Projects have a lot of components and require meticulous planning, particularly when you are working on many of them simultaneously. For this, the project managers need to do some smart management. They should know what their team is working on, how productive they are, and if they're using their time efficiently. Expanding the business is the highest priority for every company. But just hiring more people doesn't help.
The key is to effectively utilize each resource on billable work to get optimum efficiency. Yes, optimal resource utilization is the keyword for success. One of the simplest ways to check if you have successfully allocated resources is by tracking your employee utilization rates using resource planning software. Before we move ahead, let's first see what resource utilization means
Resource utilization is an important metric in resource management as it shows whether your team or employees are fully booked or not. It explains how to plan projects while ensuring that the available resources are used to their maximum potential. It also enables project managers to find if any of the employees are over-or underutilized and accordingly tweak the resource allocation. That would help them in reallocating the responsibilities to someone else or finding people who are underutilized so that they could be assigned new projects.
Though both resource allocation and utilization have the same purpose, there are some key differences.
Let's now understand the significance of resource utilization:
Let's see what some of the most important terms are for calculating employee productivity, efficiency, and utilization.
Utilization Rate Formula
Talking of the resource utilization formula, you should first calculate the utilization rate for achieving effective resource utilization. Let's take a look at the utilization rate formula you can use here.
Utilization Rate or Percentage = Actual Number of Hours Worked (by a particular resource) divided by the Total Available Hours.
If you select a range of time (for example, weekly, monthly, or quarterly), it gives you an insight into the projects that your resources are spending their time on. This data on utilization rates helps project managers to understand which projects are profitable for the organization. This information can drive the direction of your business in the future.
For example, as per the typical resource utilization formula: 1500 Hours Worked / 1600 Available Hours = .93 = 93.75% utilization rate
Realization Rate
Realization is different from utilization rate as it is directly tied to revenue and billable time. To calculate the realization percentage, you need to take the Total Billed Hours and divide them by the Total Billable Hours. The result shows what percentage of time the resource takes to bring revenue into the business.
For Example, of 1500 hours worked, 1400 were the total number of billable hours. Of the 1400, 1320 were actually billed to the customer, resulting in project revenue. 1320 Billed Hours / 1400 Billable Hours = .942 = 94.28% Realized.
With a resource utilization tool, calculating staff utilization rates and productive utilization becomes easy for the project managers. Let's see how you can improve your resource utilization by creating a resource utilization plan.
There are multiple projects that a project manager handles, and they do impact each other. Imagine if you did not have clarity into the total number of resources in a project, resource availability, and schedules of other projects, you could plan some team members who are completely booked on another project.
Rather than viewing projects as different entities, you should create a utilization plan that enables you to view all the resources and their allocated tasks for a specific period. That way, you can evaluate the capacity and performance of your team more effectively.
Various projects demand different times and resources to complete. The team leads, or the project manager, are responsible for keeping everything on track with regard to the timelines and the budget. A good resource utilization tool helps in putting all the active projects upfront and also enables allocating the resources equally amongst them.
At times, projects don't run as planned, and there are bound to be some challenges and roadblocks. It's always good to assess the resource utilization metrics. You should also check the hours booked in the preparation stage and compare them with the actual hours worked in real-time.
This will provide you an opportunity to review the utilization rates and assess if the project plan needs any tweaking before any variation or problem comes up. To aim at organizational growth, it's important to utilize your resources efficiently while minimizing waste and maximizing productivity.
Imagine and run situations that will enable you to be ready for any change or deviation. For example, if your project overruns the budget or if you lose a resource, you will be able to adapt to the change quickly. Especially for consulting firms, it's important to utilize the valuable time of people in an optimal manner to deliver projects profitably.
Having a 100% utilization does not necessarily mean that the resources are productive. Therefore, it is important to evaluate if they are engaged in productive or mundane activities and strive for optimal resource utilization. It's always the responsibility of the project and resource managers to make sure that their team's average utilization rate is as desired and their competencies are being used to the fullest.
So, how do you maximize resource utilization rates without overburdening your resources? Well, the right resource management software and resource utilization tool can be a game-changer. It keeps a tab on the utilization rates and offers valuable insights on resource capacity.
If your team has been allotted more or less work than its capacity, it leads to under- or over-utilization of resources. At times, even skill shortage leads to over-burdening or over-utilization as one skilled resource may be assigned to various projects simultaneously. It also becomes very difficult to find which resources are over- or under-utilized.
However, the right resource management software can easily help find the over- or under-utilized team members, offer real-time visibility into utilization rates, and enable distributing workload in a balanced manner.
Overwork can also contribute to double booking, which causes over-allocation. The right resource utilization tool can help project managers identify specific resources who are under- or over-utilized, track utilization rates, check the number of billable tasks, and accordingly solve the problem of double booking.
How does this happen? Such a tool offers enhanced resource visibility and details such as their availability, utilization percentage, capacity utilization, bookings, task status, skill set, and a lot more. This, in turn, helps with precise resource planning and allocating the right people on client projects, resulting in client satisfaction.
