| Topic Name: |
ghosting hours |
| Message Name: |
Ghosting Hours |
| Date Posted: |
03/08/2006 |
| In Reply To: |
ghosting could be submitting more hours than actually worked, or submitting less than actually worked, which is more popular on fixed price contracts since that practice will increase acn profit |
| Message: |
Reston_hokie,
Here is my situation:
A Consulting Engagement Manager that I work for instructs their consultants not to bill all of their hours on a "fixed price" client contract in order to decrease the contract expenses and thus artificially increasing the engagement profit margin? In other words, the consultant is working full-time and traveling out of town to a client engagement account. The Engagement Manager who negotiated the "fixed price" contract scoped out that billable hours needed to complete the engagement within the 5 month period. The consultant iwas scoped in the contract to work and bill against the engagement contract 40 hours per week over a 5 month period. However, when the Engagement Manager realizes that the profit margin is going to be lower than expected because the project is taking longer than scoped, the Engagement Manager tells the consultant not to bill all the hours (only 12 of the 40) for each week in order to decrease the consulting billable hours against the contract for a longer period of time. At the end of the year, the consultant is challenged by management as not meeting their billable hour quota and falls 140 billable hours short. The consultant looses over $5,000 of incentive compensation due to not meeting the quota. Again, this is the direct result of the Engagement Manager directing this consultant's reduction in hours and the consultant could not possibly bill on another engagement becasue they were full-time on their present one.
What is your take on this type of consulting billing and accounting practice? Should I report this to the SEC? The "true" expense of the Consultant's incentive compensation that should have been paid never hits the bottom expense line because of the practice of "ghosting hours". What if this is happening to 10 consultants, 100 consultants, 1000 consultants over a 2,3,4,5 year period? What if the consultant has e-mails showing the Engagement Manager directing this?
Regards,
Ghoster
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