Top 42 KPIs Examples for Professional Services Firms.

Top 42 KPIs Examples for Professional Services Firms.

I’ve worked for 4 years in professional services within the management committee and many more in the software industry. I wrote a list of all my favorite KPIs I would use as Professional Services Firms management committee. In Gino Wickman’s book, Traction®, there is a theory that each manager should have a number. So, this is a great list to find the KPI that you want to grow in your professional services firm and split it into 4 categories:

  • Acquire
  • Delivery
  • Adore
  • Scale

Klient PSA - KPI

The KPIs are coming from various sources, my own experience and the 2022 Professional Services Maturity™ Benchmark by Service Performance Insight.

And I’ll be using a few example from our software, Klient PSA to illustrate. Enjoy 🙂

Acquire: The top 9 KPIs for sales and marketing management as a professional services firm

Customer acquisition can be a tricky business. You want to attract new customers, but you don’t want to give away too much in terms of marketing and sales incentives. After all, you want them to buy from you because they see the value in what you’re offering, not because you’re offering a deep discount. Lead generation is often the first step in the customer acquisition process. By generating leads – potential customers who have expressed an interest in your service – you can start to build a relationship with them and eventually persuade them to buy from you.

Sales Growth Rate:

  • Formula: ((Current Period Sales — Prior Period Sales) / Prior Period Sales) x 100
  • Department: Sales
  • Frequency: Annually/Monthly/Quarterly
  • Goal: Am I growing?
  • Rating: ⭐⭐

Keep track of your sales. To get a percentage, divide (current earnings – previous earnings) by previous earnings, then multiply by 100. Sales growth is measured annually, but you can measure it monthly or quarterly. Relevant revenue growth is unaffected by monthly seasonal swings. Organizations with seasonal revenue should measure sales increase in the same month (or season) as the previous year.

Salesforce - CRM Dashboard

Lead to Opportunity Ratio

  • Formula: (Number of leads converted into opportunities / total number of leads) x 100
  • Department: Sales/Marketing
  • Frequency: Monthly
  • Limitation: Sales Cycle Length
  • Goal: Do I get the right leads? Do I qualify correctly?
  • Rating: ⭐⭐⭐

You can see how well your sales staff is doing by looking at the Lead Conversion Rate. Its formula is the number of leads converted into sales divided by the total number of leads multiplied by 100. It is required to submit a report every month.

Lead to Customer Ratio

  • Formula: (Number of leads converted into customers / total number of leads) x 100
  • Department: Sales/Marketing
  • Frequency: Monthly
  • Limitation: Sales Cycle Length
  • Goal: Am I good at winning new customers?
  • Rating: ⭐⭐⭐⭐⭐

The conversion ratio measures how many qualified leads become actual sales in a specific period, divided by the total number of qualified leads generated within that same time frame. Conversion is a term that must be defined for each firm uniquely. External parties (e.g., investors) will be able to understand the calculations, ensuring that a corporation follows desirable events while external parties are aware of the meaning of the calculations.

Salesforce - Forecast - Sales Funnel Lead to Customer

Forecasted revenue recognition

  • Formula: (Total Billable Hours Sold for a Period / Avg. Billable Hours Consumption per period)
  • Department: Sales/Operations
  • Frequency: Monthly
  • Limitation: Formula/Unprecise
  • Goal: How much revenue I’ll generate from my new sales for the following period?
  • Rating: ⭐⭐

Revenue recognition is the process of accounting for revenue. Revenue is recognized when it is earned, and it is measured by the fair value of the consideration received or to be received. There are five primary methods of revenue recognition: the cash basis, accrual basis, completion of the contract, percentage of completion, and time-based. Most consulting firms will use the percentage of completion method as it’s the most relevant for their business.
Personally, I like to use that principle to recognize forecasted revenue. You can use those principles to evaluate your sales pipeline and your requirements for new sales. To be able to “calculate” a forecast on the percentage of completion, I like to calculate my billable hours’ consumption rate. But it’s not perfect. Most consulting services firms have different rhythms for project completion based on each phase. I generally like to set up a formula that fits our reality with our occupation rate and our starting lag.
Here is an example. I like to set my year in 28 days period (4 weeks). Each billable resource is generally consuming 160 hours per period. As a team of 10, we consume 1600 hours per period. We normally have 5 projects in parallel. So, we can estimate an avg. 320 hours billable hours consumption for one project. (Again, it’s not perfect).
If I sell 2000 hours this month, it will take 6.25 months to complete. This way, you can start setting objectives and goals for my team that consider our billable hours’ needs.

Sales Capacity by Employee/Skills/Roles Utilization

  • Formula: Team’s Total Capacity – Number of Planned Hours
  • Variance: Project Manager’s Total Capacity – Number of Planned Hours for Project Manager
  • Department: Sales/Operations
  • Frequency: Monthly/Quarterly
  • Limitation: Formula
  • Goal: How much can my sales team sell for the following period?
  • Rating: ⭐⭐⭐

There is two different way to calculate sales capacity. One is to define a Sales Capacity for a rep. How much are my sales reps able to generate? As a consulting/professional services firm, you want to be able to calculate your team capacity in terms of new sales.
In terms of forecasting, you want to be able to have your team capacity for the following weeks/months based on your planning. As the Sales cycle can be long, we want to be able to plan the capacity for the following months to define our sales objectives.

Number of canceled sales/projects/requests

  • Formulas
    • Ratio: # of Sales Lost/Disqualified due to Capacity / Total # of Leads
    • Amount: # of Sales Lost/Disqualified due to Capacity x Values
    • Perfect Salesmen Formula: # of Leads x Our Best Lead to Won Opportunities Ratio x Avg. Won Opportunities Values
  • Department: Sales
  • Frequency: Monthly/Quarterly/Yearly
  • Goal: Is my sales team affected by our capacity?
  • Rating: ⭐

To compute a cancellation rate, It’s important to keep that information in your CRM. I like to have visibility on timing/capacity reasons why a lead or customer decided to cancel their request. It gives us visibility on how many billable hours we could reach if we had more resources.
The challenge is when a sales team has a service team at low capacity, they will unconsciously reduce the pressure to close sales. I had a presale, in 3 years, then went from 25% to an 80% disqualification rate. He would over-disqualify for random reasons because he knew we didn’t have the capacity. Unfortunately, our opportunity won rate stayed the same. Our Lead to Customer ratio went from 35% to 12% in 3 years.
I would try to monitor Opportunity Won Rate and Disqualification Rate to verify that phenomenon. This is why I like to calculate a “perfect salesmen” formula as well comparing our year to our best historical ratios. It would give me how much money we left on the table.

