The percentage of billable positions expected to be unfilled — accounting for turnover, clearance delays, and ramp-up in your forecast.
The vacancy factor is the percentage of billable positions you expect to be unfilled at any given time. It reduces your revenue forecast to account for the reality that not every seat is occupied every day.
Adjusted Revenue = Gross Revenue x (1 - Vacancy Factor)A 5% vacancy factor on a $10M contract means you forecast $9.5M, not $10M.
| Vacancy Factor | When to Use |
|---|---|
| 2-3% | Stable, long-running contract with low turnover and no clearance requirements |
| 5% | Industry standard—reasonable default for most GovCon T&M contracts |
| 7-10% | High-clearance programs, high-turnover environments, or new contract ramp-up |
| 10-15% | New win still actively staffing, specialized/hard-to-fill roles |
The right number depends on your actual staffing data. If you track time-to-fill and turnover, you can calibrate it precisely.
A position can be filled (0% vacancy) but the person billing at 85% utilization (PTO, training days, etc.). These are separate adjustments.
In Arcvue, the vacancy factor is set per contract. Utilization assumptions are baked into the indirect rate structure (fringe absorbs PTO, overhead absorbs training).
The Operator's View
The easy trap in contract forecasting isn’t just optimism—it’s treating certain outcomes as uncertain. Vacancies are a perfect example. Any individual contract might run fully staffed for an entire year. But across a portfolio? It is a mathematical certainty that vacancies will occur—departures, illness, extended absences. The only unknown is where.
The mistake is forecasting as if it won’t happen. That gap doesn’t disappear; it just shows up later as a shortfall the business has to scramble to cover.
The fix is straightforward: pull your prior year data, calculate what potential revenue would have been at 100% staffing, and compare it to what actually came in. That delta is your vacancy factor. Start tracking it, apply it as a portfolio-level assumption, and build it into every forecast going forward. You won’t know which contracts will take the hit—but you can be certain something will. A firm that plans for that reality runs tighter, surprises less, and spends a lot less time explaining revenue shortfalls it could have seen coming.