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BUILDING VALUE IN PROFESSIONAL SERVICE FIRMS  Moderated by: Brian Kennel Performance Management Consulting, LLC
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms Notes: Any number of team combinations could be applied. Results will vary with differing rate and hour assumptions. Time value refers to billable hours multiplied by billing rate. Collected amount assumes a 95% realization factor to account for the reality that all time worked is not normally collected Salary is a variable depending upon firm type and industry segment Bonus is a simple formula of 25 % of collected amount minus 2.5 times salary. Fringe benefits are assumed to be 20% of salary and bonus Allocated overhead is based on an assumed 40% profit margin (to include owners collections) Net income is collected amount minus loaded payroll and overhead Profit per owner hour worked is calculated by dividing gross collections by owner hours (billable and non billable) worked. It is assumed that a solo practice owner would work more billable hours to meet demand.  Leveraging Example:  4 man team - 1 partner and 3 professionals   Solo Models  Team Partner  Non Partner  Non Partner  Non Partner  Team Total    Partner  Hours billed 1,600 1,900 1,900 1,600 7,000 1,800 Billing rate $225  $185  $165  $95  $168  $225  Time value $360,000  $351,500  $313,500  $152,000  $1,177,000  $360,000  Collected amount $342,000  $333,925  $297,825  $144,400  $1,118,150  $342,000  Salary   $90,000  $80,000  $50,000  $220,000    Bonus   $32,678  $29,348  $5,820  $67,845    Benefits   $24,536  $21,870  $11,164  $57,569    Loaded payroll   $147,213  $131,217  $66,984  $345,414    Allocated overhead  $82,667  $62,000  $62,000  $41,333  $324,264  $82,667  Net income $259,333  $124,712  $104,608  $36,083  $448,473  $259,333  Profit generated per owner hour worked (assume 600 non billable/400 non billable in the solo model) $204  $144
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Building Value in Professional Service Firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

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Building Value In Proferssional Service Frims

  • 1. BUILDING VALUE IN PROFESSIONAL SERVICE FIRMS Moderated by: Brian Kennel Performance Management Consulting, LLC
  • 2.
  • 3.
  • 4.
  • 5.
  • 6.
  • 7.
  • 8.
  • 9.
  • 10.
  • 11.
  • 12.
  • 13.
  • 14.
  • 15. Building Value in Professional Service Firms Notes: Any number of team combinations could be applied. Results will vary with differing rate and hour assumptions. Time value refers to billable hours multiplied by billing rate. Collected amount assumes a 95% realization factor to account for the reality that all time worked is not normally collected Salary is a variable depending upon firm type and industry segment Bonus is a simple formula of 25 % of collected amount minus 2.5 times salary. Fringe benefits are assumed to be 20% of salary and bonus Allocated overhead is based on an assumed 40% profit margin (to include owners collections) Net income is collected amount minus loaded payroll and overhead Profit per owner hour worked is calculated by dividing gross collections by owner hours (billable and non billable) worked. It is assumed that a solo practice owner would work more billable hours to meet demand. Leveraging Example: 4 man team - 1 partner and 3 professionals   Solo Models Team Partner  Non Partner  Non Partner  Non Partner  Team Total    Partner  Hours billed 1,600 1,900 1,900 1,600 7,000 1,800 Billing rate $225 $185 $165 $95 $168 $225 Time value $360,000 $351,500 $313,500 $152,000 $1,177,000 $360,000 Collected amount $342,000 $333,925 $297,825 $144,400 $1,118,150 $342,000 Salary   $90,000 $80,000 $50,000 $220,000   Bonus   $32,678 $29,348 $5,820 $67,845   Benefits   $24,536 $21,870 $11,164 $57,569   Loaded payroll   $147,213 $131,217 $66,984 $345,414   Allocated overhead $82,667 $62,000 $62,000 $41,333 $324,264 $82,667 Net income $259,333 $124,712 $104,608 $36,083 $448,473 $259,333 Profit generated per owner hour worked (assume 600 non billable/400 non billable in the solo model) $204 $144
  • 16.
  • 17.
  • 18.
  • 19.
  • 20.
  • 21.
  • 22.
  • 23.
  • 24.
  • 25.
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Editor's Notes

  1. Stop