Cost per Lead/Opportunity/Customers (per channel)

  • Bad Formulas (If your marketer calculates that way, fire him. No, don’t do it. it’s a “joke”.)
    • Marketing Budget / # of LeadsMarketing Budget # of Leads
  • Good Formulas
  • Paid Channel: Direct Marketing Fees (CPC/CPL) + Indirect Marketing Fees / # of Leads
  • Organic Search: Net New Content Indirect Marketing Fees / Net New Organic Leads
  • Department: Marketing
  • Frequency: Monthly/Quarterly/Yearly
  • Goal: Manage your investment in marketing by Channel
  • Rating: ⭐⭐

You only need to know your total number of leads and your entire marketing budget to calculate your cost per lead. The price per lead formula is straightforward. It’s as simple as dividing your marketing budget by the number of new leads. You may calculate your cost per lead (CPL) using this information. To get an accurate outcome, you must consider the number of leads and the amount of money spent on marketing.
Again, it’s not perfect. As a Marketing department is often a jack of all trades. It makes more sense when it’s performance marketing (Growth Marketing Department). This is why I like to split Indirect marketing fees and direct marketing fees per paid channel.

  • Direct Marketing Fees are the CPC bid that you might pay to a platform like Google.
  • Indirect Marketing Fees are the time and assets required to create and maintain that campaign.

For Organic Channel, like youtube and google (organic), the calculation model is different. 99% of the cost is the cost to create new content and maintain the assets. I always say that a content/SEO marketing team has no impact on day-to-day leads. They create for the future.

  • New Net Content Indirect Marketing Fees: Cost per New Blog + Time for Integration + Cost if I need new Assets for Conversions.

This is why a lot of CEOs invest in Organic/SEO lead generation. Everything that you create will continue to generate leads even if you fire your whole marketing team. It will only slowly decrease due to the lack of maintenance.

Customer Acquisition Cost

  • Formulas: Sales/Marketing Indirect/Direct Costs x Number of new customers
  • Department: Sales/Marketing/Operations
  • Frequency: Monthly/Quarterly/Yearly
  • Goal: Self-explanatory
  • Rating: ⭐⭐⭐⭐⭐

To calculate Customer Acquisition Cost (CAC), sales and marketing costs are multiplied by the number of new customers acquired in a given period. One of the essential KPIs for investors is represented by this indicator. Understanding a company’s ability to grow and its profitability are two of the primary purposes of this tool. Consider the lifetime worth of a customer when calculating CAC (LTV). Return on investment (ROI) can be gauged using these criteria.
This is an important KPI for the business. It gives you the project size that you need to sell to break even. (It doesn’t mean that you should accept projects under that size.) It means that your team needs to be conscientious of customer value.

Website visits

  • Formulas: Google Analytics = Total Number of Users
  • Department: Marketing
  • Frequency: Monthly/Quarterly/Yearly
  • Goal: Is my Website content growing?
  • Rating: ⭐⭐

There are several ways to measure the performance of your website (or business, for that matter) using KPIs. Still, the most common method is to look at the number of unique visitors that come to the site each month and the number of unique visitors that return to the site each month
This KPI is good to follow organic growth/lead generation and brand notoriety. You can use that as a starting point to measure your conversion rate.

YouTube subscribers

  • Formulas: Youtube Monthly Net New Subscribers
  • Department: Marketing
  • Frequency: Monthly/Quarterly/Yearly
  • Goal: Is my Youtube Channel growing?
  • Rating: ⭐

A YouTube KPI or metric assesses the success of a video’s social media distribution on YouTube. An effective social media video strategy is built on recognizing the correct variables for generating successful content.
It’s a great KPI to measure your Youtube Channel Growth.

Delivery : 14 KPIs For Project and Resources Management as a Professional Services Firms.

Keeping an eye on your team’s productivity is easy when you use project management metrics. Utilizing resource management KPIs, or Key Performance Indicators is a great way to achieve this goal quickly. It is identifying and allocating the resources needed to finish a project. Effective communication is a critical part of project management, even if not given top emphasis by tiny start-ups. It’s a good idea to improve your resource management to increase productivity because resource management uses KPIs as concrete benchmarks to help you track your efficiency.

Scheduled/Planned Billable Hours

  • Formula: Billable Hours assigned to all your resources for the following period
  • Department: Operations
  • Frequency: Weekly/Bi-Weekly/Monthly (Fit with your Resource Planning Meeting)
  • Rating: ⭐⭐⭐

Billable hours are the amount of time spent working on business projects that can be charged to a client according to an agreed-upon hourly rate. They are a key metric for many businesses, as they directly impact profitability. Billable hours can be used to track employee productivity, project progress, and more.
Scheduled billable hours are to have on how many hours are planned for the following week. It gives you visibility on your billability and revenues for the following period.

Scheduled v. Total Billable Hours - Klient PSA

Project profitability

  • Formula: Profitability Index = (Net Project value + (CAC + Administrative Cost split by projects)) / (CAC + Administrative Cost split by Project).
    • Net Project Value = Project Revenues – Cost
  • Department: Operations
  • Frequency: Annually
  • Goal: Find your sweet spot in terms of effectiveness and profitability.
  • Rating: ⭐⭐⭐

Project profitability is a funny thing. Some firms think that the only way to make money is to take on high-dollar initiatives, but that’s not necessarily true. In fact, some firms may find themselves in hot water if they take on too many of these types of projects without careful consideration. Why? Because while a high-dollar initiative might sound like it’s going to be profitable, it might not actually be once all is said and done. Project profitability is essential for the overall financial health of a business, so it’s important to be mindful of this when taking on new projects. To ensure profitability, do your research and ensure that the project you’re undertaking has the potential to be lucrative. By doing so, you can help set your firm up for success.
This Index will give you a reality on each project’s profitability. You will be able to define the right project profitability index for your growth and use this KPI as a qualification index for your sales team.
Mainly, you want to find if any project criteria have a higher chance to generate unbillable hours and decrease your net project value. As an example, in a previous role, our fixed-fee project profitability index was 3 times higher than time-based projects. Our project over 600 hours had our worst profitability index.

