Gaining Efficiencies Through Indirect Rate Management

Everyone is looking for efficiencies in their business whether through structured initiatives (Six Sigma or LEAN) or through the execution of organizational goals. What you should be looking for? That is easy… efficiencies that drive profit and growth for your project-based organization.

One of the most impactful areas to work on efficiencies is through the management of indirect rates. Indirect rates can make the difference between winning a bid, losing a bid, making a profit, and enabling growth. So, managing them is extremely important. Here are some great tips for how you can gain efficiencies with your rates. 

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The GAUGE report has rate information (Fringe, G&A, Overhead -government and contractor, and MSH) by company size (yearly revenue) that you can compare yourself to. It is great tool to use to see where your rates stack up to others in your industry. For this blog, we are going to use G&A as an example:

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There are many reasons why these rates may be different for the different sized companies. For instance, in the less than $25M of revenue, some respondents at this level of revenue are using a single rate and, consequently, their single overhead and G&A rate is above 21%. Not many government contractors start out with a value-added G&A base. As you read the report you will gain more insight into the rates by revenue level. 

The E section of the report is one of the most useful external benchmark for government contractors and can potentially have the biggest impact.

Just a quick reminder of the benefits of external benchmarking:

  • Gives a perspective of the overall industry
  • Provides an understanding of what others are doing to be successful
  • Produces ideas for improvement
  • Makes you more competitive
  • Helps you win more business and grow your organization

 

Check out The GAUGE Report for additional information that will help you grow your GovCon.

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