October 16, 2018

What do NGO’s, Federally Funded Nonprofits, and Government Contractors have in common?

What do NGO’s, Federally Funded Nonprofits, and Government Contractors have in common? Assurance

Whether you are large or small organization, there are certain critical key performance metrics (KPI’s) that will allow you to manage and monitor results more effectively.

In order to navigate the complex waters of federal funding, keeping your fingers on the pulse of your business is essential. Most federally funded organizations use a sophisticated ERP (enterprise resource planning) system that supports the complex calculations and reporting requirements necessary to be successful in the government funded space. These systems capture vast amounts of data. The challenge is what to do with all this data and what information is important.

Today we’ll focus in on seven important KPIs (Key Performance Indicators) for government funded organizations. Tracking the right KPIs will help you to be more proactive, select the right grants, awards or contracts, calculate more accurate bids, and ultimately lead to more successful projects.

  1. Backlog
    • A backlog report will reflect remaining funds on existing grants, contracts or awards, and how many option years may remain. Knowing when the critical percentage of funds has been reached on each grant or award is essential.
  2. Wrap Rate
    • Wrap rates are those costs that go into the final price you charge the government for your services or products. Government contracting is extremely competitive, especially in today’s Lowest Price Technically Acceptable (LPTA) environment. This means you need to accurately assess what you can and can’t do, and at what price.
      • The Wrap Rate is also referred to as the “Fully Loaded Rate” or the “Direct Labor Multiplier.” This is the fully burdened labor rate – the rate at which an organization must bill out its direct labor units to cover its direct and indirect costs. Understanding these rates is crucial for an organization providing services to the federal government.
  3. Labor Utilization
    • Tracking the percentage of time your employees spend on direct (billable/funded) work vs. indirect (non-billable) work in real time and following trends allow for more effective adjustments to meet target billable utilization.
    • If you’ve budgeted your direct staff to be 75% covered under direct grants or awards, it is important to know if they are meeting this goal and/or identifying the trends.
  4. Accounts Receivable Aging
    • Tracking aged accounts receivables won’t necessarily help you get paid faster, but it may give you insight on your customers (agencies) and allow you to prepare for certain trends.
  5. Profit and Loss by Project
    • It’s not only important to understand that certain projects are performing adequately, but to understand the details of why they are over/underperforming on a real time basis. This will allow you to adjust on the fly and maximize profits.
  6. Budget vs. Actuals on each Project
    • Each project manager should be able to clearly track budgets vs. actuals on the projects they oversee, and capture work progress assessments against the baseline plan. In addition, these reports provide valid, timely, and auditable information for proactive project management analysis and action.
  7. New Business Pipeline
    • It’s easy to track the business you already have, but what about potential future grants, awards or contracts in the pipeline? An integrated xRM system can help you look at both existing and future business data together on one screen. In addition, you can look at the number of opportunities pending and the probability of winning the business, the cost of preparing your proposals, your success rates on specific types of grants, contracts and awards, or targeted success within specific agencies, and even potentially uncovering new areas for growth.

With the right ERP system, you can get all of these KPIs in one central place, based on a “single source of information.” If your organization is focused on federally funded grants, awards or contracts you should use a system that also focuses on the same space.

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Nonprofit & Social Sector