legal, Finance, Marketing, etc.) can get their comparatively large paycheck/bonus when compared to the production work staff. Approximately 25% of this company is corporate, or otherwise non-billable.
- Let's get back to the grind it out production staff, who due to the BRs are starting to see work ebb and flow a little more than the non-billables would like because other firms with less corporate baggage. The non-billables lean heavier on the billable staff to go get more work.
- So you put forth an effort to develop more business, it is not billable, but you send proposals and you get a hit. You offer what you think is a fair price based on effort involved (maintaining billability!), but because the hourly rates associated with hours worked by the production staff are high, you get a price that is considered high by the potential client.
- This is relayed to corporate (again, non-billable), that some negotiating is required, and you are told to WIN THE WORK. Can anyone out there tell me how to do that without 1.) Asking your production staff to work 12 hours while paying them for 8....or...2.) Cutting the cost so billability and profitability are affected. One doesn't make your work staff happy, the other doesn't make your corporate hawks happy.
