Mike Andes says track your efficiency score: budgeted hours divided by clocked hours. An 8-hour job that takes 10 hours is 0.8 or 80% efficient. This metric shows you which employees are productive, whether your estimates are accurate, and which services drain profit.
Efficiency score = budgeted hours ÷ clocked hours.
If budgeted hours = 8 and clocked hours = 10, efficiency score = 8 ÷ 10 = 0.8 (80%).
We're flying blind if you do not know this metric. What we call the efficiency score is your budgeted hours divided by your clocked hours. Which means if there's eight budget hours on a job and it takes me 10 hours from 7am till 5pm, that's 0.8 or 80% efficiency score. By tracking this number I'm able to know which of my employees are the most efficient. I'm able to know if my estimating is accurate or not. I'm not guessing as to whether or not I'm going to lose my shirt or whether or not I'm going to make a bunch of money on project because I know that I'm accurate on my budgeted hours. I'm also going to have a very educated stance as to which customers I need to raise prices on which projects and services I always go way over time on or it's all over the place and I might actually consider cutting that service so I can have more accurate estimating and more predictable profits.
