Business Tools Blog

Understanding how quickly we can turn over our install pipeline (sometimes called backlog) is a VERY important metric in Telecommunications. (remember the post on the Rule of 78’s?)

We use the “Balancing the Checkbook” methodology to track changes to our Installation Pipeline.  In order to forecast installs beyond the orders that are already scheduled, we need a metric.  This is where Implied Days is applicable.

This example shows:

• A Beginning Balance Installation Pipeline in January of $1M (this is the balance at Midnight December 31st)
• In January, we installed $500K … this is subtracted from the Installation Pipeline
• In January, we sold $650K … this is added to the Installation Pipeline
• The ending balance in the Installation Pipeline is $1.15M (this is the balance at Midnight January 31st)
• The % of the Pipeline Installed is 50% calcualted: ($500,000/$1,000,000)
• The Implied Days to Install Service is 60 calculated: (30/50%)
• A Beginning Balance Installation Pipeline in February of $1.15M (this is ending balance at Midnight January 31st)

Note - this doesn’t mean that the average installation interval from a customer perspective is 60 days.  A company might install 80% of it’s service orders in 30 days and the larger higher priced service orders might take 90 days.  The above calculation is a weighted average.