Employee/skills/roles utilization

  • Formula: # of billable hours / total schedulable hours (by employee/skills/roles)
  • Department: Operations
  • Frequency: Monthly/Quarterly/Annually
  • Goal: Try to find if any employee, skills, or roles is underutilized or overutilized.
  • Rating: ⭐⭐⭐

What’s the best method for determining utilization? The basic calculation is straightforward: the number of billable hours divided by the total number of available hours is the formula (x 100).
As a result, a person billing for 32 hours of a 40-hour week would have an 80 percent utilization rate. It is possible to compute utilization rates in various methods, depending on whether you are interested in pricing, employment, or the health of your organization. Divide the total of all employee utilization rates by the total number of employees to arrive at your firm’s utilization rate. Employee and company-level data can be gleaned from the most reliable time monitoring systems.
You can consider administrative hours. It’s a better KPI if you take them out as your employee are not responsible for an internal meeting.
Most professional services firms have roles/skills that create roadblocks. As an example, in software implementation, architects can be in high demand and rare to find. You’ll think that the integrator is not doing a good ratio. But he’s always waiting for the analysis to start the customization. By recruiting a new architect, you’ll increase your integrators’ utilization.

Klient PSA Report - Roles Utilization

Total utilization.

  • Formula: Total Billable Hours / total schedulable hours (by employee/skills/roles)
  • Department: Operations
  • Frequency: Monthly/Quarterly/Annually
  • Goal: Analyze the overall business health.
  • Rating: ⭐⭐

As before, it’s a similar KPI with a different goal. Total utilization is a term that indicates the relative volume of hours an employee delivers, regardless of the type of work being done. Total utilization includes all hours worked with the same denominator of available hours. Total utilization is a good way to measure employees’ workloads and how effectively they are using their time. However, it is important to note that total utilization does not take into account the quality of the work being done or the results of the work. Therefore, total utilization should not be used as the sole criterion for assessing employee performance.

Cycle Time

  • Formula: Time to execute a specific task
  • Department: Operations
  • Frequency: Annually
  • Goal: Answer the ultimate question about life the universe and everything.
  • Rating: ⭐⭐⭐⭐⭐

My brother is a mechanic. If you ever go to a mechanic shop, everything is precalculated and each mechanic is evaluated from those cycle times. Mechanics will get assigned specific tasks based on their previous performance vs. the cycle time. (Sorry, I ❤️ Cycle Time.)
It’s one of the most important KPIs here. In professional services, I heard a lot about “it depends”. Defining cycle time by the task will help you create recipes to compare, benchmark, improve and grow your business. We started using cycle time in the marketing department. We’ve seen a huge improvement in our content production capacities.
You can compare employee performance, increase profitability, set a consistent production, increase customer satisfaction, improve project scoping and so much more.
The cycle time formula is the key to revealing the speed of delivery. It’s a crucial metric that allows you to measure how long it takes to deliver a service. It can also be considered part of continuous improvement efforts since it can expose areas of inefficiencies that you and your team could address. It’s also a valuable metric when it comes to measuring productivity and efficiency within a business. However, cycle time can be a bit of a mystery for some businesses.
The challenge is the cycle time can only be managed at the task level or a fix-fee project.

Here is a video that explain how we use project and task template in Klient PSA.

On-Time Project Completion Rate

  • Formula: # of Project completed before time / # of Project Completed
    • # of projects completed under budget / # of Project Completed
  • Department: Operations/Sales
  • Frequency: Annually/Quarterly
  • Goal: Review your ability to scope, quote, and execute projects in time and on budget.
  • Rating: ⭐⭐⭐

On-Time Task Completion Rate is a measure of how often projects are completed on time. The goal is to get a completion rate of as near as possible to 100%. Knowing the On-Time Completion Rate acts as a starting point for improving project efficiency and can be tracked over time.

On-Time Task Completion Rate

  • Formula: # of projects completed before time / # of Project Completed
    • # of projects completed under budget / # of Project Completed
    • Can be done by employee/role.
  • Department: Operations/Sales
  • Frequency: Annually/Quarterly
  • Goal: Review your cycle time and employees for each task.
  • Rating: ⭐⭐⭐

On-Time Task Completion Rate is a valuable metric for any organization, especially those who want to improve their project management skills.

Number of adjustments to the project

  • Formula: Sum of adjustments done to a proj
  • Department: Operations/Sales
  • Frequency: Annually/Quarterly
  • Goal: Review your ability to scope, quote, and execute projects in time and on budget.
  • Rating: ⭐⭐⭐

Again, there is always a challenge in scoping and executing projects. You want to identify the variance of the project scope vs. actual. It can be useful in fix fee project to know if there is a change to be done in the initial scope.

Resource Capacity

  • Formula: # of scheduled hours / total billable hours
  • Department: Operations
  • Frequency: Weekly/Monthly
  • Goal: Overview your needs in terms of new contracts or resources.
  • Rating: ⭐⭐⭐⭐

For managers to better grasp their team’s capabilities, they need to calculate the capacity of their resources. To calculate the total number of hours worked throughout the measurement period, multiply the number of working days by eight. Net work hours are calculated by deducting the time set for team meetings. Individual capacity for each resource is determined by subtracting time off for each team member from the total work hours and multiplying the result by availability. Calculate the total number of hours your team can work by adding the individual capacity of each resource.
This is why PSA software can give you that information in real-time.

Resources Capacity - Klient PSA

Cost Variance

  • Formula: Budgeted Cost/Actual Cost
  • Department: Operations
  • Frequency: Monthly/Quarterly/Yearly
  • Goal: Cost and schedule variance can affect customer satisfaction. It can be an indicator of customer churn if the communication is not done correctly. It can also be a good KPI to manage your fixed fee offers.
  • Rating: ⭐⭐⭐⭐⭐

The amount by which your project’s budget exceeds or falls short of your predetermined maximum is known as a cost variance. It would be best if you kept an eye on cost and schedule variation, i.e., how early or late you meet project deadlines during your project.

