Consulting & PSA glossary
Essential terms for anyone running a consulting firm: PSA, T&M, ATS, day rate, utilization and 30+ more concepts explained without buzzwords.
PSA & Core concepts
Billing & Rates
Time & Materials (T&M)
Billing model where the client pays for hours actually worked, multiplied by an agreed bill rate, plus pass-through expenses.
Fixed Price
Billing model with an agreed price for a defined scope: the vendor takes on overrun risk in exchange for a potentially higher margin.
Day rate
Daily rate charged for a consultant on each billable day, the typical pricing unit in European T&M contracts.
Bill rate
Hourly or daily rate the consulting firm charges the end client for a consultant's time.
Cost rate
Internal hourly or daily cost of a resource, including salary, payroll taxes, benefits and a share of company overhead.
WIP (Work in Progress)
Value of work already delivered but not yet invoiced to the client, recorded as an asset on the balance sheet.
Revenue recognition
Accounting process determining when and how much revenue can be booked to the income statement, independent of cash collection.
Project margin
Difference between revenue and direct costs of a project, expressed in absolute value or as a percentage of revenue.
People & Performance
Utilization rate
Percentage of billable hours worked compared to total available hours of a consultant in a given period.
Bench
Set of consultants not currently allocated to billable projects, waiting to be assigned to new engagements.
NPS (Net Promoter Score)
Metric measuring the propensity of clients or employees to recommend the company, computed on a 0-10 scale by subtracting detractors from promoters.
Onboarding
Structured process for integrating a new employee or new client, aimed at reducing time-to-productivity.
KPI (Key Performance Indicator)
Quantitative indicator that measures the performance of a company, team or individual against predefined targets.
Recruiting & ATS
ATS (Applicant Tracking System)
Software that manages applications, recruiting pipelines, interviews and onboarding for HR teams and staffing agencies.
Placement fee
Recruiting pricing model where the agency earns a one-off commission only if the candidate is hired by the client.
Retainer
Recruiting model where the agency earns a fixed fee in multiple tranches during the search, regardless of the outcome.
Clawback
Clause requiring the recruiting agency to refund or reduce the fee if the candidate leaves or is dismissed within a guarantee period.
Vesting period
Period during which a placement fee is subject to clawback if the candidate leaves the role before the agreed deadline.
Delivery & Projects
Staffing
Process of assigning the right people to the right projects, balancing required skills, availability and utilization targets.
Resource allocation
Detailed planning of the share of time each consultant dedicates to different projects in a given period.
Capacity planning
Process of projecting total team capacity versus future demand, to identify resource gaps or excesses in the medium to long term.
Progress billing milestone
Periodic document certifying a project's completion percentage and authorizing invoicing of an agreed tranche.
Scope creep
Uncontrolled growth in project requirements or activities beyond what was originally defined in the SOW.
Timesheet
Document, often digital, where a consultant logs hours worked, split by project, activity and type (billable or non-billable).
Sales & Pipeline
Backlog
Total value of signed but not yet delivered contracts, representing future revenue already secured by the firm.
Sales pipeline
Set of ongoing sales opportunities, each with an estimated value, close probability and expected signature date.
SOW (Statement of Work)
Contractual document detailing scope, deliverables, timeline, cost and responsibilities for a services engagement.
Customer Success Manager
Role responsible for post-sale client satisfaction, service adoption and contract expansion through upsell and cross-sell.
MRR (Monthly Recurring Revenue)
Recurring monthly revenue generated by subscription contracts or managed services, net of one-off components.