Companies and Business firms put a great deal of effort in ensuring profitable resource allocation. It is your goal to keep every individual in your team busy while ensuring their job tasks are important and billable for the company. It gets really challenging as your team expands, especially when you need to designate individuals to multiple projects going-on at the same time.

One of the simplest ways to confirm whether your resource allocation efforts are successful is by tracking your team’s utilization. Before we introduce different resource utilization formulas, let us define resource utilization in a reasonably easy-to-understand way.

The Definition – What is Resource Utilization?

Resource utilization is a metric that shows whether the time and talent of your entire team or particular employees is completely utilized in accordance with the goals of the organization. It describes the process of planning the project and efficiently deploying the available time of the individuals in the company.

As an example,  when you know that someone is currently overutilized and simply has too much on their plate, you can search for another team member with similar skillsets who would fit into your project. This measure additionally assists to identify individuals that are underutilized, so you can designate new projects to them.

Resource Utilization Formula

Now you would be thinking about how to measure resource utilization it can easily be calculated by below formula:

Resource utilization = Busy time / Available time

The outcome value expressed in percentage shows you how much of your team’s time is spent working.

Despite the fact that it sounds simple, there are a number of questions that emerge when attempting to measure resource utilization. Should you base your calculation on real working time (timesheets) or rather planned working time? What regarding holidays, vacations, and paid time off? How frequently should you track your team’s utilization?

There is not a particular answer for this, it depends on your needs. There are so many variables that it is practically difficult to suggest a universally good solution. The only method to figure it out is to go through the choices and choose the one that best fits your requirements.

Are you looking for a tool that will help you calculate resource utilization for your team? With Whizible Reports, you can quickly set up metrics you want, save them or share them with your team.

Different Types of Resource Utilization

Overall resource utilization is one of the most important KPIs of a cost center. It can be further split into billable, non-billable and strategic utilization.

• Overall Resource Utilization

Overall resource utilization is an approach of measuring the overall utilization of a resource versus its availability or capacity. It is a collective time that an employee spent on billable, non-billable, and also on strategic tasks. It can be determined by comparing the overall resource capacity against the overall work assigned to an employee.

Which means: Overall Resource Utilization = Actual/Allocated Total Time ÷ Resource Capacity

• Billable Resource Utilization

Billable resource utilization is the method to measure how much a resource is utilized for billable work against the resource capacity or availability. The time spent by a resource on billable work is called billable time for which the customer/client has actually committed to pay.

Which means: Billable Resource Utilization = Actual/Allocated Billable Time ÷ Resource Capacity

• Non-Billable Resource Utilization

Non-Billable resource utilization is a method to measure time spent by a resource on a work task that cannot be billed to the client. This time is usually related to BAU, internal meetings, stand-up huddles, training, and workshops etc.

Which means: Non-Billable Resource Utilization = Actual/Allocated Non-Billable Time ÷ Resource Capacity

• Strategic Resource Utilization

Strategic resource utilization is the method of measuring how much a resource is utilized for strategic projects. It measures the actual time spent by a resource that is related to strategic activity to meet the long-term goals of the organization.

Which means: Strategic Resource Utilization = Actual/Allocated Strategic Time ÷ Resource Capacity

Resource Utilization Tracking

• Monitor the Resource Utilization for different categories

It is very important to regularly check and track resource utilization under various classified groups. Below mentioned are 3 major categories in which you can track the resource utilization: Project/Task, Team/Group, Person/Individual.

Project

In this situation, the collective utilization calculation of all the resources operating in a specific project is taken into consideration. A suitable tool can aggregate and show this information according to the requirement.

Team

It is required to track the utilization of each team member in a shared-service model. The members either work on a specific issue solution based on a ticket or work under multiple project managers.

Individual

Analyzing individual resource utilization basis the allocated work against the resource capacity lets project managers evaluate the resource performance. It makes certain that the resources are neither under or overutilized.

• Forecast Vs. Actual Report

Keeping track of resource utilization levels is essential to access employees’ productivity. Although, it is not easy to do so for every resource manually. There are advanced tools available that can help you track resource’s and project’s performance status in real-time.

A resource scheduler can let project managers have a regular check on resource utilization. Additionally, project managers can draw a comparison using actual vs. forecast utilization reports. The actual number of hours are plotted from the timesheets and the forecast time is taken from the resource scheduler.

How to Maximize Productive Resource Utilization?

100% utilization doesn’t mean the resources are productive. It is necessary to check that they are not engaged in mundane activities. Thus the load is on resource managers to ensure their utilization is productive and skill-sets are being used to the maximum potential.

• Effective Bench Management

Bench management in any organization is always an in-progress activity and must be taken into consideration strategically. Lowering bench time requires reducing non-billable hours that ensures the resources are allocated to billable or strategic work.

The advanced resource management software helps managers to forecast the demands of projects pipelined in advance. Using the benched reports and project vacancy, they can further fill the vacancies with the skilled benched resources.

• Identify Under and Over Utilized Resources

When the assigned work is less or more than the resource capacity, it causes underutilization and overutilization of resources. Skill-sets shortage leads to overutilization because a specific resource may be assigned to different projects at the same time. 

Imperfect visibility of resources can contribute to this cause as it leads to double booking causing overallocation. The precise resource management tool helps managers to detect over and under-utilized resources in a project.

• Lower Non-Billable Activities of Resources

It is vital for an organization to check the overall billable utilization of its top skillful resources with the optimal resource allocation. A resource brings profits only if the working hours are carried out on billable or strategic work and is completely utilized against its capacity.

Resource managers should keep track of resources that spend minimal or no time on mundane activities such as discussions and meetings. It helps them enhance the billability of resources and gain maximum profitability and productivity.