Where Does Your Time Go?

Small firms are often overwhelmed by the task of focusing time and attention on everything from building their business to servicing their clients and even developing new markets. How can small firms gain perspective and use time effectively?

The most common metric used to determine the distribution of time is utilization, defined as the amount of billable time spent on project work. Small firm architects, engineers and practitioners are in business to deliver the design and construction goals and objectives of our clients. Our utilization, or billable time, may be as high as 63% (or more) depending upon the level of staff person, size of the project, demands of the client organization, and complexity of the project. A senior project manager may be 100% billable to a project, while a principal may only be 32%. What’s important is that your organization has utilization goals for each staff member, because utilization effects profitability. Unbillable time is charged to overhead which comes out of the firm’s profits.

For that small firm (less than 5 people) with 63% billable time, the 37% of staff time remaining needs to provide the firm with a high return on investment. As much as 20% should be invested in the development of new business, with the remaining 17% invested in management and administration.

What constitutes “development of new business”?

• Meeting with potential clients, sub-consultants and teaming partners
• Understanding and defining where project opportunities are
• Identifying new targets (projects)
• Networking
• Breakfast and coffee meetings
• Client-focused events
• Preparing proposals
• Creating new opportunities

How should time be invested in management and administration? The obvious things are: AP/AR, collecting on outstanding accounts, staff development and coordination meetings. Often overlooked is advance planning to accommodate peak demand without permanently increasing overhead. Invest in finding other sources (independent contractors, consultants or part-time resources) that can support staffing demands so that they are already identified when such a situation occurs. An investment in finding people is just as valuable as an investment in finding work, but it’s hard to do when billable time takes priority. Take the time to look for intellectual capital before you need it.

Analyze how you spend billable and unbillable time, establish goals for utilization and track your performance. These are the first steps to becoming the profitable firm you’d like to be . . . no matter the size.