Question
Business Case - Seneca Company (Civil Engineering) The Seneca Company (Civil Engineers) consists of two divisions. The divisions are Transportation and Infrastructure . The company
Business Case - Seneca Company (Civil Engineering)
The Seneca Company (Civil Engineers) consists of two divisions. The divisions are Transportation and Infrastructure. The company sells engineering services to various customers. The following are the bill rates for the various staff classifications:
Vice President
$250/hour
Senior Engineer
$200/hour
Associate Engineer
$190/hour
Staff Engineer
$160/hour
The two divisions expect to bill the following hours:
Transportation - 10,000 hours, vice president at 10% of the time, 20% of Senior Engineer time 10% to Associate engineers and remaining to Staff Engineers.
Infrastructure - 6,000 hours, vice president at 12% of the time, 20% of Senior Engineer time, 5% to Associate engineers and remaining to Staff Engineers.
The Direct Labor costs per hours are as follows:
Vice President
$90/hour
Senior Engineer
$70/hour
Associate Engineer
$60/hour
Staff Engineer
$50/hour
The utilization (billable ratio to total hours) for each staff member is as follows:
Vice President
60%
Senior Engineer
80%
Associate Engineer
85%
Staff Engineer
90%
The company has the following other costs:
Admin Salaries
$81,000
Rent
$120,000
Utilities
$16,000
Benefits
$75,000
Assume that there are 2080 hours per year that each engineer can work including vacation and other benefit hours.
Group Assignment:
You are an outside third party Human Resources consulting firm and the Seneca Company Board of Directors, CFO and the CPO have engaged your company. The goal of the Board, CFO and the CPO is to improve profitability of the divisions and company. Therefore, to accomplish providing engagement advice to the Board, CFO and CPO the consulting team should answer the following questions during the presentation and in the final report.
.
Assume that the actual utilization came in at the following rates:
Vice President
50%
Senior Engineer
82%
Associate Engineer
88%
Staff Engineer
93%
How to find actual hours?
where to use utilization rates?
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