Thoughts on project overages in the context of a consulting company

I was chatting with my PM peers over a brown bag lunch this afternoon, and project overages became a topic of a heated discussion.

In the PMI/PMP world, "on budget" is one of the cornerstones in the definition of a successful project. PMs are expected to bring the project on budget, because:

1. An overage eats into the company's bottom line.
2. It is an easy metric to use; there is nothing fuzzy about it; you are either on budget or you are not.
3. It is a "feel good" psychological statement (didn't you have it on the latest copy of your resume?)

I would like to make an argument that in a consulting company, small overages may be OK.

Here's why.

Most consulting companies have a bench. For folks outside of the consulting world, a bench is a term to describe available resources who are collecting a paycheck but don't have an active project to bill against at the moment. In the ideal world, a consultant on the bench stays productive by taking training, assisting with internal projects or sales and marketing efforts (if my manager happens to read this, blogging is a marketing effort too!), or actually taking care of themselves by enjoying a well-deserved vacation. In the real world, people come to work and surf the Internet, play video games, gel by the water cooler, show up late and leave early.

Since the resources on the bench get paid anyway, utilizing them on a project will have no impact on the profitability of the company, as long as their involvement doesn't interfere with the productive activities listed above or prevents them from joining another project. The potential benefits of using benched resources, on the other hand, are numerous:

1. Rescued projects
2. Happy clients and potential future revenue from referrals
3. Improved morale (sitting on the bench is no fun! there are only so many online training courses one can take at a time)

That said, overages are a re-active, not a proactive measure. Similarly to how overtime is a safety net and should never be planned for (according to PMBOK), overages are a second line of defense and should never be part of the project plan.

So, my conclusion on overages in a consulting company is:

1. When managed responsibly and staffed by benched resources, they cost the company $0
2. They have a number of long-term benefits
3. They are a safety net and should never be planned for

What do you think? I would love to get some comments on this post.