Michaela,

In calculating project profitability you need to have an understanding of the direct and indirect costs attributable to that project. When you say “fully burdened cost” are you including appropriate fringe, overhead and G&A costs in burdening the direct salary costs of the consultants for the hours worked on the project?

If the consultant is not highly utilized on billable work, where is their time being spent and should those costs be better allocated to, for example, pre-sales projects and be included in cost of sales?

Regards,

Richard H.

Typically this is another resource with program management skills that acts as the primary interface with the customer and ensures that all deliverables are met with the consultant actually performing the tasks. Billing rates depend on the resource cost.  My preference is to scope necessary hours for both resource types when pricing, however program management can be baked into your overhead rates to eliminate need for tracking.

Ray W.

Thanks Ray,

What costs are figured into ‘program management of the consultant’? I’m not sure I understand what that includes.

Michaela

Michaela,

one other area of cost that is often overlooked when calculating project profitability is program management of the individual consultant. I’ve found treating these as direct billable hours the easiest approach.

Regards,

Ray W.