Hello all

I was wondering if the group could share some ideas on allocating the costs of delivery resources across multiple P&L’s.

By way of background, We run a PS group which generates approximately $17m annually across 3 P&L’s. Each P&L has it’s own sales & support staff, however, the delivery resource belong to a national practice. In the past we’ve primarily staffed projects with subcontractors, and as such cost allocation to the correct P&L was pretty simple. Given that the internal staff accounted for only a small percentage of our cost (as well as the fact that we were measuring revenue regionally but margin nationally) we’ve never had to implement a cost allocation model for the internal delivery consultants.

We’re in the process of moving towards a higher percentage of delivery with internal consultants, as well as moving margin measurements down to the region. That being the case, we’d like to implement an elegant model that allocates the cost of the internal team based on utilization or lack there of, while at the same time promoting good behavior on the parts of our regional managers. For example, we don’t want to simply allocate a daily cost to the project (e.g. if I book a consultant on a 50-day project, I incur a $50,000 cost) without factoring in the cost of bench-time incurred due to the project being rescheduled 3 times. we also don’t want our regional managers blocking out wide swaths of a consultant’s time without incurring some cost associated with the bench-time that this behavior can generate.

Any and all ideas are welcome.

With warm regards,

Israel