Resource Management and Financial Impacts

Introduction

As discussed in our previous post, today we shall discuss about impact of resource management on the bottom line - the Financials.

Let's understand some key jargons which we use in day to day RM world.

Manpower needs/Staff/Resource Size — As Resource Managers, we have a keen awareness of upcoming headcount changes. Financial analysts perform projections based upon planned headcount changes so it is important to share this information with them.

Billing Rate — The rate which are charged to client for doing activities and tasks for them.

Realization — The resulting % of Billing rates earned after discount determined by negotiations w/ client. Some companies follow this rules while some does not as they work on Fixed price deal.

Utilization — Utilization = Client service hours/Standard hours, where, Standard Hours = (40 hours/week * # of active weeks)

·               Typically 2080 hours/yr (i.e. 40 hours/wk * 52 weeks in a year) for most of the organisations around the world

·               New Hires should calculate 40 hours/wk * # weeks since start of employment.

·               Utilization calculation is not adjusted for leaves or Holidays in most of the firms.

To maximize utilization

1. Time sheet Follow up : Practitioners report client service hours in timesheet portal, which feed into the financial statements.
2. Timely time sheet submission relates directly to revenue/plan/forecasting, etc.
3. Run utilization reports
4. Shows billable and non-billable time, by resources
5. Information should closely align to allocation of resources in their respective projects

How can Resource Management help Business

1. Know our Business Terminology
2. Understand our financial results
3. Provide information regarding headcount
4. Provide the management insight into staffing trends
5. Run RM Analytics : 
• Additional professionals needed by level?
• Any levels overstaffed?
• Encourage practitioners to project all planned activity (i.e. leaves, Training, Recruiting, etc.) that impacts their availability for billable hours.

The above tips will surely help you become a better resource management and will be adding a lot of value at bottom line (revenue).

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