Overtime Premium Drag
Standard definition, mathematical formula, practical agency calculation walkthrough, and 2026 benchmarks.
Core Definition
Overtime Premium Drag is the reduction in contract margin caused by salaried staff working uncompensated overtime or hourly staff incurring premium overtime pay on fixed-fee projects.
In-Depth Practitioner Guide
When project schedules slip due to poor scoping or sluggish timesheet feedback, agencies frequently rely on team overtime to hit deadlines. Even if salaried practitioners do not receive overtime wages, excessive hours degrade work quality, increase code defect rates, and drive senior staff attrition—creating severe downstream financial drag.
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Frequently Asked Questions
The reduction in contract margin caused by salaried staff working uncompensated overtime or hourly staff incurring premium overtime pay on fixed-fee projects.
When project schedules slip due to poor scoping or sluggish timesheet feedback, agencies frequently rely on team overtime to hit deadlines. Even if salaried practitioners do not receive overtime wages, excessive hours degrade work quality, increase code defect rates, and drive senior staff attrition—creating severe downstream financial drag.
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