Core modellingCore · ~35 minWorking draft · 9 sheets · 851 formulas

Professional services utilisation model

Headcount pyramid, utilisation, realisation, profit per partner. Build a professional services firm from its people: a pyramid by grade with hiring, attrition and promotion, billed hours from utilisation, fees from bill rates and realisation, pay and bonus pools, profit per partner, and the cash held in work in progress and receivables.

By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.

On this subject: professional services utilisation model.Updated 30 October 2026

Who builds it, and for whatThe model a consultancy, law, accounting or engineering firm builds to plan its year, and the one a private equity buyer of a services business builds in diligence. A firm that sells its people’s time has no product and no factory: its revenue is heads times hours times price, its main cost is the same heads, and its owners are judged on profit per partner. The model answers how many people of each grade the firm needs, how much of their time it can sell and at what price, what the partners keep, and how much cash is tied up in work not yet billed or paid for.

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Inspect the workbookProfessional services utilisation model · Working draft · 9 sheets · 851 formulas

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Every value, every sheet, as the workbook holds it.

	A	B	C	D	E	F	G	H	I	J
1	Assumptions
2	$m unless stated. Headcount in full-time equivalents (FTE); bill rates in dollars an hour; pay per head in $ thousands a year.
4	Year	Unit		FY0A	FY1E	FY2E	FY3E	FY4E	FY5E	Notes
5	Year number	#		0	1	2	3	4	5	FY0A = 0. Drives rate, pay and cost growth.
7	Scenario
8	Scenario	#	1	1 = base, 2 = upside, 3 = downside. Sets utilisation achieved, realisation, the bill rate increase and bonus funding.
10	Headcount pyramid
11	Partners at the end of FY0A	FTE	40.0
12	Partners: planned headcount growth, a year	%	5.0%	Hiring fills whatever leavers and promotions leave short of the plan.
13	Partners: attrition, % of opening headcount	%	6.0%	Partners retiring or leaving.
14	Principals at the end of FY0A	FTE	46.0
15	Principals: planned headcount growth, a year	%	5.0%
16	Principals: attrition, % of opening headcount	%	10.0%
17	Principals: promoted to the grade above, % of opening	%	8.0%
18	Managers at the end of FY0A	FTE	80.0
19	Managers: planned headcount growth, a year	%	5.0%
20	Managers: attrition, % of opening headcount	%	14.0%
21	Managers: promoted to the grade above, % of opening	%	10.0%
22	Consultants at the end of FY0A	FTE	120.0
23	Consultants: planned headcount growth, a year	%	6.0%
24	Consultants: attrition, % of opening headcount	%	20.0%
25	Consultants: promoted to the grade above, % of opening	%	15.0%
26	Analysts at the end of FY0A	FTE	135.0
27	Analysts: planned headcount growth, a year	%	6.0%
28	Analysts: attrition, % of opening headcount	%	20.0%
29	Analysts: promoted to the grade above, % of opening	%	25.0%
31	Hours and utilisation
32	Working days a year	days	225	After weekends, public holidays, leave, training and sickness.
33	Hours a working day	hours	8
34	Partners: target utilisation	%	35.0%	Billable hours / available hours. Partners spend most of their time selling and leading.
