Andrew RadosevichUtilization Metrics
Billable utilization is the single most important metric for professional services. Target: 70–85% for billable staff. Track weekly, not monthly. Monthly is too late to course-correct. Break down by team, individual, and project type. Also track: effective rate (revenue ÷ total hours) and realization rate (collected revenue ÷ billed revenue). The gap between utilization and realization often reveals pricing or scope creep problems.
Financial Metrics
Track: gross margin per project/engagement (target: 50–65%), revenue per employee ($150K–$250K depending on service type), cash conversion cycle (invoice to collection), and overhead ratio. The most common failure: not knowing margin by project type. You may be busy but unprofitable on certain work, this is invisible without project-level costing.
Delivery & Quality
Track: on-time delivery rate, scope change frequency, rework rate, and client satisfaction (NPS or CSAT). Quality issues show up as: unexpected scope changes, missed deadlines, and client complaints. A simple quality scorecard reviewed weekly catches issues before they become client problems.
Growth & Pipeline
Track: pipeline coverage ratio (pipeline value ÷ quarterly target, aim for 3x), win rate by source, average deal cycle time, and proposal-to-close conversion. For professional services, referral rate is critical. Track what percentage of new business comes from existing clients. If it's below 40%, your delivery quality needs attention.
Common questions
How many KPIs should I track?
5–7 in your weekly leadership scorecard. You can track more in the background, but the weekly review should focus on the vital few that drive decisions.
What's a good utilization target?
70–85% for billable staff. Below 70% and you're leaving revenue on the table. Above 85% and you risk burnout, quality issues, and no capacity for business development.
How do I get my team to track their time accurately?
Make it easy (simple categories, not 15-minute increments), review it weekly in the operating meeting, and tie it to decisions (staffing, capacity planning). When people see their data being used, compliance improves.