How Expensive Are My Unassigned Consultants?
Learn how to calculate the daily cost of unassigned consultants and how to optimize your resources for higher profits.
The “bench” is a sports metaphor, describing players who are sitting waiting to be used in the game. In consulting, this means your consultants who are not currently assigned billable work. This is costing your firm revenue and profit.
While having your consultants working on billable projects 100% of their time is ideal on paper, the ideal number is lower. In the 2024 Professional Services Maturity™ Benchmark by SPI Research, the typical consulting firm averages around 73%, while the highest performing firms average about 80%. The extra 20% of non-billable or idle time is necessary to prevent burnout and allow for flexibility in scheduling and admin work.
The gap between the average firm’s 73% and the 80% ideal represents a massive lost revenue opportunity. And the first step is capturing that lost revenue is calculating just how much “bench time” your consultants have.
Calculating The Daily Cost Of Bench Time
Many firm owners consider consultants’ salaries to be a sunk cost: salaries are paid whether or not there is billable work to be done. But when a consultant is idle, you not only pay their salary, you also miss out on the revenue their salary is supposed to be generating.
The daily cost of an unassigned consultant can be calculated as follows:
(Annual Salary + Overhead Costs (employee benefits, office, etc)) / Billable Days Per Year
If your consultant’s salary is $130,000, the overhead costs for that consultant are $40,000, and there are 220 billable days per year, the cost per consultant per billable day is:
$170,000/220 = $773
This means every day this consultant is unassigned, it costs the firm $773. But you spend that $773 in order to generate revenue. If that consultant’s work is billed at $2,000 per day, the opportunity cost is actually $2773 per day. Even if just two consultants are idle for a week, that represents over $27,000 in lost value.
How Spreadsheets Hide Bench Time Costs
Even though the lost revenue and value costs are so high, it is easy to miss them when your firm is using spreadsheets to manage time tracking and resource management.
The data in spreadsheets is very often days or weeks old, and by the time you are looking at the data, projects may have already ended early, leaving a consultant idle for days before you can see it. Or, finding a consultant with the right skills for a project might be difficult, leading to delays in assignment, leaving them idle while you sort out the planning scheduling.
Optimizing Your Team’s Output
The difference in 73% utilization rate and 80% over 220 billable days per year is 15 days. This means that optimizing your idle bench time to 80% generates $30,000 in additional annual revenue per consultant, and over $40,000 in total value for the firm.
For a team of 20 consultants, the increase in revenue is $600,000, with high profits due to the efficiency in the high utilization rate.
To capture that revenue opportunity, you must get up to the minute project and resource data in the right tool. Dedicated PSA software like Projectworks enables you to visualize the project workload months in advance, match the right resources to your projects, and improve your utilization rate.
You can start reclaiming that lost revenue today with a free trial of Projectworks, or let us demo Projectworks for you and show you how switching from spreadsheets to software can get your consultants off the bench and generate revenue for your firm.
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