Percentage of tasks completed

  • Formula: # of tasks completed / # of tasks in the project
  • Department: Operations
  • Frequency: Weekly/Monthly
  • Goal: It can be a good KPI to send in your weekly report. It’s not the best KPI as each task has a different duration.
  • Rating: ⭐

A simple but intriguing KPI to keep track of. Over time, it keeps tabs on how many jobs each employee has performed. Despite its usefulness to all departments, developers frequently use it to measure productivity. In comparison to other departments, they may have a higher number of unfinished jobs. After all, they’re constantly juggling a slew of more minor – but no less critical – positions.
This is an excellent indicator for a manager since it demonstrates how well each department has performed over the past few months. It is possible to temporarily provide more resources to one department or delegate some work to the employees who are not under as much stress.

Planned vs. actual hours

  • Formula: # of scheduled hours / total billable hours
  • Department: Operations
  • Frequency: Weekly/Monthly
  • Goal: Have good visibility of your ability to execute the planned schedule. It can be a good KPI to evaluate team members and find tangents that can be affecting your team’s performance.
  • Rating: ⭐⭐⭐⭐⭐

The most frequent KPI for assessing a planner’s efficiency is the plan vs. actual (also known as planner accuracy) ratio. It compares the estimated hours of work by the planner and the exact number of hours billed to a job.

Scheduled Variance

  • Formula: Scheduled value / Expected value
  • Department: Operations
  • Frequency: Weekly/Monthly
  • Goal: The Schedule Variance percent tells you how much the project is behind or ahead of schedule in percentage terms.
  • Rating: ⭐⭐⭐

The Schedule Variance percent tells you how much the project is behind or ahead of schedule in percentage terms. When calculating schedule variance, use this formula: A schedule variance percentage (SV%) is calculated by taking the scheduled value and dividing it by the expected value (PV)

Project Velocity

  • Formula: # of story points/number of sprints
  • Department: Operations
  • Frequency: Weekly/Monthly
  • Goal: A better fit for the development team. The goal is your team’s capacity to complete stories per sprint and forecast your whole project.
  • Rating: ⭐⭐⭐

This metric is calculated by averaging the story points delivered across the previous sprints. The velocity should be determined across five sprints to obtain a reliable average.

Adore: 8 KPIs to Get the most from your customer service department as a professional services firm.

An organization’s overall key performance indicator (KPI) for measuring how satisfied and engaged employees are at any one time is known as employee satisfaction. The metric combines several minor indications to get an overall picture of how happy and pleased your employees are at work.

NPS Score

  • Formula: How likely is it that you would recommend this company to a friend or colleague?
    • Promoters: 9 or 10
    • Passives: 7 or 8
    • Detractors : 0 to 6.
    • NPS = % of Promoters ( — ) % of Detractors
  • Department: Operations
  • Frequency: Quarterly/Yearly
  • Goal: NPS score is a great KPI. The challenge is most of the time it’s used on a really small sample. NPS scores are recommended on large samples (over 1 000).
  • Rating: ⭐

If you want to know how your consumers feel about your firm, you can use a net promoter score (NPS). The percentage of clients likely to promote your company’s products or services is considered.
Above 0 is good, Above 20 is favorable, Above 50 is excellent, and. Above 80 is world-class.

Customer Churn

  • Formula: # of customers that stop using a service / total number of customers
  • Department: Operations
  • Frequency: Monthly/Quarterly
  • Goal: The goal is to compare your acquisition rate to your customer churn rate. It will give your net customer growth.
  • Rating: ⭐⭐⭐⭐

An important KPI for tracking customer retention is the Customer Churn Rate. It can be determined by dividing the number of consumers that stop using a service by the average number of users for a specific period.

Customer upsells/cross-sell rate.

  • Formula: Total quantity of upsell/cross-sells / Total number of customers
  • Department: Operations
  • Frequency: Monthly/Quarterly
  • Goal: Having continuous relationships with your customers is essential to your success. Behind able to measure and compare customers on a ratio of “avg upsell/cross-sell rate” helps you identify/compare your customer base.
  • Rating: ⭐⭐⭐

Cross-selling and up-selling programs can be measured in a variety of ways, including the following:
One approach to tell if upselling has occurred is to look at the average sales volume for each customer.
The number of items and services available to each customer increases as the company’s sales breadth increases.
You get a better cross-selling ratio when you divide the total number of products or services sold by the total number of customers. Cross-selling and up-selling efforts may have been unsuccessful if customer retention rates are higher than typical. Customer attrition can be caused by various circumstances, including poor customer service.

Customer Complaints

  • Formula: # of customers complaints / total number of customers
  • Department: Operations
  • Frequency: Monthly/Quarterly
  • Goal: Identify if a customer has a higher complaints rate and identify the cause. Like in support, you want to identify which customers are consuming your services the most.
  • Rating: ⭐⭐

A positive experience for the client Companies uses KPIs to measure and track consumer satisfaction with their products, services, and experiences. The ultimate goal is to discover factors influencing customer satisfaction and identify potential growth and enhancement areas.
A few years back, one of my teachers at HEC, Yany Gregoire, was talking about the double fault. Customers that complain are normally customers who want to keep working with your business. They only want a solution. By doing a service recovery, they will most likely become your most loyal customer.

Employee Churn

  • Formula: # of employees that left for a period of time / # of employees
  • Department: Operations
  • Frequency: Monthly/Quarterly
  • Goal: Same as customer churn, it gives you visibility on how many employees you’ll need to hire to grow your business. Also, it can help you identify customers at risk.
  • Rating: ⭐⭐

It’s computed by taking the number of people forced to leave and dividing it by the average number of employed people during that time. Assume that six of the ten outgoing employees left of their own volition, based on the data above.
Employees’ churn in professional services has a huge impact on customer retention. The knowledge transfer is frequently bad and if a customer lives multiples churn in a short period of time, they are most likely to leave the company as well.

