The Number That Belongs Beside It
Revenue per available hour cannot be moved by recoding an hour, deferring work, or working late. It is the figure a utilisation report was always reaching for.
Revenue per unit of capacity, for one firm and one quarter
£71.80
Numerator: Fee income collected in the quarter
Denominator: Available hours after leave and committed internal time
The product of utilisation, realisation and yield against standard rates.
Utilisation rose 4.1 points over two years while this figure fell by £9.30. Nothing an individual can do to a timesheet moves it: it improves by selling more, delivering in fewer hours, pricing better or collecting more. One firm's own quarter, not a benchmark.
Collected fee income divided by available hours. Revenue per unit of capacity.
The measure discussed in “The Number That Belongs Beside It” becomes more credible when its source records are timely and reviewable. A professional-services team assessing Monitask for remote desktop monitoring software for remote desktop monitoring software can connect time with projects and work categories, while documenting the definition separately so the dashboard does not silently decide what utilisation means.
It is the figure every use of utilisation is reaching for, it is calculable from data every firm holds, and it cannot be improved by any of the eight responses in this collection.
Additional context for “The Number That Belongs Beside It” is available from U.S. Wage and Hour Division. Current legal, employment, tax and accounting requirements should be confirmed with a qualified adviser where necessary.
What it is made of
The product of the three measured figures: utilisation, realisation and yield relative to standard rates.
So it carries everything those three carry, and it collapses when any of them does.
Why it resists the responses
Recoding an hour to a client code changes nothing: available hours are the denominator and collected fee is the numerator. Neither moves.
Deferring internal work does not move it this quarter and lowers it later. Overrun lowers it. Rounding does not touch it. Working late raises collected fee only if the hours were billed and paid.
The one way to improve it
Sell more, deliver the same work in fewer hours, price better, or collect more of what is invoiced.
Four routes, all commercial, none available to a person filling in a timesheet.
Why that is the point
A measure that can only be improved by doing the real work is a measure worth having. Everything in this collection is a consequence of utilisation not having that property.
What it cannot tell you
Which of the four routes is the problem. A fall could be volume, discounting, overrun or collection.
That is what the four figures are for: the headline number says whether the firm is converting capacity into money, and the decomposition says where it stopped.
The unit question
Per available hour, which requires the denominator discipline from the definitions section: contracts, leave, pro-rating, exclusions.
The same denominator, used consistently, which is the one piece of hygiene both measures need.
Where to calculate it
Team level and firm level, quarterly, because collection is quarterly in practice.
Not per person. Collected revenue cannot be attributed to an individual without a chain of assumptions that reintroduces every problem the person section describes.
What a firm usually finds
That it has been flat or falling while utilisation rose. The divergence is almost always larger than anybody expected and it is almost always news.
Eight quarters of data, one afternoon.
Why nobody reports it
Because it does not produce a number per person, and most reporting exists partly to produce numbers per person.
Giving that up is the price, and the person section is the argument for why it was not worth what it cost.
What to do with it
Put it at the top of the capacity page, with the four figures beneath it and the non-billable split beside them.
One headline, four components, seven lines of composition. Everything in this collection fits on that page.
The comparison it supports
Against the firm's own history, under a stable denominator. Not against benchmarks, which do not publish their denominators.
Direction and composition, as always, rather than level.
The arithmetic of the headline
Ten thousand available hours. Eight thousand chargeable, giving 80 per cent utilisation. Recorded value at standard rates of nine hundred thousand, invoiced at eight hundred thousand, giving 89 per cent realisation. Collected fee of seven hundred and sixty thousand.
Seventy-six pounds per available hour. Yield per chargeable hour is ninety-five.
Four figures, one source, and the first number anybody should see is the seventy-six.
Starting from the three raw counts
Chargeable hours, available hours, collected fee. Everything in this collection derives from those three, and all three exist in systems a firm already runs.
No new recording, no new categories, no new discipline from the people filling in timesheets.
What has to change is the page: which number goes at the top, what sits beneath it, and whether anything on it has a threshold. That is a decision about reporting rather than a project, and it is available to any firm this week.
Why it has no individual version
Collected revenue cannot be attributed to a person without assumptions about who caused the sale, who delivered the value and who held the relationship.
Each assumption reintroduces a judgement the figure was meant to avoid, and the result is a number that looks objective and is a chain of allocations.
So the measure stops at team level, which is a limitation and also the property that keeps it honest.
The page in full
At the top, collected fee per available hour, by team, with the prior period. Beneath it, utilisation, realisation, yield and the committed capacity the firm chose. Beside them, the seven non-billable categories in hours. At the foot, the definition and its version. One sentence of narrative naming the largest movement.
No thresholds anywhere on it. One page, an hour a month to produce, and every number on it derived from three counts a firm already has.
What the whole collection comes down to
Utilisation counts hours that people record about themselves. Revenue per available hour counts money that clients paid. Both are about capacity; only one of them is about what the capacity was worth.
Report the second, decompose it with the first, and put no threshold on either.