Engineering Insights: Workload vs. Staff

I’m honored The Zweig Letter asked me to be a contributor. In the 15-plus years since Crafton Tull (Best Firm-Multidiscipline #43 for 2015) began our subscription, we
have drawn on the newsletter’s wealth of information to help our business too many times to count. I hope I can live up to the high standard of this newsletter.

First, the obligatory disclaimer.  I’m the CEO of a mid-sized architecture, engineering and surveying firm located in the central part of the United States.  Like anyone, my views are shaped by my own experiences, and my opinions may or may not be applicable to your firm, depending on its size, location or services offered.  The needs and processes of very large firms are very different from those of mid-size or small firms.

I think probably the most difficult issue managers in the A/E/P and environmental industry have to grapple with on a day to day basis is workload v. staff.  The quickest way to the poor house as professional service providers is to have a bunch of people sitting without enough billable work to do.  It takes revenue generating work to cover expenses (especially that payroll), so the more our people charge time to overhead tasks, the less revenue we generate, and the harder it is to make a profit. 

There are a myriad of metrics managers in this industry use to gauge whether their business is operating as well as it should be.  From reading different publications and talking to my peers, it seems that each firm uses its own variety of measures to varying degrees.  Our firm is no different, we look at project variance (budget overruns) as a measure of project management effectiveness.  Our departments have goals for revenue, income from operations and sales (new contracts).  But, for my money, pound for pound, staff utilization (billable hours/total hours) gives the quickest insight to profitability.  For our business, I know when we hit a certain percent utilization, we’ll profitable, and if we don’t hit that number (say, during the holidays), we aren’t profitable.

Granted, staff utilization, like any other metric, can be manipulated by the unscrupulous.  You can charge a bunch of hours to jobs to pump up your utilization, but then you’ll probably run out of fee quickly.  Or, you can charge actual billable time to overhead to keep your budget looking good, but your utilization suffers.  We just tell our people to always ‘charge it like you work it’ and let the numbers fall where they may.  Most firms I know include “Integrity” as a core value, so being honest with our timesheets shouldn’t be that hard.  If you’re going to have the word Integrity on a poster on the wall, then it ought to be practiced throughout your business, including the timesheet.

So, how to manage workload v. staff, and better yet, how to predict what it’s going to be over the coming months?  We used to spend many hours in spreadsheets in the pursuit of estimating what our revenue v. costs would be over future time periods.  Each project manager had a workload spreadsheet showing each of his/her projects, and each month they were to estimate the revenue that would be generated in certain time periods.  Those PM workload projection spreadsheets were linked to department spreadsheets that rolled up all the PM numbers for that department.  We added in ‘marketing projections’ for projects we were “sure” would be in-house in future months, and then all the departments were linked and rolled into one giant spreadsheet that showed projected revenue for the company over the coming months. 

I know firms that use similar systems, whether it is spreadsheets or enterprise software, to do this.  You can get really intricate by projecting the hours each person is going to work on each project in each week and roll all of that into summary spreadsheets and reports to make projections of how busy each person, department, office or division is going to be.  I’m not against any of that.  PM’s and department managers can get real and useful insight by going through the exercise of analyzing the amount of work to be done and whether or not you have the right staff on hand to get the work done.

However, from a top level management perspective, over many years of experience, we found that a much simpler system is about as accurate as the intricate.  Each month, I ask our department managers to give me a quick guesstimate of their workload over future months 1-2, months 3-4 and months 5-6 time periods.  Those estimates are in terms of arrows: an up, green arrow means “we will be busy and will meet or exceed our utilization target”; a side to side, yellow arrow means “we will be steady, might meet our target but not sure”; and a down, red arrow means “we need work and will struggle to meet our target”.  Put them all together and you’ve got a pretty good picture of what the coming months will looks like.

Too simplistic?  Maybe, but it works for us.  We’ve found that this simple approach gives us a pretty close picture of what our workload will be for the coming six months, and we don’t have legions of people spending hours and hours in intricate spreadsheets trying to project revenue and costs down to the penny.  We get as much accuracy with the simple system as we did with the complex.

Granted, this system like any other requires integrity and accountability.  Our managers know that I expect honesty in their ‘arrow projections’.  If a manager paints an all green, arrows up, rosy picture and doesn’t meet their target utilization, they know we’ll be having a talk about that.

Again, I’m not at all down on PM’s and department managers getting into the nitty-gritty of project planning.  I’m all for it.  But, from the top level perspective, the simple, gut feel approach works for our business. 

I’d love to hear your thoughts on the subject of workload v. staff.  Email me anytime at matt.crafton@crafotntull.com.