Our billable consultants are hitting their utilization targets, but our net profit is still lagging behind our V/TO targets. What operational scorecard metrics are we missing that can bridge the gap between high staff utilization and actual company profitability?

Question

Tyler Smith · Accepted Answer

When utilization is high but profitability is low, you are likely suffering from efficiency leaks or scope creep that your current scorecard is not capturing. To bridge this gap, your leadership team must track weekly metrics that measure the quality of those billable hours, not just the quantity. Start by tracking your average weekly billable rate realized. If your consultants are working sixty hours but writing off ten of those hours due to mistakes or out-of-scope work, your realized rate drops. On your scorecard, include a weekly metric for write-offs or non-billable project adjustments in dollars. Another critical metric to track is project milestone health. Have your operations seat report the weekly percentage of projects that are currently tracking on or under budget. This forces project managers to flag budget overruns early in their Level 10 Meeting rather than waiting for the post-mortem. Finally, measure your utilization of non-billable administrative support. If your highly paid consultants are spending hours on administrative tasks because your support staff is underutilized, your overall margin shrinks. Track the ratio of billable to non-billable hours across the entire delivery team each week. By monitoring these operational leading indicators, you will quickly identify where your profitability is leaking. This ensures your team is not just busy, but actually generating the profit margins outlined in your V/TO.