From the mass of available information KPIs tell the “reality” of your Business. The targeted values of those KPIs indicate where you want your business to go; therefore, understanding these and continuously monitoring them is essential for any firm to communicate their goals and understand what it takes to improve them when they are not on target. This is vital to a firm’s sustained success.

Although KPIs may differ from one company or industry to another, in all enterprises these must be aligned with the overall goals of the business, since the first actionable step  is to define the most important KPIs and their targeted values.

The following are identified for Engineering Firms:

  • Backlog Volume: It is essential to continuously replace invoiced fees with new contracts. A desirable target maybe equal to or greater than the firm’s budgeted annual Net Operating Revenue.
  • Proposals Pending: Marketing must maintain the funnel and continuously feed the sales pipeline with new prospects, leads and opportunities in order to have sustained booking probabilities. The total money amount of prospects (≥50% chance to be awarded) and suspects (<50%) should be 2.5 to 3 times Net Operating Revenue. Prospects must at least equal the Net Operating Revenue; suspects 1.5 to 2.
  • Utilization Rate: Not only measures how busy employees are, but also the capacity that existing staff have to take on client work. High value may mean understaffing; low, that current staff needs to be revised. A reasonable goal for the entire staff maybe 60-65%. For professional and technical staff -including principals- 75-85%.
  • Breakeven Rate: Value represents profit/losses. It may warn about the need of cost structure changes in order to maintain a reasonable profit level. Typically firms strive to keep it under 2.7.
  • Overhead Rate: Managing indirect expenses is critical for the firm´s profitability. A target of 1.5 maybe acceptable; above 1.75 cause for concern and immediate action.

The first step towards achieving a firm’s goals is defining the right KPIs; the second, using engineering vocabulary, is “To communicate compartments by opening the isolation valves between them, let  the process flow through the entire system and balance it as an unit.”

In any modern Business, Information (Data) and Technology are the most valuable asset besides the human asset, and must serve the Business purpose, strategy and vision.

ProgresSum Business Intelligence will break down silos of information across your Business and will empower decision makers to visualize the overall picture to support strategic, tactical and operational decisions based on facts.