Dispatch #47 - Field-to-Office Headcount Ratio

As I work with my contractor clients to spend through our PPP funds and adjust to the new normal, one question that arises is how many people do we have in the field and how many in the office?
 
Too high a ratio and we risk losing control of estimates and jobs—gross margin and cash flow will suffer. Too low a ratio and there's not enough revenue to cover overhead and profit.
 
The optimal ratio is trade- and contractor-specific. For example, here are the ratios from four successful contractors: 

Most important is to track the ratio over time and note what it is during periods of peak performance.

Like other Key Performance Indicators (KPIs), this is one of several reference points we use to take the pulse of the business.

And as always, keep it simple. For the purpose of calculating the ratio:

• Headcount = anyone who received a paycheck

• Field = crew and crew leaders

• Office = project managers, precon/estimating, accounting, and owners

Need help with this or other financial matters faced by construction contractors? Let’s talk!

David Stern CFO makes every effort to provide useful and accurate information. This content, however, is not intended as a substitute for specific business-related financial advice. We disclaim all warranties and liabilities from its use.