How can we calculate the ideal staffing rate of a company with following information :
- Number of consultants : 150
- TJM : 3500
- Rentability : 15%
(edited)
(edited)
What is ideal staffing rate of a consulting company ?
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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
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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.
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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
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.
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