Team Satisfaction

  • Formula: There is great software like Office Vibes that can get a multi-factorial vibe for your team.
  • Department: Operations
  • Frequency: Monthly/Quarterly
  • Goal: Increase employee satisfaction and retention.
  • Rating: ⭐⭐⭐

To know how happy and engaged your employees are at any given time; you need to assess employee satisfaction. The metric combines several minor indications to get an overall picture of how happy and pleased your employees are at work.

Number of change requests

  • Formula: # of change requests
  • Department: Operations
  • Frequency: Weekly/Monthly/Quarterly
  • Goal: Identify either a customer/consultant/project going off-track.
  • Rating: ⭐⭐

Using this KPI, you may better understand the approval process and see whether you need to make any adjustments. This aspect can help improve the communication between the service provider and the client.
Change request affects the scope, cost, and timeline of a project. A large variation from the initial scope can slightly move the project of its initial objectives. In the 80/20 rules, they will end up investing a lot in a request that is not essential to the organization.
By monitoring this KPI, you can identify a project/consultant/customer going off-track and verify if those changes are within the project objectives.

Avg. backlogs/requests per customer

KPI for customer service teams is the total number of customers who have submitted a support request. Keeping tabs on the top line is just the beginning; you’ll also need to look at how the volume changes with the year’s hours, days, and seasons.

Scale: 11 KPIs To Ensure that your Professional Services Firms has the best margin.

Key Performance Indicator (KPI) and Return on Investment (ROI) are acronyms used in Digital Marketing. Digital marketing uses the phrase “Key Performance Indicators” to describe the marketing measures used to evaluate a digital marketing campaign’s performance.

Annual/Monthly Revenue per Billable Employee/Roles

The ratio of revenue generated per employee is crucial since it approximates the amount of money each employee brings into the business. To get a company’s revenue per employee, divide the company’s total income by the number of employees it currently has on staff.

Annual /Monthly utilization per billable employee/roles

In project-based services, billable utilization refers to the percentage of available hours personnel spend earning money. The formula for the usage rate is as follows:
To calculate a company’s billable utilization percentage, multiply the total billing hours by the total available working hours by 100 percent.
For most professional services organizations, the billable utilization rate is a key performance indicator (KPI).

Annual/Monthly Overhead by Billable Employee/Roles

Divide the monthly sales by the entire monthly overhead costs to arrive at the overhead rate. To determine your overhead rate, multiply this value by 100.

Percentage of non-billable

Productivity can be measured by the percentage of billable hours your technicians spend on directly chargeable tasks to a customer. Field service firms frequently monitor this KPI since it is more financially oriented. The most significant component of most KPIs or metrics is what you do with them — in other words, how the KPI drives decision-making. The percentage of billable hours makes this crystal evident. These technicians are more productive if they have a large portion of their work time being billable hours, while the less effective technicians spend most of their time on non-billable jobs.

Time to invoice

Hourly work is invoiced by calculating the hourly rate for each activity and providing a detailed explanation of each performed task. The hourly invoice keeps track of the time spent on a project and clarifies when it’s time to get paid.

Invoice Processing/Creation Time

Regarding overall departmental efficiency, measuring costs per invoice handled provides the organization’s first insight. The infrastructure and follow-up, personnel pay, management overhead, and IT support are only some of the costs associated with processing an invoice.

Average approval time

Using this KPI, you can see how long it takes for customers to complete a purchase order in a shopping cart. It’s based on a year’s worth of data, returning to the prior year. A total of four measurements can be shown on the app: For each day of the week, there are four price ranges: low, medium, high, and very high (Main Measure). It shows the average approval time for low, medium, high, and high-cost items. In advance, a set of acceptable values has been established.

Invoice cycle time

Using this KPI, you can see how long it takes on average to invoice a given percentage of your line volume. The invoice fill rate option allows you to set this proportion.

Average invoice value

For the average transaction value, multiply the total amount by the number of transactions, equal to how many sales there were during the time in question. This can be computed on a daily, monthly, or yearly basis.

Net profit margin

After subtracting all of your operational expenses, taxes, interest, and depreciation, your net profit is the genuine profit that remains. The net profit margin is calculated by dividing the total revenue by the entire profit margin.

Selling, General, and Administrative (SG&A) Ratio

  • Formula: Total SG&A / Total sales revenue

Total SG&A = Direct selling expenses (Commissions/Selling Fees) + Indirect selling expenses (Marketing/Sales wages + Marketing Budget) + Administrative Expenses (Rent, Utilities, Supplies, Administrative staff wages)

  • Department: Administration
  • Frequency: Annually

SG&A affects a company’s profitability and break-even point. The point of equilibrium is when revenue and expenses are equal. It’s one of the most accessible places to find methods to boost profits. Non-sales staff salaries may usually be cut without hurting production or sales. After a merger or acquisition, SG&A is a top cost-cutting target. It’s an easy target for management teams looking to boost profitability.


In conclusion, Key performance indicators are used to measure the success of a company’s strategic, financial, and operational goals compared to those of other businesses in the same industry. Among the monetary metrics that can be used are net profit (also known as the bottom line or gross profit margin), revenues less specific costs, and the current ratio (liquidity and cash availability). Most customer-focused key performance indicators (KPIs) are geared toward improving efficiency, delighting customers, and ensuring they return.

Complete Guide to Resource Leveling vs. Resource Smoothing In Project Management

Complete Guide to Resource Leveling vs. Resource Smoothing In Project Management

Without a project resource management system, it is difficult for any project (or team) to succeed. It’s all too common to have resources from different projects overlap or for certain tasks to suddenly need additional people or equipment. When this happens, the project manager (PM) should be able to re-allocate or re-adjust as required. This flexibility is crucial as the average employee is severely overworked and burnt out due to unrealistic deadlines. In a 2021 global survey conducted by the consulting firm ADP Research Institute, they discovered that 67 percent of respondents experienced stress at work, up from 62 percent pre-pandemic.

While the primary goal of PMs is to ensure each project is executed as efficiently as possible to save costs, they also have to consider proper management of company assets and work-life balance for employees. Human workers are the company’s greatest resource, and their well-being should be a priority. This is where resource leveling and resource smoothing become handy. These two strategies enable PMs to look at their project plans and pinpoint problematic areas, like days when people are overworking or unrealistic deadlines given the available resources.

