Firm Math
What 4 points of utilization cost a 40-person firm
Utilization slipping from 75% to 71% doesn't feel like news. Nobody calls a meeting about it. We ran the numbers for a made-up but typical 40-person A/E firm, and the answer was big enough that we checked it twice.
Worked example · round numbers, not data from any firm
$442k
Four points sounds small
Take one project engineer on a 40-hour week. At 75% utilization, 30 of those hours go on billable project work. At 71%, it's 28.4.
The gap is 1.6 hours. Spread over five days, that's 19 minutes a day: one fiddly timesheet correction, one hunt for the latest drawing set, one status email. None of it feels like lost money while it's happening.
The math, step by step
Here's the whole calculation, so you can swap in your own numbers. Nothing is hidden in a spreadsheet tab.
We used 48 weeks to leave room for holidays and leave, and 90% realization because not every billable hour gets billed in full. If you assume less, the number shrinks. It doesn't shrink as much as you'd hope.
Where 19 minutes a day go
We sketched one ordinary day to show how easily the minutes disappear. It's illustrative, not measured, but most people who work in a firm will recognize every item on it.
- 5 min Moving hours logged to last month's project code
- 6 min Retyping hours into the weekly project report
- 5 min Looking for the current drawing set in three folders
- 3 min Writing a status email someone could have read in a dashboard
Notice what's missing from that list: design work, client calls, site visits. The lost time sits in the gaps between systems, where information gets copied, checked or chased.
Utilization rarely drops because people stop working. It drops because the work around the work keeps growing.
Run your own numbers
Change the inputs to match your firm. Everything is worked out in your browser. Nothing is sent anywhere.
What actually moves the number
Asking people to "be more billable" doesn't work and isn't fair. The minutes come back when the admin goes away. These four changes do most of the work:
- 01
Capture time where the work happens
Hours are logged against the right project and phase the first time, so nobody fixes codes at month end.
- 02
Connect timesheets to project budgets
Project managers see burn against fee as it happens, without someone retyping it into a report.
- 03
Look weekly, not monthly
A two-point dip caught in week two costs far less than one found at the monthly close.
- 04
Give files and status one home
When the current drawing set and the project status are where everyone expects them, the searching and the status emails stop.
Common questions
What is a good utilization rate for an A/E firm?
It depends on the role. A principal who sells work and a production engineer shouldn't share a target. What matters more is the trend for each role and catching a drop early. Set targets by role, then watch them weekly.
Why use 48 weeks and not 52?
Holidays and leave take people out for several weeks a year. Using 48 keeps the example closer to the hours people are actually available. Use your own figure in the calculator above.
Isn't the lost time just overhead that has to happen anyway?
Some of it, yes. Proposals, training and firm management are real work. The example here only counts admin that comes from disconnected systems: rekeying, correcting codes, hunting for files. That part can be removed.
Where do these numbers come from?
They're round numbers for a fictional 40-person firm, chosen to make the math easy to follow. They aren't survey data or client results. Put in your own figures to get an answer that means something for your firm.
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