This document discusses how a firm analyzed their historic data on time spent in different categories to understand their "productive capacity" and inform their operating budget. They tracked billable vs non-billable hours, converted time to percentages, and used this to estimate revenue potential from current staffing levels. This allowed them to determine they could take on more volume with existing staff. They now track weekly progress on balancing time and focus on billable hours and goals to maximize productivity and revenue. This analysis supported planning to add two new roles to increase capacity further.

1. UP AND TO THE RIGHT
What we learned to measure and how it focused our
attention on our “Productive Capacity”

2. We are working on a three year operating budget
We know that we could do more volume with our
existing staff – but how much more?
We wanted to see where the ceiling of our
“Productive Capacity” was and what influenced it

3. We assembled two years of historic data
for each of the categories we track to
determine how we spend our time

4. Totals for Design
Jamie: Design
Janet: Construction
Karen: Admin

5. Totals for Construction

6. Totals for Administration

7. BILLABLE
NON-BILLABLE
Including Time Off

8. Converted to
Percentages
That total 100%

9. These are taken from previous
design and construction personell
to be used for future budgets
The percentages of our time were translated to categories
used to shape our Annual Operating Budgets
(we are developing a three year plan)

10. This is a map of our “Productive Capacity”
It shows how we distribute our time

11. We use this data to
determine how much
Revenue we can expect to
generate based on our
current or anticipated staff
and what their productive
capacity is.
This “Staffing Worksheet” is
essential to generating data
that helps us understand
how much revenue we can
produce with the staff we
employ.

12. In this worksheet we first record payrates,
benefits, hours, labor burden, and time off
This tells us what it
costs to employ each
person for a year –
and shows burdened
billing rates with and
without time off
We all have health
coverage thru our
spouses!

13. We then apply those percentages to see the
revenue we are able to generate for billable hours
Hrs. x Bill Rate =
Hrs. x Burden $=
Hrs. x Bill Rate =
Hrs. x Burden $=
Billing for our time is only a
fraction of our Gross Profit
Most is from Construction

14. We do the same for non-billable time.
This data feeds our annual operating budget
categories for Overhead
This is 55% of our Overhead!
All this data feeds our Operating Budget (so we aren’t guessing!)

15. This part of our
Operating Budget is
fed from the previous
Staffing Worksheet –
in this case related to
Overhead
The Budget includes
narrative descriptions
of each of the
expense Categories

16. This is the average of how we spend our time
So… back to our quest to understand Productive Capacity
We studied how our time leverages our Revenue

17. We studied how our time leverages our Revenue
These are assumptions about the time we
spend on fully and partially active projects
and associated time. It pretty much aligns
with how we actually spend our time.

18. We studied how our time leverages our Revenue
We use this to determine how much revenue we
are producing for each hour we work
(understanding this is order of magnitude thinking)

19. We studied how our time leverages our Revenue
We then asked: If we spent one more hour on billable time
each day, how much more might that increase our revenue?

20. UP AND TO THE RIGHT
One more hour a day?
WE CAN DO THAT!
(or at least try to)

21. Inspired to work at balancing our time in a way that enhances our
ability to reach peak “productive capacity” we record our progress
and review it every week.

22. In addition, we created a new metric which we dubbed “DBF” – for
“Done by Friday.” These are critical path goals for the week that we
identify at a Monday staff meeting, assign with a reminder system,
then evaluate the following Monday.
This focus has helped each of us become more
deliberate about how we spend our time each day.

23. We are now using a weekly planner that doubles as a
timesheet. Filling this in at the beginning, rather than
the end of the week helps us to stay focused on key
priorities and billable hour targets
TARGETIS>20

24. We applied these methods to
our three year planning
process.
We anticipate adding an
architect (who could become
an owner) and a
design/production support
role.
This is what that looks like.
This focused our attention on
the next question:
WHERE WILL THIS
WORK COME FROM?

25. UP AND TO THE RIGHT
… SO NEXT UP
Lead Generation and Sales tracking to secure the projects we
need and quantitatively know we can produce!