How to measure people & resourcing performance in your consulting firm

Research shows that adopting a Professional Services Automation (PSA) tool is one of the best ways to boost performance and growth within your consulting firm.

A 2024 independent study by The Consultancy BenchPress found that consulting firms using a PSA had 19% higher gross margins than those using spreadsheets, as well as a 40% higher operating profit.

These firms also grow revenues faster, can expect a much higher revenue portfolio under the wing of each of its partners, and are more tuned into measuring KPIs regularly.

The benefits of having an integrated (eco)system are significant both in terms of operational efficiency and time & cost saving, as well as key insights into the performance of a consulting business, automating core processes, and supporting faster and better decision making that is crucial to be successful in a highly competitive market.  

Interested readers can find more detail on the benefits of a PSA and an overview of our 5-point performance measurement framework here.

So, for the final blog in the series, let’s take a deeper look into which metrics we should be measuring to see how we're performing in terms of managing your people and resourcing.

People and resourcing

Chargeable utilization

This is the measure of how much time your consultants spend on work that is chargeable to customer engagements as a percentage of the total time they're available.

While it is tempting to think this should be 100%, the truth is that this is very difficult to achieve, unless:

1. They are on long-term full-time client engagements (typically a resource augmentation type of engagement)

2. You are able to seamlessly roll consultants from one client engagement to the next

3. You don’t want them to contribute to the business in other ways

So, if it isn’t 100% then what is the optimal chargeable utilization rate for a consultant?

Well, this really depends on the seniority of the consultant.

For example, a Principal Consultant will typically have a lower utilization target than a Junior Consultant, as they're involved in numerous other business-generating or internal management activities.

It also depends on your firm’s business model and expectations around profitability (chargeable utilization is a key lever on profitability).

But for the sake of argument, a sensible average target for the team might be >70% depending on the size and mix of your team.

In terms of how to calculate chargeable utilization, the basic formula is as follows:

Total time chargeable to projects / Total time available x 100

• Calculating actual time: Total actual time booked to chargeable projects in timesheets in the measurement period

• Calculating total available time: Total working hours in the measurement period minus deductions for unavailable time e.g. annual leave, public holidays, sick leave etc.

To put this into a worked example:  

Jonny is contracted to work full time 8 hours per day.

In May, there are 20 working days.

In May, Jonny’s work pattern based on his timesheets was:

• 14.5 days on chargeable client engagements

• 2 days on annual leave

• 1 day on public holiday

• 1 day on business development activities (tagged as productive)

• 1.5 days on other internal non-chargeable activities

Calculating Jonny’s chargeable utilization for the month of May:

• 14.5 days / (20 days less 2 days annual leave less 1 day public holiday) x 100 = 85.3%

For a super deep dive into resource utilization, check out this guide.

Productive utilization

‍A derivative of chargeable utilization, this is the measure of how much time your consultants spend on work that is chargeable to customer engagements and/or spent on value generating activities (e.g. sales and marketing, IP development) as a percentage of the total time they are available.

Consideration of what activities are deemed as productive will depend from firm to firm, but the key here is that the optimal productive utilization target will be much closer to 100%.

That's because you want consultants to prioritize value-adding activities that drive revenue over non-value-adding activities as much as possible.

In terms of how to calculate chargeable utilization, the basic formula is as follows:

Total time booked to chargeable + productive activities / Total time available x 100

• Calculating productive time: Total actual time booked to chargeable projects plus productive activities in timesheets in the measurement period

• Calculating total available time: Total working hours in the measurement period minus deductions for unavailable time e.g. annual leave, public holidays, sick leave etc.

Calculating Jonny’s chargeable utilization for the month of May using the same data as above:

• (14.5 days plus 1 day business development) / (20 days less 2 days annual leave less 1 day public holiday) x 100 = 91.2%

Available future capacity vs. forecast demand

‍This measures your ability to be able to fulfil your future estimated demand (a combination of your forward order book plus weighted sales pipeline), by comparing it to your forecast consultant availability.

This forward-looking measure supports resourcing and hiring decisions in order to fulfil future demand, so that you aren’t left scrambling!

Let’s start with the available future capacity.

This can be calculated as the total time your consultants have available for future work i.e. they are not already scheduled onto something else in your resource plan, and is typically analyzed on a weekly and/or monthly basis.

• Calculating future available time for any given period: Total working hours in the measurement period minus time already scheduled onto chargeable engagements or other activities, time marked as unavailable due to annual leave, public holidays etc.

Using a worked example again, we can see that Jonny’s upcoming resource schedule looks like this:

So, we can see that Jonny has some limited availability in Week +1 and Week +4, but none in Weeks +2 or +3.

By calculating future weekly availability at the individual level, we can then aggregate this for all resources so that we can see total availability for the team in the upcoming weeks:

Now let’s look at the demand side of the analysis.

This can be calculated from your future resource plans for your sales opportunities that have yet to close.

From your planning assumptions around likelihood of closing, expected start dates and delivery timelines, we can create a profile for future resource demand, which may look something like this:

As you can see, in Week +1 we have enough available capacity to meet future expected demand, but in Weeks +2, +3 and +4 we have a shortfall which we may need to meet through new hires or associates.

The above is a simple representation, and it is likely that you will need to do that as a team or role/grade level or perhaps even at a skills level.

CMap does a great job of representing this is in a graphical format, pulling all of the relevant source data together for you, in order to make the calculations and highlight your future capacity gaps.

You can find a deep dive into balancing resource capacity vs. demand here.

Planned vs. actual analysis

‍Often, things don’t happen quite as you might have expected them to in terms of how and when your consultants actually spend time on client projects compared to when you expected them to, creating potential variances in your actual v revenue forecast.

The underlying cause can often be the variance in planned time vs. actual time booked in timesheets.

Your planned time can be taken directly from your resource plans and is the total time that had been allocated to each resource per week to work on chargeable client projects.

The actual time can be taken directly from timesheets as the total time booked to chargeable engagements.

The variance is calculated as Planned Time less Actual Time, measured on a weekly basis to highlight any significant differences.

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In conclusion

That was my final blog in the series, but don’t worry—you can check them all out here:

• How to measure sales and pipeline performance

• How to measure revenue and margin performance

• How to measure project financial performance

• How to measure the performance of your invoicing & WIP processes
• And, for the top-level overview: How to maximize your Professional Services Automation (PSA) software investment

I hope this was a useful blog series for you.  If so, please do sign up to the Consulting Digest below for new updates straight to your Inbox!