President and CEO at Salient Federal Solutions, Inc. and Chairman ...

Unanet October 27, 2011Salient Federal SolutionsContinued Excellence. Greater Strength.

Understanding the case for Metrics• The Start-Up– The CEO’s “on the ground” experienceminimizes the need for metrics as a way tomonitor projects• The Established Company– The CEO requires metrics from his middlemanagers in order to monitor the success ofkey projects– Daily, weekly, monthly, quarterly and yearlymetrics reports provide insight into thesuccess of projects2

Experience with Metrics• General Electric/ Martin Marietta/ LockheedMartin– Highly Metricized– Earned Value Management were the norm– Basis of estimates were required on all bids, quotes orRFP’s– Monthly Variance Analysis Reports were required– Performed postmortems on projects to validate metrics– Projects were too large to manage without formalmetrics“If you can’t measure it, you can’t improve it”Edwards DemingCompany Proprietary3

The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again.Do we need Metrics?If the objective is growth in the top and thebottom line, then metrics are essential• Understanding program performance is critical• Future Opportunities are based on past performance• The ability to bid successfully requires a solid understanding of howthe organization performs against standards/metrics• Then the ability to manage to those bid metrics during performance• This is more than and different from EVMS but they are related– Does your organization prepare BOEs?– Do you set program baselines on bid metrics?– Do you do a post mortem on each program after completion?• Metrics can make a difference in future performanceCompany Proprietary4

Finding the right balance of Metrics• The metrics will depend on your role• The most rudimentary metrics can be pulled fromyour Timekeeping Tool• Get a snapshot of utilization– How much billable time is being billed?– Every organization has the right balance ofutilization– When you find and set your utilizationnumbers they are easy to monitor6

Finding the right balance of Metrics(cont.)• Important metrics for measuring theorganization– Trends in Direct Labor– Utilization– Total Backlog– Funded Backlog– Days Sales OutstandingCompany Proprietary7

Labor Utilization100%95%90%85%80%93%89%88%85%79%Group AGroup BGroup CGroup DGroup E75%70%65%Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11

Trending Backlog200.0180.0160.0140.0120.0100.080.0UnfundedFunded60.040.020.0-Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11

Days Sales Outstanding16014012010080Group AGroup BGroup CGroup DGroup E604020-Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11

Review a Monthly CEO Report• Detailed Financials for each P&L• Overhead Rates and Trends• Fringe Rates and Trends• G&A Rates and Trends• Cash Flow Projections• Work at Risk• New Business Pipeline• New Business Win Rates• Balance Sheet11

We depend on tools to make ourassessment of the business easier• As you grow, there is less time for analysis• Learn what metrics are important to you and measurethem– Hold people accountable for them– Incentivize them– Take actions based on them

Questions?