35	Principals: target utilisation	%	60.0%
36	Managers: target utilisation	%	72.0%
37	Consultants: target utilisation	%	78.0%
38	Analysts: target utilisation	%	80.0%
39	Utilisation achieved, % of target, base	%	96.0%	The share of planned billable hours actually sold.
40	Utilisation achieved, % of target, upside	%	99.0%
41	Utilisation achieved, % of target, downside	%	90.0%
42	Utilisation achieved, selected scenario	%	96.0%
44	Bill rates and realisation
45	Partners: standard bill rate, FY1E	$ per hour	850.00
46	Principals: standard bill rate, FY1E	$ per hour	650.00
47	Managers: standard bill rate, FY1E	$ per hour	480.00
48	Consultants: standard bill rate, FY1E	$ per hour	340.00
49	Analysts: standard bill rate, FY1E	$ per hour	240.00
50	Standard rate increase, a year, base	%	4.0%
51	Standard rate increase, a year, upside	%	5.0%
52	Standard rate increase, a year, downside	%	1.5%
53	Standard rate increase, selected scenario	%	4.0%
54	Realisation, base	%	86.0%	Fees billed and collected / standard value of the hours billed.
55	Realisation, upside	%	89.0%
56	Realisation, downside	%	80.0%
57	Realisation, selected scenario	%	86.0%
58	Sub-contractor fees billed, % of fee revenue	%	5.0%	Specialists the firm brings in and bills on to the client.
59	Sub-contractor cost, % of their fees billed	%	80.0%
61	Pay
62	Principals: base salary, FY1E	$k a year	320.0
63	Principals: target bonus, % of base salary	%	30.0%
64	Managers: base salary, FY1E	$k a year	210.0
65	Managers: target bonus, % of base salary	%	20.0%
66	Consultants: base salary, FY1E	$k a year	140.0
67	Consultants: target bonus, % of base salary	%	12.0%
68	Analysts: base salary, FY1E	$k a year	95.0
69	Analysts: target bonus, % of base salary	%	8.0%
70	Salary increase, a year	%	4.0%	Partners draw no salary: they share the profit.
71	Bonus pool funding, % of target, base	%	100.0%
72	Bonus pool funding, % of target, upside	%	115.0%
73	Bonus pool funding, % of target, downside	%	60.0%
74	Bonus pool funding, selected scenario	%	100.0%
75	Employer costs, % of salary and bonus	%	18.0%	Payroll taxes, pension contributions and benefits.
76	Recruiting and onboarding cost per hire, % of the grade’s base salary	%	25.0%
77	Recruiting cost per lateral partner hired	$k	300.0
79	Non-labour costs
80	Occupancy per head, FY1E	$k a year	15.0	Offices, per average head of every grade, partners included.
81	Technology and knowledge per head, FY1E	$k a year	9.0
82	Growth in per-head and fixed costs, a year	%	3.0%
83	Travel not recharged to clients, % of revenue	%	2.0%
84	Business development and marketing, % of revenue	%	2.5%
85	Depreciation, % of revenue	%	1.5%	Capital spending is assumed equal to depreciation.
86	Central costs, FY1E	$m	16.0	Finance, HR, legal, risk and the leadership office.
88	Working capital and cash
89	Days in the year	days	365
90	Work in progress, days of revenue	days	20	Work done for clients and not yet billed.
91	Receivables, days of revenue (DSO)	days	55
92	Work in progress, end of FY0A	$m	9.5
93	Receivables, end of FY0A	$m	26.0
94	Bonuses accrued, end of FY0A	$m	10.0	The FY0A bonus pool, paid in FY1E.
95	Cash, end of FY0A	$m	20.0
96	Partner distributions, % of operating profit	%	90.0%	Paid in the year. The rest is kept to fund working capital.

