Billiable Hours and Productivity

February 17, 2012

Q: We have a problem with billable hours and productivity in our design and engineering department. What is the average productivity for design, CAD/drafting, technical support? Then we get swamped and have to pay OT? Do the other members pay OT, or treat as exempt?

A: Great question! I phoned some friends on this one… I reached out to some of the most successful NSCA members to seek advice for you. I got some great input.

Let’s start with the exempt/non-exempt. Almost without exception, the design, engineering, CAD and support staff should be paid OT. That is unless they manage or supervise the others. I’ve had dozens of members ask about these particular roles as it seems to be a gray area. Certainly flex/comp time is an option if that complies with your employee handbook and HR policy. The 40 hours per week (or 8 hours per day in CA) still applies for all non-exempt staff.

On productivity, very few members track anything other than the time allocated to a project. We are very good at assigning time for engineering, documentation, submittals, as-built drawings, etc. From my findings it seems that 75% +/- seems to be the target number. Remember that this position requires a lot of training and non-billable time for keeping up with new products. One of our most successful members organizes in advance webinars, vendor meeting and on-line training in advance for times when the projects aren’t stacked up.

An even bigger concern for this department is what they are spending their billable time doing. We need to always keep in mind that billable time and productive time are two different things. Many companies find that their design staff can only do things one way –their way. When a consultant-led job comes in they spend as much time reengineering the project as they do their own design-build work. Often they end up 20% high on bid day. On the other hand, these same companies when successful seldom require field modifications or change orders. You have to decide quickly if the job fits with your methodology and process.

One of the biggest changes I’ve seen of late is specialization within the sales support and design/engineering roles. That is an expensive proposition compared to the generalists we once had. The complexity and certification requirements have almost forced integrators to hire vertical market or system-specific technical support. Be mindful of taking that leap before you are ready and perhaps share resources with other members until you are. But keep in mind that the engineering department can be a huge asset to your business. Sure, they are viewed as a bottleneck at times when swamped with work or a drain on profitability when times are slow. Some of our best companies view them as the core element to their brand and reputation.

As another KPI (key performance indicator) on this one, watch your hours allocated per job vs. the hours spent. That might be even more important than the productivity. Is what they are doing really important on this project? Is it necessary and does the work support the company’s bottom line? Does your team work between different jobs effectively, or get myopic on one project at a time? Does the time overruns occur mostly in your own designs, or when bidding to another person spec? Thanks for the challenging question. CW

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