In this article, we’ll walk you through resource smoothing vs. resource leveling, their advantages/disadvantages, and the situations where these methods work best.

The resource management process

First, it’s important to understand the process of resource management, which involves planning, scheduling, and allocating people, technology, and money to a project. Resource management is crucial because it helps PMs prepare an inventory of existing resources, pinpoint gaps or missing information, and prioritize allocation based on the needs of different projects.

This process has three main components: resource allocation, resource leveling, and resource smoothing. The first step is resource allocation, where team members are assigned specific tasks based on their strengths and expertise. This is the planning stage, where resources are strategically placed to optimize the timeline. 

However, projects might encounter resource and time constraints for various reasons. Resource leveling or smoothing is a method for anticipating these challenges and applying the right solutions and adjustments.

Here is a quick video on how resource management can work in a Professional Services Automation or Project Management Software.

What is Resource Leveling?

Based on the Project Management Body of Knowledge (PMBOK) Guide, resource leveling helps PMs evenly allocate resources by adjusting a project’s start and completion dates. This strategy ensures that no one is overworking, the equipment is available, and requirements are made clear so that there are no additional costs to the project. 

Leveling works best when there are limited resources and the PMs want resource usage at a constant level. That’s why this technique is sometimes referred to as resource constrained scheduling (RCS). 

There are several factors that will help PMs apply resource leveling effectively. First is knowing the dependencies or the relationships between tasks. For example, which activities must be completed before the team can move on to the next? Another factor to consider is the resource conflict. What is the main issue that needs to be solved? Is it human resources, equipment, or technology? 

Finally, it is also important to look at the different types of constraints. Is it mandatory (physical limitations like lack of equipment), discretionary (team members’ preferences or actions), or external (third-party challenges)? Only after figuring out these factors can PMs create a resource leveling plan that adequately addresses the pressing concerns of the project.

According to Online PM Courses, here are some of the things PMs can do during resource leveling:

  • Delay start times
  • Extend planned duration
  • Remove some tasks
  • Allocate additional resources
  • Split tasks up
  • Bring tasks forward
  • Assign alternative resources

In addition, there are also specific instances where resource leveling can be used:

  • There is no fixed deadline (e.g., the project can be finished within the first quarter of the year).
  • A resource has to be shared with another project (e.g., some teams have to work on another website for a few weeks).
  • A resource is highly in-demand (e.g., laboratory equipment has to be used for three projects simultaneously).
  • A resource is unavailable for a certain time (e.g., a subject matter expert won’t be available to consult until they return from their holiday).

Basically, resource leveling answers this question: Given the resources you have, when will you be able to complete the project?

Watch the complete video about What is Resource Leveling from OnlinePMCourses here:

Advantages and disadvantages of resource leveling.

Aside from re-balancing resources, leveling can offer several advantages:

  • Identifying under-allocated or unused resources 
  • Maximizing downtimes
  • Reducing project delays
  • Team members can have one centralized reference that they can use to adequately prepare for their next tasks.
  • Team members are working on areas/tasks that best suit their expertise

However, there might also be disadvantages to this technique, mainly because something has to be sacrificed, whether cost, scope, or time.

Other disadvantages:

  • Risks of tasks delays and budget overruns
  • Can be tricky to re-shuffle some tasks, especially if they’re all critical
  • There might have to be additional resources (whether labor, time, or budget)

Example scenario of resource leveling:

Suppose a project is planned to be completed in two days. It has three activities (A, B, and C), and each activity takes 8 hours to complete. 

Activities A and B can be done by one employee (Alex) and C by another (Jane). 

At first, it would seem like A and B could be performed at the same time by Alex. However, it would take Alex 16 hours to complete both activities. This situation would lead to him being overworked on the first day.

To address this, the PM decides to extend the project to three days instead of two. Activity B is then moved to Day 2 to give Alex enough time to finish each task and evenly allocate working hours.

Resource leveling methods

Now that we’ve discussed the basics of resource leveling, let’s look at the different methods or techniques that PMs can use, depending on the urgency of the situation. There are three main methods: critical path analysis, fast tracking, and crashing.

Critical path analysis (CPA). This most common technique comprises mapping out every critical task needed to finish a project. This process includes identifying how long it would take to complete each task and the other tasks dependent on each other. CPA is a good tool to ensure that deadlines are realistic.

The first step in CPA is to define all project tasks (both critical and non-critical), and the maximum and minimum times it would take to complete these tasks. It’s also important to include slack time (or float) in the calculation to come up with a reasonable deadline.

A timeline is then created to track each task using Gantt and bar charts. CPA is often used in industries that have complicated processes. However, most CPAs are now automated using resource management software.  

Fast-tracking. This resource leveling technique compresses schedules so that some tasks are completed simultaneously instead of sequentially. For example, if certain activities are not dependent on each other, they can be done on the same day. This method is particularly helpful if there is simply not enough time.

One example of this technique is creating different prototypes before a design has been approved. However, while this can save some time in the beginning, it does have the risk of being reworked if there are mistakes or massive changes to the design.

Crashing. This method is often considered the last resort, particularly if fast tracking is still insufficient. The idea behind crashing is to shorten the project duration by adding more resources (e.g., labor and equipment) with the least possible cost, including hiring extra staff or paying a premium to acquire a service faster.

This technique can become expensive real quick, so it’s best to use it when there are no other options available or when a project can no longer afford to miss its deadline.

The chart below summarizes the main differences between resource leveling vs. resource smoothing in project management.


Resource Leveling Resource Smoothing
The finish dates of the project can change The finish dates of the product stay the same.
Critical paths change, mostly increasing. You can pause activities within its float boundaries.
Scheduling when resources are under or over-allocated. Scheduling is based when resources are unevenly allocated.
The main constraint is your resources. The main constraint is your project end date.
Resource leveling can be implemented for tasks on the critical path. With resource smoothing, you don’t alter the critical path.
Resource leveling is usually scheduled first. Resource smoothing is often performed after resource leveling.

What is resource smoothing?

We’ve discussed resource leveling and when to use it, let’s now look at the other resource optimization technique: resource smoothing. Some people might be confused about when to use resource leveling versus smoothing because they have very subtle differences. 

