- Design and Engineering consulting firms create project and business budgets based upon a Labor Multiplier Factor. Taking into account that information:
- What would expect your annual salary to be upon graduation? Convert that salary into an hourly rate (base on 2080 work hours annually)
- Now, what do you believe is a reasonable hourly rate at which your company will charge for your services, i.e. what rate (dollars) will the company bill out your services at?
- What factors did you consider/take into account when you determined your billing rate?
- What is a reasonable utilization rate for a staff engineer after graduating from college? Does it change one month, to 6 months, to 1 year after graduation?
- If your business is expected to have annual revenue of $9,385,000, Direct Labor Costs of $2,950,000, and achieve a Profit of 16%, answering the following:
- What would your total costs (i.e., total expenses) be?
- What would your Breakeven Multipler be?
- What would your Target Multiplier be?
- What is the difference between the Breakeven Multiplier and Labor Multiplier Factor (also known as the Target Multiplier)?
- Download the Sample P&L spreadsheet for the next tasks.
Click on the ‘Exercise ‘ tab and complete exercises 1A, and 1B. Record your answers below and provide a explanation on your method (Hint: this is based on calculating the Breakeven Multiplier and using that multiplier to calculate the billing rate).
- Gross Revenue and Breakeven Labor Multiplier for Exercise 1A:
- Gross Revenue and Breakeven Labor Multiplier for Exercise 1B:
- Complete the tasks outlined on the Exercise 2 tab. Record your answers below and provide a explanation on your method and what your outcome tells you.
- Utilization Rate for Staff Engineers and CAD Operator, Earnings before taxes, Gross Profit, and Average Labor Multiplier for Exercise 2
- Click on the Exercise 3 tab and complete. Record your answers below and provide a explanation on your method and what your outcome tells you.
- Show Utilization Rate for all positions. Write down Gross Profit, and Average Labor Multiplier for Exercise 3.
SubmissionProvide your responses on a signle .docx file format. Include your .xlsx file as will and submit both as your homework submission.