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Professional services utilisation model: the workbook

An Excel workbook with working formulas, no macros and no external links: the same model you can work with on this page.

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The worked model: 9 sheets and 851 live formulas, all 5 schedules built and linked, every check reading zero. Change an input in Excel and the whole model moves.
The starter: The same inputs and layout with the headcount pyramid: hiring, attrition and promotion left blank for you to build, each blank cell marked. The worked model is its answer.

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What the base case says

Revenue, FY1E: $184.8m
Operating margin, FY1E: 27.1%
Profit per partner, FY1E ($k): 1,223
Firm utilisation, FY1E: 68.6%
Leverage, FY1E (non-partners per partner): 9.6x
Average realised rate, FY1E ($ per hour): 329.18
Revenue per partner, FY1E ($m): 4.51
Bench cost, FY1E: $1.8m
Lock-up, FY1E (days): 75
Profit per partner, FY5E ($k): 1,578

Read from the workbook as served, every input at its default. Periods: FY0A, FY1E, FY2E, FY3E, FY4E, FY5E. The figures are invented and move with whatever you type in.

What this model is

A five-year model (FY1E to FY5E, from an FY0A actual year) of a fictional management consultancy of about 420 people, built from what a professional services firm actually sells: its people’s time. Every figure is invented.

It runs from a headcount pyramid of partners, principals, managers, consultants and analysts, each with planned growth, attrition and promotion, to billed hours (heads x available hours x utilisation), to fee revenue (hours x standard rates x realisation), to pay, bonus pools and other costs, to operating profit before partner remuneration and profit per partner; then to work in progress, receivables, accrued bonuses and cash.

Utilisation and realisation are the two levers. Utilisation is the share of available time that is billed; realisation is the share of the standard value of that time the client actually pays. A point of either reaches profit almost untouched, because the salaries are paid whether the hours are sold or not.

Leverage, the number of non-partners per partner, is the partnership’s gearing. Each partner’s profit is earned on the team beneath: more leverage means more profit per partner as long as the team is kept busy, and more bench cost when it is not.

Set Scenario on the Assumptions sheet to 2 (upside) or 3 (downside) to move utilisation achieved, realisation, rate increases and bonus funding together.

Seats: Private equity, Investment banking, Equity research and hedge funds.

Sheets in the workbook

Cover. How to read it, the conventions, the sheet map.
Assumptions. Scenario selector, the pyramid by grade (headcount, growth, attrition, promotion), hours and target utilisation, bill rates and realisation, pay and bonus, non-labour costs, working capital and cash.
Headcount. Opening headcount, leavers, promotions out and in, hires and closing headcount by grade; averages, totals and leverage.
Hours and Revenue. Available and billed hours by grade, realised and firm utilisation, standard bill rates, standard value, realisation, fee revenue by grade, sub-contractor fees, realised rates and revenue per head.
Costs and Profit. Salaries, bonus pools, employer costs and recruiting by grade; the bench cost; sub-contractors and non-labour costs; operating profit before partner pay, margin and profit per partner.
Working Capital and Cash. Work in progress and receivables in days, billings and collections, lock-up, accrued bonuses, cash from operations, partner distributions and cash.
Sensitivity. Operating margin by firm utilisation and realisation; profit per partner by leverage and staff attrition, with the workings beneath.
Sources. The basis of every assumption. All figures are invented for a fictional firm.
Checks. Headcount rolls by grade and for the firm, the hours identity, revenue, WIP, receivables and cash roll-forwards, and the grid centres. Each should read zero.

How the schedules connect

Every row in the workbook is tagged with the schedule it belongs to; the inspector above shows the tag when you click a row. These are the schedules this model is made of and where each one lives.

Headcount pyramid: hiring, attrition and promotion

Heads by grade, rolled forward year by year

Assumptions, rows 11–29 · Headcount, rows 6–12 · Headcount, rows 15–22 · Headcount, rows 25–32 · Headcount, rows 35–42 · Headcount, rows 45–51 · Headcount, rows 54–66

Utilisation and realisation: hours to fee revenue

Available hours, billed hours, rates and realisation

Assumptions, rows 32–42 · Assumptions, rows 45–59 · Hours and Revenue, rows 6–25 · Hours and Revenue, rows 28–51

Profit per partner: pay, bonus pools and partnership profit

Salaries, bonus pools, costs and what partners keep

Assumptions, rows 62–77 · Assumptions, rows 80–86 · Hours and Revenue, rows 54–59 · Costs and Profit, rows 6–24 · Costs and Profit, rows 27–35 · Costs and Profit, rows 38–45

Working capital schedule

Receivables, inventory and payables in days

Assumptions, rows 89–96 · Working Capital and Cash, rows 6–13 · Working Capital and Cash, rows 16–17

Sensitivity tables

Two assumptions at once, without a data table

Sensitivity, rows 5–8 · Sensitivity, rows 11–16 · Sensitivity, rows 19–26 · Sensitivity, rows 29–43

What you should be able to explain

Why utilisation and realisation are the two numbers a services firm lives by, and why a point of either reaches profit almost untouched.
How a pyramid works: promotions out of one grade are promotions into the next, so attrition is paid for in recruiting rather than in a smaller firm.
What leverage, non-partners per partner, does to profit per partner, and why it only helps while the team is kept busy.
Why a partnership reports profit before any partner pay: the partners are the owners, paid from what is left.
Why revenue earned is not cash: work in progress and receivables of two to three months of revenue sit between the hours worked and the money collected.