Resource smoothing is used to balance the peaks and troughs of individual tasks after they have been leveled or re-allocated. Whereas resource leveling deals with the question of resource constraints, smoothing deals with time constraints (which is why it is also known as time constrained scheduling (TCS)).

Here are some instances where resource smoothing works best:

  • There is a fixed deadline (e.g., the tasks have to be completed within their allotted timeline).
  • The resources have been properly re-allocated, and the critical tasks can no longer be re-shuffled.
  • Only minor tweaks are needed to smooth out the timeline (e.g., slight changes in working hours).

Advantages and disadvantages of resource smoothing

While often done at the last stages of the project, resource smoothing is a good tool to keep everyone on track. This method is particularly crucial since the project can no longer afford any delays at this point, particularly for critical activities.


  • Project sticks to its assigned timelines
  • Tasks are monitored well 
  • Fewer ambiguities and unexpected factors that can affect the overall schedule


  • No more room for flexibility
  • Increased pressure to stick to the timeline
  • People have to commit to their work schedules as best as they can

Example scenario of resource smoothing:

A project must be completed within three days and is once again assigned to Alex and Jane. They can both work on the project simultaneously, without any activity dependencies. The PM notices that on Day 1 and Day 2, Jane is working 10 hours while Alex is working for only 6 hours.

The PM then re-arranges the tasks on Days 1 and 2 so that they’re evenly distributed (as much as possible) between Alex and Jane. This strategy would ensure that both employees are not overburdened and can maintain the quality of their output to finish the project on time (Day 3).

The important thing to remember on resource optimization is to understand the main challenge the project is facing. Sometimes, these two techniques are done simultaneously to ensure that issues are being addressed in a timely manner. Like everything around project management, there is a time for flexibility and a time to stick to the plan.

Find out how Resource Leveling & Resource Smoothing can be done in resource management tool.

If you want a resource management tool that’s automated, flexible, and highly customizable, Klient can build one to tailor it to the needs of your business. We can help you take control and manage staffing, and allocate tasks appropriately and intuitively.

Resource Management in a PSA Software for a specific project

Resource Management in a PSA Software for all your project.

We’d love to help you out. Schedule a demo with us.

Everything you need to know about Resource Histogram for Project Management

Everything you need to know about Resource Histogram for Project Management

  • What is a Resource Histogram?
  • Why Use a Resource Histogram?
  • What Can You Do With a Resource Histogram? An Introduction to Resource Leveling and Smoothing
  • How to Build a Resource Histogram on Excel/Google Sheets?

Project management is a complicated beast, mainly because it requires monitoring resources. And resources – whether people, time, or money – can rapidly disappear. However, with a resource histogram, project managers (PMs) don’t have to panic. That’s because they know exactly where the budget is going daily and where they might tweak things to get the project back on track. 

Resource histograms are just one way PMs streamline processes and protect themselves from unexpected situations. Fortunately, companies seem to be catching up to the importance of being prepared. According to the Project Management Institute (PMI), wasted funding due to poor project management (e.g., budget overshoots, scope creep, and missed deadlines) has declined to 9.4 percent in 2021 compared with 11.4 percent in 2020. 

In this overview, we’ll walk you through your burning questions about resource histograms, how to build and implement one, and how you can take advantage of these tools to get the best results possible.

What Is a Resource Histogram?

A resource histogram is a visualization and statistical tool used to manage resources. Typically, a simple table might give you an idea of how your resources are monitored daily, but it’s hard to visualize information that way. (Also, let’s face it, tables can be boring). By turning your tables into resource histograms, you can easily see at a glance how well you’re keeping everything on track and if daily costs are exceeding the budget.

You might have guessed it, but the first step is establishing the resource cutoff per day. Without this clarity, it can be very easy to overshoot spending or over-allocate. Next is creating a “table of dependencies,” where details like types of activities, how long these activities will take, and how much they will cost per day are recorded. From this information, you can create a Gantt chart to visualize the data. 

Most people stop at this part. But if you take a step further and create a histogram, then you can have a better guide on when to move resources around or when to delay the due dates. We highly recommend two great videos from Engineer4Free that explain this concept really well. But, don’t worry, we will explain everything in this blog.

However, to give you a better context, we will explain the concept further with some nuance.

Why Use a Resource Histogram?

Aside from getting a cool visualization tool, resource histograms give you detailed information on the progress of your projects. In particular, some tasks are too complex and have many components; without a resource histogram, it’s like getting lost in a maze. The Gantt chart below demonstrates how you can have multiple activities/resources that overlap on a project. 

In this video, you can watch how a Professional Services Automation/Project Management Software replace a Resource Histogram with no effort.

When to Use a Resource Histogram?

The PM can use a resource histogram throughout the project. It can be a handy tool, even if it takes time and effort to create one in Excel. (It can even be manually created on paper, but it would be time-consuming and error-prone).

The resource histogram can help PMs figure out how profitable a particular activity is and which activities are interdependent. They can also monitor different processes and make data-based decisions. For example, they can determine which part of the project might benefit from added resources or have been over-allocated for quite some time.

Below are other examples of when a resource histogram is most beneficial.

  • You have a limited budget and must stick to it to the last dollar. Sometimes, budgets are incredibly tight, and overspending even for a few hundred dollars can lead to the dreaded scope creep (when unplanned tasks keep adding up, most of which were not initially included in the budget allocation).
  • You want to limit the number of daily resources assign for a project. For example, you have a specific role that executes a particular task and want to monitor that these tasks/roles don’t excessively overlap or get unnecessarily duplicated.

To demonstrate this, let’s say we have five parent tasks for the whole project.

Task Predecessor Duration Start Day End Day Cost / Day
Analysis 2 0 2 1560
Architecture Analysis 3 3 5 1680
Configuration Architecture 3 6 8 1680
Implementation Architecture 2 6 7 1520
Training Implementation 3 7 10 1400


In the table of dependencies below, you can see that each task/role is clearly specified per day, along with their corresponding budgets. Being detailed as much as possible helps to create relevant and accurate histograms.

