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Dylan Smith ALM / Architecture / TFS

I was chatting with a buddy of mine who works in consulting about the Project Status Report I've been using (see previous entry).  He was concerned that something like that wouldn't work for a consultant (both the report and the process itself) without some modification.  His main concern was that they need to track billable hours for both project costing and billing the client.  My process and report don't deal with hours instead choosing to deal with "work points".  Work Points represent the amount of effort required relative to the other features on the list.  If you wanted to I'm sure you could spend some time and track hours worked and then calculate out how many hours worked correspond to each work point.  In my circumstances though that is not needed.  Work Points gets me an abstract velocity number which allows me to easily detect if we are speeding up or slowing down our progress, and allows me to calculate an estimated completion date which is really all I'm interested in.

For a consulting company, they are interested in hours for calculating costs and billing clients.  We were talking about how this report and process could be adapted to work in his situation.  I thought about it for a while and have an idea that is probably pretty out there (but hey, these are the things I like to think about).

Instead of charging clients by the hour why not charge by the work point.  It would probably be more attractive for the clients (once they got used to it) since now they are paying for value delivered rather than hours worked.  And the cost won't fluctuate depending on how many hours it takes (although I'm guessing consultants provide hours estimates up front that the clients are charged for regardless of the actual hours).  I can see an advantage to consultants also, but let me rehash a conversation I had with another consulting buddy a while ago.

I was talking with Joel Semeniuk about his consulting company (Imaginets) we were talking about a situation he encounters there. Imaginets has extremely low employee turnover.  I take this to be a sign that they know what they are doing and are a great company to work for.  However, the problem this presents is that their employees are getting more and more senior as they gain experience and demanding higher and higher salaries.  What is the company to do?  Do they start charging clients higher and higher rates?  That may be one option, and you could certainly argue that it's justified.  Joel has some novel ideas on how to deal with that situation, but lets get back to the original conversation.  If you were to charge clients based on work points instead of hours worked it seems like it would help in this situation.  The client and the consultants don't need to deal with how to charge for senior devs vs junior devs and all those inbetween.  If they just charge based on work points it's up to the consultants how to staff the project.  If they put junior devs on the project the assumption is that they would have a lower velocity than a senior dev but it would even out because their salary is presumably lower to compensate.  Likewise, paying the senior devs more would be justified assuming that their velocity is high enough to justify it.  All the consulting company would need to worry about is that the aggregate velocity is sufficient to hit the date given to the client.

It also removes the task of having to provide up front estimates in hours of how long everything will take.  Instead the estimates can be done in abstract work points which in my experience are infinitely easier to estimate.

Now my knowledge of consulting companies and their processes and issues is somewhat limited, so there's a good chance this is a crazy idea.  If so give me some feedback and let me know the many reasons why it won't work.  Or maybe it would work, maybe lots of consulting companies already do something similar and I'm just not aware of it (easily possible).

Posted on Thursday, January 11, 2007 3:19 PM | Back to top

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