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What is ideal staffing rate of a consulting company ?

How can we calculate the ideal staffing rate of a company with following information :

- Number of consultants : 150

- TJM : 3500

- Rentability : 15%

How can we calculate the ideal staffing rate of a company with following information :

- Number of consultants : 150

- TJM : 3500

- Rentability : 15%

(edited)

2 answers

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Hello Anonymous,

This is a tough one. There is no ideal staffing rate really, since the difficulty and strategic importance of the project are crucial parameters in the staffing process. At BCG, we could overstaff a project that is very critical to us, in order to position ourselves better for future work. Similarly, we could understaff a project that we know is within our realm of expertise and would allow us to knock the ball out of the park without much effort.

Hope that makes sense!

Vasilis

Hello Anonymous,

This is a tough one. There is no ideal staffing rate really, since the difficulty and strategic importance of the project are crucial parameters in the staffing process. At BCG, we could overstaff a project that is very critical to us, in order to position ourselves better for future work. Similarly, we could understaff a project that we know is within our realm of expertise and would allow us to knock the ball out of the park without much effort.

Hope that makes sense!

Vasilis

Hi there, you need a few more parameters to calculate that. Basically it is the ratio between the charged hours and the salaried hours. A consultant also needs time for continuous education, trainings, interviewing candidates, holidays. Usually it is around 80%.

In this example, I think they wanted you to calculate the break-even point. If you have a consultant in France, starting level making 40kEUR let us just say, that means 167 EUR/day, let's assume 250 EUR with social expenses and miscellaneous.

The contribution margin for each day on project is 15%*3500EUR=525 EUR

Therefore if he is active at least 250/525=48% of the time, then the cabinet is not overstaffed. The staffing for the whole company is the weighted average of staffing rates.

Hi there, you need a few more parameters to calculate that. Basically it is the ratio between the charged hours and the salaried hours. A consultant also needs time for continuous education, trainings, interviewing candidates, holidays. Usually it is around 80%.

In this example, I think they wanted you to calculate the break-even point. If you have a consultant in France, starting level making 40kEUR let us just say, that means 167 EUR/day, let's assume 250 EUR with social expenses and miscellaneous.

The contribution margin for each day on project is 15%*3500EUR=525 EUR

Therefore if he is active at least 250/525=48% of the time, then the cabinet is not overstaffed. The staffing for the whole company is the weighted average of staffing rates.

I didnt get 15% in your calculation. Also if you assume a consultant costs 167 a day and paid 40 k, you assume that he is working 240 days and not 221. Why ? Many thanks — saline on Apr 10, 2017 (edited)

The 15% was given by the person who asked this question, read the top of page. The numbers are arbitrary, what counts is the logic. — Cyrus on Apr 11, 2017

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