Day Task Total Daily Cost
1 Analysis 1560
2 Analysis 1560
3 Architecture 1680
4 Architecture 1680
5 Architecture 1680
6 Configuration + Implementation 3200
7 Configuration + Implementation 3200
8 Configuration + Training 3080
9 Training 1400
10 Training 1400


This is the kind of table that is simple to do like this, but it’s a nightmare for a 6 months project. This is the kind of report that a PSA Software can generate quickly.

Pros and Cons of a Resource Histogram

While resource histograms are very useful, they also have certain limitations. For one, it feels outdated and should have been automated long ago. But resource histograms do serve a purpose, and PMs continue to benefit from this simple but informational tool. 


  • They allow users to compare and contrast data easily.
  • The data can cover a long period range (e.g., monthly or annually).
  • They have commonly used tools, and references are easy to find.


  • It can be difficult to compare different categories because histograms work best with one dataset over a long period.
  • They can require a lot of file space just to display basic information.
  • They can present misleading or incomplete data if the parameters are not clarified in the first place. 

What can you do with a Resource Histogram?

Resource histograms enable PMs to do two main strategies: resource leveling and resource smoothing. 

Introduction to Resource leveling

Let’s say you discovered through your resource histogram that there are three days where the project exceeds the daily budget or time limit. PMs can then re-shuffle major activities to move some tasks to the days below the resource limits, leveling the playing field and avoiding strains on teams.

When to use resource leveling

Resource leveling basically ensures that resources are spread evenly throughout all the client’s projects. Here are some examples of when to apply this technique. 

  • To maximize resources. As we described earlier, projects can have multiple tasks, and companies can have various projects simultaneously. With resource leveling, PMs can ensure that resources are re-allocated as needed. 
  • To give teams work-life balance. For groups overworking or exceeding time limits, PMs can either bring in other employees to help or push back the timeline to accommodate incontrollable delays (e.g., experiments and test results). 
  • To manage client expectations and output quality. PMs can efficiently update their clients on how resources are allocated while maintaining the quality of every deliverable. 

Resource leveling examples

Here are more concrete situations where resource leveling works best:

Moving a project completion date.

Let’s say a user interface (UI) developer team is refreshing an e-commerce website for re-launch within the week. However, a bug fix has been delayed for a couple of days. Since it is very critical to ensure that all bugs have been fixed beforehand, the PM can choose to extend the deadline to the following week. To make up for the lost time, the PM can maybe tweak the due dates of some minor tasks.

Moving a project start date.

A large project is due to start by next week, but the requirements/specifications from the client are still not complete. The PM communicates to the client that since they don’t have all the needed information yet, they will have to start a few days later. The PM then gives the client choices on how they want to re-allocate resources to compensate for the lost time caused by the client’s delay. 

Short on staffing.

A team of software engineers got sick at the same time, and a project needs to be delivered to the client by next week. The PM can then re-allocate some of the engineers from the other projects that are not due yet to help out in the meantime.

Introduction to Resource smoothing

Resource smoothing is usually done after resource leveling. In leveling, the primary constraint is resources; in smoothing, it’s time or schedule. After everything has been re-allocated, PMs saw that there were still some workdays that exceeded the limit within the new plan. The PM can then re-allocate tasks and teams without major re-shuffles, particularly in critical activities. 

Want to learn more about Resource smoothing and leveling? 

When to use resource smoothing

Smoothing ensures that things are going according to plan and that the project won’t have any more significant shifts or scope creep. Here are some examples of when to use resource smoothing.

  • The project deadline is set in stone. PMs can look at their histograms and ensure that work hours and labor are evenly allocated across the remaining days/months.
  • The critical paths/activities are not going to be affected. As long as the main tasks are going along as scheduled, then some small re-shuffles (a day or two) will be fine.
  • Some minor activities can be paused within their timeframe. To make room for other more crucial tasks, some activities can be slightly delayed without much impact on the overall project timeline.

Resource smoothing examples

To better visualize how this technique works, here are some sample situations where resource smoothing works best.

  1. The project is due within the week, and the PM sees that everyone seems to be working overtime on Wednesday. The PM can re-allocate the excess work hours to the other weekdays to smooth out the schedule.
  2. A website banner is due for review on Monday, but the Design Manager is on leave and will return on Wednesday. The PM can pause the review until the manager returns. Fortunately, the manager will still be able to finish the task before the banner’s scheduled to release on Friday.

How to Build a Resource Histogram on Excel/Google Sheets?

First of all, it’s much more simple to use a project management software or a PSA software to manage those. But I know that some of you are still using excel for those report. Now that we’ve gone through the background and essential characteristics of resource histograms, let’s look at how we can build them. We’ll start with a relatively simple example. First, we need to create a table of dependencies on Microsoft Excel. For example, the table below shows the number of employees required per month.

Resource Histogram - Excel

Next, select the entire table, including the titles and headings, and click the Insert tab. Under Column, select the Stacked Column in 3-D (under 3-D Column). (You can also choose the 2-D version, but in general, stacked columns work best).

Generate Resource Histogram with Excel

Our table of dependencies should be transformed into this:

Resource Histogram - Excel Graph

Source: Watch the complete video from Eugene O’Loughlin on how to Create a Resource Histogram in Excel.

As we can see from this basic resource histogram, additional information can be included, like extending the months or adding more roles/employees. This way, PMs can immediately see the months where employees would be needed more (e.g., July-September on the sample histogram). The team can then prepare in advance for these periods, including hiring additional staff if required.

Another way to read this histogram is if there’s an employee limit. For example, the client only wants to pay for 10 employees max for this project. By referring to the histogram, PMs can choose to shuffle specific tasks so that they are performed in the first quarter or last quarter of the year, where resource allocation is much lower.

For more information on how to build resource histograms in Excel, you can check this video out.

Resource histograms can be simple to create but can give valuable detail. It all depends on how PMs want to use and adjust them to the project’s needs.

Are you interested in a resource management tool for your business?

You don’t need to be an excel wiz to do this kind of report. This is why a solution like Klient can help you out. If you want a resource management tool that’s automated, flexible, and highly customizable, Klient can build one to tailor it to the needs of your business. We can help you take control and manage staffing, and allocate tasks appropriately and intuitively.

We’d love to help you out. Schedule a demo with us.