Modeling P&L on the Deal

Vlad ELeave a comment
  • Have proforma for every deal
  • Rates Modeling – Request CM, AM model from Finance team
  • Assign someone to assist with merging, creating, aggregating multi-location ratecards
  • Keep in mind any model is probably ~5% or more off, e.g. you miscalculate Account Management cost, Direct Expenses, investment resources, reimbursable Expenses, wrong salaries ranges, EUR/USD conversions, etc.
  • Include volume discount formulas and bands that can be adjusted
  • Discount – Have one cell where you can input % discount and it will reduce rates by that %, one for onsite; use another field to discount offshore in bulk
  • Rate Increases on Annual Basis – have a separate input field for that
  • Model should be Multi-year
  • Salary Increases – With input where you can increase salary by e.g. 2% each year for more accurate forecast. Must include b/c every year salaries rise
  • Salary – have input for salaries so you can overwrite them. Include standard salaries in the initial model
  • Vacation – include VAC/ILL % of time
  • Expenses – include line item to control Reimbursable and Direct Expenses
  • Account Manager cost – make sure to have it included
  • Onsite/Offshore Growth % estimate (e.g. anticipate resource counts to grow 25%) – have a field to input %
  • Include e.g. 5% CPI or Rate Increases YoY on multi-year deal especially if it’s Fix Bid or Managed Service/Support (if that deal is locked for multi-year, your pricing must include XYZ% raises YoY, otherwise you’re locking a 3 year deal with 3 year old prices)
  • Blended Rate – output field to show blended rate AND/OR blended rates PER each ROLE row e.g. some locations have knows blended rate ranges to hit, also some customers have blended rate ranges to be within for their budgets, KPIs for team composition, balance
  • Monthly/Hourly rates – have the ability to switch between monthly vs. hourly rates
  • Include options e.g. drop-down box with different locations tiers so you can model 2-3 locations e.g. Delivery is done only in US, Offshore, Hybrid (onshore, offshore)
  • Add actual people names to resource plan model, if known, to understand real cost
  • Have resource plans that model $5M, $10M, $15, $20M scenarios
  • Currency – include currency drop down to make adjustments and to have input field for rate conversion. Include USD, EUR, and Country Specific
  • Have the ability to add additional people, roles to the resource plan

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