You may very well disagree with the rules of the accounting bodies, but you know what they are.Ĭonsulting is very different. In other words, great work is significantly less subjective because the work of the legal and accounting firm is publicly available and a body with known criteria for success evaluates the work. You also know when an accounting firm does a good job because the standards bodies in different countries will not penalize the firm for the work done. There are a lot of guidelines in terms of being able to benchmark performance of employees of such firm.Īs an example, you know when the legal firm wins because the judge decides if the firm wins. Various professional bodies are tracking the work such a firm does. Compared to consulting firms, an accounting or legal firm is significantly more regulated. This is the difference that makes the billable hours model work for accounting and legal firms. Lets look at the most important difference between a consulting firm and an accounting or legal firm. Why the billable hours model works for accounting and legal firms
#Consultant billable hours spreadsheet professional#
The percentage of billable hours out of total working hours is called utilization and it is a key metric used in performance evaluation by the consulting arms of professional services firms like Deloitte and PwC. The consulting firm will track billable hours as a percentage of total working hours he could have billed out. For example, a consultant can have 77% billable hours, 88% billable hours or even over 100% billable hours. In the billable hours model you have a consultant at, for example, Deloitte who is going to be measured on the amount of hours that he has billed to a client and the total hours he has billed in a year as a percentage of the total hours he could have billed. How the billable hours model is used in management consulting On the contrary, the billable hours model works well for these two professions. We insult the accounting firms for using billable hours model purely because we assume that if the accounting firms are using it than it can’t be good, or if lawyers are using it than it can’t be good. We talk about the billable hours model as if it is evil, but for the wrong reasons. The problem is that it is inappropriate to management consulting. I find that a lot of people misunderstand the problem with billable hours model. I have had a lot of discussions about the billable hours model with aspiring management consultants, clients currently working for consulting firms and other people in our network. Today I want to talk about the billable hours model and why it is unsuitable for management consulting.
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