Customer Service Delivery Management

Estimania – How to estimate effort for Service Delivery

Masaf Dawood

Oct 20, 2013

Practices

Overview

Insights

Execution

Technology SeriesTechnology – Collaboration – Change

Overview

How do you estimate effort for providing Service Delivery…?

The focus is to show how to calculate cost of service and related estimate of resourcing to support client needs.

The presentation is attempting to raise awareness about the questions you need to answer/assess for estimating Service Delivery.

Are Estimates Free …

There are no Free Estimates…..estimates are

tied to Service Delivery.

Underlying Problem –Effort Estimation How do you estimate effort ?

What do you define as unit of effort ?

Underlying Problem – Labor Accounting Units How many actual billable hours in the year?

How many billable/week or /month?

Underlying Problem – Effort Type

What constitutes non-billable time?

Who pays for non-billable time?

Underlying Problem – Effort Classification

What are billable targets and ratios based on?

How do you estimate work time that is no-billable?

How do you account for non-billable time internally?

Too many questions…? Where are the answers…

Underlying Mathematics… Answers (Effort Estimation)

Effort is based on work week and country labor regulations.

For the purposes of this we will use NA work week of 40 hours.

Based on location (EU vs. NA. LATAM vs. APAC) establish the relevant block of annual hours required from each FTE. (2K/FTE in NA Rule of Thumb)

Underlying Mathematics… Answers (Labor Accounting Units) Billable Time

Billable time is the time out of the work week that is spent doing client work as per contract and as per client approval.

Billable time is charged to the client at month end (not in advance). In some cases 30 days advance invoices are sent.

Underlying Mathematics… Answers (Labor Accounting Units) Non-Billable Time

Non-Billable hours also need time and labor accounting.

Non-Billable time is charged to the internal Service Delivery accounting code.

Provide/Establish Non-Billable Accounting Codes based on the categories and companies internal workflow!!!!

A Brain Teaser……

Not all client facing work is billable and not all internal work is non-billable!!!!

Some Recommendations….Costs Allocation

Proper estimation and ability to define units of work, effort and labor hours required to meet is key.

All direct and in-direct overhead needs to be accounted for as well.

Direct overhead = Travel, Training, Computer, Cell # etc.

In-Direct Overhead = coffee pot, electricity, water cooler etc.

Some Recommendations….Costs Allocation

Estimation of raw labor hours converted to productive delivery hours a challenge!!! An ability that few companies have.

Service Delivery resource management and allocation upfront and with the discipline to deliver creates the successful and distinguishes good delivery org from not so good ones!!!

Clear definition of work categories, codes and mapping of the accounting//charge codes to client billable codes creates seamless and true billing and accounting experience.

Billable time targets are established upfront and employees are expected to deliver and be measured to the targets.

Estimania – Summary

Define Units of work and annual SD expected from Each FTE.

Define and establish Billable targets for each role.

Develop guidelines for Non-Billable thresholds/month for each Role.

Allow for exceptions in case of no/light client work.

Develop accounting codes and enable for Non-Billable Hours.

Establish accounting codes for each client facing work package and or project.

Develop regular review of the spend and effort expensed against each code and provide feedback to client and internal team’s.

Estimania – End

Happy customers are repeat and reference-able customers!!!