ASSIGNMENT ANSWER

The 7 Key Indicators are:

• Utilization Rate
• Overhead Rate
• Break-Even Rate
• Net Multiplier
• Profit-to-Earnings Ratio
• Net Revenue Per Employee
• Aged Accounts Receivable
  

Utilization rate is the efficiency of labor. It is the ratio of work you do for a project to all the work you do. This gets expressed as a percentage. Even if you don’t get paid, as long as that work is “billed” to a project, it counts toward your Utilization Rate. So hours spent beyond an hourly-not-to-exceed still count. Utilization Rate also can’t account for the efficiency of the actual work...if you spend 38 hours out of 40 working on a project, you will have a very high Utilization. But if you spent half of those 38 hours reading Hyperfine Blog you’re really not getting that much work done. Doesn’t change your Utilization Rate though!

Remember, ratios don’t have units, they are just a comparison of numbers. We multiply a ratio by 100 to read it as a percentage. You may encounter values in one form or the other on an exam. So 1:4 is a ratio and it’s equivalent to saying 25%.

From the AIA Article, high-performing firms have a total utilization ratio of about 60%. From AHPP, target for the entire firm is 60%-65% and for principals and architects it should be above 75%.

Below 60% is probably too low. I don’t know if there’s a too high but you can’t really get to 100% and someone already above 85% might be too busy to take on new work.

Try to figure out what you actually did at work this week. I personally use Grindstone to track all my hours, and you can create reports and graphs. It’s free.

See my math below for the utilization rate. Originally I put it at 62.5% because I thought hours 16 & 17 on project B didn’t count...I was wrong. As long as you’re working on a project, it counts. Stuff like admin, training and marketing don’t count.