Utilisation & Capacity Planning

This use case explains how to use Model Reef to plan utilisation and capacity for professional services and consulting businesses.

You will:

• Model headcount and roles across offices or teams.

• Convert FTE capacity into available and billable hours.

• Apply utilisation and realisation assumptions.

• Connect supply of billable hours to revenue, margins and hiring plans.

The aim is to move away from static spreadsheets and build a capacity engine that is directly tied into your three statement model.

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When to use this pattern

Use this pattern when:

• You run or advise a consulting, agency or professional services firm.

• Utilisation is a key driver of revenue and margin.

• You want to understand when to hire, and how many people you need, to support planned work.

• You need to see the impact of utilisation changes on P and L and cash.

It is often combined with:

• Rate Card and Billable Hours Forecasting

• Project Pipeline and Revenue Scheduling

• Office or Team Profitability Modelling

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Architecture overview

You will build four layers:

1

Branch structure

• Branches for offices, teams or service lines.

• Optional group or holding branch.

2

Capacity drivers

• FTE by role.

• Available hours per FTE.

• Utilisation and realisation assumptions.

3

Revenue variables

• Billable hours by role.

• Revenue as billable hours times rate card.

4

Outputs

• Utilisation and capacity KPIs.

• Office or team P and L.

• Impact on margin and hiring needs.

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Step 1: Design the branch structure for your firm

Start by deciding how you want to see performance:

• By office or city.

• By practice or service line.

• By team or squad.

In Model Reef, create a branch tree such as:

• Firm (root).

  • Practice - Strategy.

  • Practice - Technology.

  • Practice - Implementation.

  • Overheads (for central costs).

Or, for geographic focus:

• Firm.

  • Office - London.

  • Office - Manchester.

  • Office - Remote.

  • Overheads.

This branch structure will drive how you see utilisation and profitability.

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Capacity & utilisation build steps

1

Define headcount and capacity drivers

In the Data Library, create drivers for headcount and capacity, for example:

• FTE - Consultant - London.

• FTE - Senior Consultant - London.

• FTE - Partner - Firm.

• Available Hours per FTE per Year or per period.

You can choose to work in:

• Hours per week and number of weeks per year, or

• Hours per month or quarter directly.

For example:

• Available Hours per FTE per Week = 40.

• Working Weeks per Year = 46.

• Available Annual Hours = 40 × 46.

You may prefer to work with capacity modules per branch, storing all the assumptions for that branch in a small group of drivers.

2

Add utilisation and realisation assumptions

Define the following drivers per role or per branch:

• Target utilisation percentage (share of available hours that are billable).

• Realisation percentage (share of billable hours that can actually be billed at full rate, after write offs and discounts).

Examples:

• Utilisation - Consultant - London = 75 percent.

• Utilisation - Senior Consultant - London = 80 percent.

• Realisation - Firm = 95 percent.

Store these as Modifier type drivers in the Data Library so they can be reused in formulas and easily updated.

3

Convert capacity into billable hours and revenue

In each office or practice branch, create variables to compute:

• Available hours per role.

• Billable hours per role.

• Billable hours after realisation.

For example:

• Available Hours - Consultant - London = FTE - Consultant - London × Available Hours per FTE.

• Billable Hours - Consultant - London = Available Hours - Consultant - London × Utilisation - Consultant - London.

• Billable Hours Realised - Consultant - London = Billable Hours × Realisation.

Then link to rate card drivers (described in more detail in Rate Card and Billable Hours Forecasting), for example:

• Revenue - Consultant - London = Billable Hours Realised × Rate - Consultant - London.

Set these revenue variables as type Revenue so they flow into P and L and cash correctly.

4

Compare capacity to demand

If you implement Project Pipeline and Revenue Scheduling, you will have a view of demand for billable hours over time.

You can then compare:

• Supply of billable hours (from this utilisation and capacity structure).

• Demand for billable hours (from pipeline and project schedules).

Use charts or custom reports to show:

• Excess capacity or shortfalls per office or role over time.

• Expected utilisation compared to target.

This helps answer questions such as:

• When do we need to hire more people in a team or location.

• Where are we likely to be overstaffed if pipeline slows.

5

Connect to staff cost and P and L

Make sure Staff variables exist for all roles in each branch, representing:

• Salaries or day rates for employees and contractors.

• Oncosts such as pensions and payroll tax.

Then check that:

• Revenue variables from billable hours and rate card are in the same branch as staff costs.

• Office or practice P and L shows revenue minus staff and Opex clearly.

This gives you a utilisation driven margin view at office or practice level.

6

Build utilisation and capacity dashboards

Create a dashboard focused on utilisation and capacity that shows:

• FTE counts per role and branch.

• Available hours, billable hours and realised billable hours over time.

• Utilisation percentages per role and per office.

• Revenue per FTE and gross margin per FTE.

These views give partners and managers a clear line of sight from staffing to revenue and margin.

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Check your work

• FTE and hours assumptions are realistic and grounded in actual contracts and work patterns.

• Utilisation and realisation percentages are plausible given historical performance.

• Revenue per role and branch aligns with what you would expect from the rate card.

• Office or practice P and Ls reconcile to the consolidated firm view.

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Troubleshooting

Utilisation looks too high across the board — Check that you have not confused billable hours with available hours, and that holidays and non-billable time are correctly reflected in the capacity assumptions.

Revenue jumps or dips unexpectedly — Look for step changes in FTE drivers or utilisation assumptions, and align them with known hiring or restructuring events.

Too many roles make the model hard to manage — Group similar roles into bands for planning (for example junior, mid, senior) and track very granular titles only in HR systems.

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Related guides

• Build an Opex Planning Model

• Scenarios & Planning

• COGS Variables: what is, rules, what it affects

• Entering Accruals & Delays