This presentation outlines some of the requirements for estimating the effort associated with Service Delivery.

1. Customer Service Delivery Management
Estimania – How to estimate effort for Service Delivery
Masaf Dawood
Overview
Oct 20, 2013
Practices
Insights
Execution

2. Overview
 How do you estimate effort for providing Service Delivery…?
 The focus is to show how to calculate cost of service and
related estimate of resourcing to support client needs.
 The presentation is attempting to raise awareness about
the questions you need to answer/assess for estimating
Service Delivery.

3. Are Estimates Free …
 There are no Free Estimates…..estimates are
tied to Service Delivery.

4. Underlying Problem –Effort Estimation
 How do you estimate effort ?
 What do you define as unit of effort ?

5. Underlying Problem – Labor Accounting Units
 How many actual billable hours in the year?
 How many billable/week or /month?

6. Underlying Problem – Effort Type
 What constitutes non-billable time?
 Who pays for non-billable time?

7. Underlying Problem – Effort Classification
 What are billable targets and ratios based on?
 How do you estimate work time that is no-billable?
 How do you account for non-billable time internally?

8.  Too many questions…? Where
are the answers…

9. Underlying Mathematics… Answers (Effort
Estimation)
 Effort is based on work week and country labor regulations.
 For the purposes of this we will use NA work week of 40
hours.
Based on location (EU vs. NA. LATAM vs. APAC) establish the relevant
block of annual hours required from each FTE. (2K/FTE in NA Rule of
Thumb)

10. Underlying Mathematics… Answers (Labor
Accounting Units) Billable Time
 Billable time is the time out of the work week that is spent
doing client work as per contract and as per client approval.
 Billable time is charged to the client at month end (not in
advance). In some cases 30 days advance invoices are sent.

11. Underlying Mathematics… Answers (Labor
Accounting Units) Non-Billable Time
 Non-Billable hours also need time and labor accounting.
 Non-Billable time is charged to the internal Service Delivery
accounting code.
Provide/Establish Non-Billable Accounting Codes based on the
categories and companies internal workflow!!!!

12. A Brain Teaser……
Not all client facing
work is billable and not
all internal work is nonbillable!!!!

13. Some Recommendations….Costs Allocation
 Proper estimation and ability to define units of work, effort and
labor hours required to meet is key.
 All direct and in-direct overhead needs to be accounted for as
well.
 Direct overhead = Travel, Training, Computer, Cell # etc.
 In-Direct Overhead = coffee pot, electricity, water cooler etc.

14. Some Recommendations….Costs Allocation
 Estimation of raw labor hours converted to productive delivery
hours a challenge!!! An ability that few companies have.
 Service Delivery resource management and allocation upfront
and with the discipline to deliver creates the successful and
distinguishes good delivery org from not so good ones!!!
 Clear definition of work categories, codes and mapping of the
accounting//charge codes to client billable codes creates
seamless and true billing and accounting experience.
 Billable time targets are established upfront and employees
are expected to deliver and be measured to the targets.

15. Estimania – Summary
 Define Units of work and annual SD expected from Each FTE.
 Define and establish Billable targets for each role.
 Develop guidelines for Non-Billable thresholds/month for
each Role.
 Allow for exceptions in case of no/light client work.
 Develop accounting codes and enable for Non-Billable Hours.
 Establish accounting codes for each client facing work
package and or project.
 Develop regular review of the spend and effort expensed
against each code and provide feedback to client and internal
team’s.

16. Estimania – End
 Happy customers are repeat and reference-able customers!!!