Bench management is an ongoing activity and should be conducted strategically. Reducing bench time involves decreasing non-billable hours that ensure that the resources are assigned only to billable or strategic work.
This becomes an easy task with the right resource management software. How? Keeping a check on resource availability and utilization rates enables accurate allocation and resource management. It also helps to utilize valuable time of limited resources efficiently, leading to higher profit margins.
Having the right resource utilization tool helps the team lead forecast the exact demands of the projects in the pipeline and the billable client work. With comprehensive reports that such a tool provides, they can easily fill the vacancies with the capable benched resources.
Project managers can also create accurate resource utilization plans using historical utilization data while forecasting future demand and aiming to achieve optimal utilization rates. They can clearly communicate the utilization targets for the team's utilization.
Human capital is the most important asset in a team. Therefore, it is important for project managers to gauge resource performance and track the overall billable utilization rate of their team's highly skilled resources with optimum resource utilization. The resources are gainful only when they are working on billable tasks and are fully utilized in terms of capacity.
Hence, reducing non-billable work and mundane or administrative tasks that are not part of strategic or billable work is very crucial, as you may find availability in your existing team rather than adding more resources. It's also important to accurately calculate billable hours worked so that resource optimization can be achieved.
A resource management tool offers real-time insights into available hours of resources and guides you to efficiently distribute workload and improve productivity. This data helps to create a feasible resource utilization plan while keeping in mind potential bottlenecks.
When employee burnout is avoided by tracking available hours and planning accordingly, work-life balance can be achieved. Additionally, the overall performance increases, leading to optimal utilization of full capacity.
Project managers should also keep track of resources so that they spend the least or no time on non-value tasks like meetings and discussions. They should encourage their resources to improve billability, avoid below-par performance, and enhance their productivity and profitability.
With the right resource management tool, project managers can also check what various team members are working on, monitor resource performance, productivity, status of task completion, leave plan, and resource requirements for projects in the entire organization.
So, you enhanced your resource utilization formula to adapt to the needs of your business, but your team's data is dynamic, and your resource management strategy should be ready for that. Availability of people and unforeseen circumstances may impact your metrics in a big way. So, what's the solution? Investing in a good resource utilization tool that can handle everything on its own can work wonders and help distribute a balanced workload.
Be it calculating utilization rates or tracking if your team is utilized efficiently, such a tool becomes your centralized platform with all resource-related and project data. It also helps to monitor the status of projects, resource allocations, find underutilized resources, and calculate the resource utilization rate in just a few easy steps, which leads to a significant impact on profit margins.
eRS Cloud offers comprehensive resource utilization in project management and availability reports that are also configurable to suit your business. The end-users can configure the reporting views easily to gain a better understanding of the data. Colour coding enables the identification of over- and under-utilized resources. Other powerful features, like the ability to view data in two units at one go and configurable filters, enable utilization rate and availability reporting at all levels. Besides that, configurable graphs provide a simple visual data representation that helps in quick and well-informed decision-making.
By gathering reliable insights, project managers can optimize their resource pool while assigning tasks and maximizing their resource utilization. The real-time tracking data provided by this leading resource utilization tool helps managers to understand the real challenges and adopt tactics and solutions in advance. The tool's time-tracking feature helps you track the billable tasks, non-billable hours, and who are the available resources.
This information is then used to generate various reports that show the productivity of your team. Other brilliant features of eResource Scheduler help in automating the process of calculating your resource utilization rate. This enables you to stay focused on your key metrics and project management tasks.
So, are you achieving your ideal resource utilization rate? Be the best project manager by having a transparent project and resource management plan with the help of the best-in-class resource utilization tool. Try eResource Scheduler to up your game in terms of productive utilization rate and employee utilization.
What's more? Book a 14-day free trial along with custom-made support to configure this tool as per your specific business requirements. The robust architecture and swift performance of eRS make it the first choice for streamlining business operations and augmenting organizational efficiencies.
1. What is a good resource utilization rate for teams?
There is no universal benchmark. For billable teams, 70 to 85 percent utilization is often healthy. Anything consistently higher risks burnout. Anything lower signals wasted capacity. The right rate depends on role mix, industry, and how much buffer is needed for planning and innovation.
2. Is 100 percent resource utilization a good thing?
No. Hitting 100 percent consistently usually means zero flexibility. It leaves no room for unplanned work, learning, or recovery. High-performing organizations optimize for sustainable utilization, not maximum utilization.
3. How is resource utilization different from productivity?
Utilization measures time usage against availability. Productivity measures output and impact. A resource can be highly utilized but poorly productive if time is spent on low-value work. Strong resource management tracks both, not just hours.
4. How often should resource utilization be tracked?
Weekly tracking works best for most teams. It balances accuracy with actionability. Monthly views help with trend analysis and forecasting, while real-time visibility helps prevent overbooking and missed capacity before they escalate.
5. Can spreadsheets accurately track resource utilization?
Only at a very small scale. As teams grow or projects overlap, spreadsheets break due to delayed updates and a lack of visibility. Dedicated resource management software provides real-time utilization, capacity forecasting, and faster decision-making without manual overhead.
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