Running a successful services company requires more than just securing projects and delivering quality work. Effective management of utilisation, realisation, and resourcing will significantly impact your firm’s profitability and growth. I’ve seen firsthand how these metrics can transform a business when managed correctly.

Before we begin let’s look at the key metrics of utilisation and realisation.

Utilisation measures the percentage of time your consultants spend on billable work. We also included time allocated to value-add projects. You can read more about why here.

Realisation, on the other hand, reflects the revenue earned as a percentage of the revenue that could have been earned based on billable hours worked. Both metrics are crucial for evaluating the effectiveness and financial health of your consulting firm.

Example of Utilisation Improvement:

In 2019, we implemented Metric.ai to help measure and manage utilisation and a governance cadence to complement. Here’s how our average monthly utilisation improved over time:

• 2019: 72%

• 2020: 77%

• 2021: 84%

• 2022: 82%

• 2023: 79%

By implementing the right systems and a weekly cadence focused on managing utilisation, we were able to substantially improve and maintain utilisation above our 80% target. This had a significant impact on our gross margin and underlying net profit.

Implementing Effective Resourcing Strategies

Resourcing is that ongoing dance where you seek to assign your consultants to projects they will find rewarding all the while maximising utilisation and realisation. This requires a keen understanding of current and future project needs, available skills, and potential pipeline opportunities. Effective resourcing ensures that the right people are working on the right projects at the right time. Sounds simple, right?!?! If only it was!

Establishing a Weekly Governance Cadence

I found that a weekly governance cadence was essential for maintaining control over utilisation, realisation, and resourcing efforts. Here’s a detailed look at the governance structure that has worked for us:

Weekly Meetings:

1. Monday Morning Team Meeting (30 min):

Participants: Sales, Delivery, People, and Operations teams

Agenda:

• Review planned vs. actual utilisation and realisation by discipline

• Sales update on pipeline deals to foresee resourcing requirements

• People team update on open roles, resignations, and notable leave requests

2. Midweek Resourcing Meeting (1 hour, Wednesday or Thursday):

Participants: Delivery, People, Operations

Agenda:

• Review and update project allocations

• Allocate people to new projects (hard bookings)

• Assign resources to high-probability deals (soft bookings)

• Review rolling 12-week forecast to identify gaps and overloads

• Approve and manage leave requests

• Assign bench consultants to value-add projects

I would suggest that, you complement this with a daily check-in. Take 5-10min every day to quickly review utilisation and realisation metrics to identify and address any issues early before they impact revenue.

Benefits and Problems Avoided

By adhering to this governance cadence, you can achieve several benefits:

• Increased Utilisation and Realisation: Regular monitoring and adjustments ensure optimal deployment of your people to projects.

• Improved Financial Performance: Higher utilisation rates translate to better margins and profitability.

• Proactive Problem Solving: Early detection of issues prevents revenue leakage and client dissatisfaction.

• Enhanced Team Morale: A regular cadence that is transparent to the wider business can help with morale. Staff know that you are seeking to manage workloads and that any changes to bookings will likely be communicated mid-week.

• Forecast clarity: An understanding of where there are gaps and overloads will help sales and people teams prioritise any sales activities or hiring activities.

TL;DR Summary

1. Utilisation and Realisation Metrics: These are crucial for financial health and efficiency.

2. Effective Resourcing Strategies: Ensure optimal project allocations and resource management.

3. Weekly Governance Cadence: Regular meetings and daily reviews prevent issues and improve performance.

By implementing these practices, you can transform your consulting business’s performance. If you’re unsure where to start, feel free to get in touch for a consultation!