What a reviewer looks for

Revenue grown as one line, so a fall in utilisation and a fall in price look the same.
Hours billed at the standard rate, ignoring realisation, which overstates revenue by the discounts every partner gives.
A pyramid where promotions out of one grade do not arrive in the next, so the headcount does not reconcile.
Partners carried as a salary cost, which hides profit per partner, the measure the owners are paid on.
Working capital ignored, when lock-up of two to three months of revenue is what a growing firm has to fund.

Conventions this workbook uses

Stated on the cover sheet too. A model is only as trustworthy as the decisions it tells you it made.

Annual periods. FY0A holds the closing headcount and the opening balances; the forecast runs FY1E to FY5E. Average headcount is the mean of opening and closing.
Each grade’s leavers and promotions out are a share of its opening headcount; promotions into a grade are the promotions out of the grade below; hires fill the rest of the plan and are never negative. A grade whose leavers and promotions exceed its plan with no hiring is flagged on the Checks sheet.
Billed hours are average heads x working days x hours a day x target utilisation x utilisation achieved. Fee revenue is billed hours x the standard rate x realisation. Sub-contractor fees are billed on at a margin and sit in revenue.
Partners draw no salary: operating profit is struck before any partner remuneration, and profit per partner is that profit over average partners. Bonuses for other grades are a target share of salary times a funding level set by the scenario, accrued in the year and paid after it.
Capital spending equals depreciation. Interest on cash is not modelled and there is no debt, so nothing is circular. Taxes are paid by the partners personally and are not modelled.
The sensitivity grids work from FY1E: a different firm utilisation moves every grade’s hours in proportion and a different leverage moves every non-partner grade in proportion; costs that follow revenue move, salaries and per-head costs do not. A different attrition rate changes only recruiting, because hiring backfills to the plan.

Build it yourself

The starter workbook

The headcount pyramid has been cleared from the Headcount sheet: openings, leavers, promotions out and in, hires, closings and averages for each grade, and the firm totals and leverage. Rebuild it from the Assumptions sheet so that hires fill each grade to its planned growth. The Checks sheet shows when every grade and the firm roll forward.

Blanks: Headcount pyramid: hiring, attrition and promotion. Download it beside the worked model.

The path around this model

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Vocabulary: Utilisation, Leverage Model, Up-or-Out, Working Capital.

Questions about this model

What is the difference between utilisation and realisation?

Utilisation is the share of available time that is billed: here the firm bills 534,500 hours in FY1E, 68.6% of the time its people have. Realisation is the share of the standard value of those hours the client actually pays: the hours are worth $204.6 million at the rate card, and the firm collects 86% of that, so $28.6 million of recorded time is never paid for. Utilisation is about keeping people busy; realisation is about pricing.

What is leverage, and why does it raise profit per partner?

Leverage is the number of non-partners per partner, 9.6 in FY1E. Each partner’s profit is earned on the team beneath, so one more non-partner per partner, with every grade grown in proportion, lifts FY1E profit per partner from $1.22 million to $1.35 million. It only works while the extra people are billed: unsold time is bench cost, salary paid for hours nobody buys.

Why does attrition cost money if the firm hires to replace leavers?

Because every replacement has to be found and trained. Hiring here fills each grade to its plan, so higher attrition does not shrink the firm; it raises recruiting. Replacing every opening non-partner once would cost $15.3 million at 25% of salary a hire, so each point of attrition costs about $153,000 a year, and three points take $11,000 off profit per partner.

Why does a profitable firm need working capital?

Because it is paid long after the work is done. Work in progress of 20 days and receivables of 55 days of revenue mean 75 days of lock-up: a firm growing about 10% a year has to fund the growth in both before it sees the cash. Bonuses help the other way, because they are paid after the year end.

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