Resource utilization<\/strong><\/a> is a KPI<\/strong> (Key Performance Indicator<\/em>) that affects the success of projects. It helps to evaluate and improve productivity by ensuring that all the resources within an organization are being used to their highest potential.<\/p>\n This article takes you through how to track resource utilization effectively using an intuitive tool.<\/p>\n Let\u2019s first begin with understanding the definition of resource utilization:<\/p>\n Resource utilization is the way to measure how effectively the resources are utilized against their availability or capacity. In other words, it is the process of monitoring team productivity and analyzing whether they\u2019re under or overworked. It is calculated using the formula:<\/p>\n Resource Utilization Formula = Actual\/allocated work time \u00f7 Resource capacity<\/strong><\/p>\n It can be measured in hours\/days\/percentage<\/strong> and FTE (Full-time equivalent)<\/strong><\/a>.<\/p>\n Optimal Utilization<\/strong>– It is the process of maximizing the utilization<\/a> of resources to achieve the most out of their available capacity. While calculating the available capacity, their planned leaves, training schedule, or any other admin-related activities are also considered.<\/p>\n Note: A consistently higher resource utilization rate (>100%) does not inherently mean increased productivity and efficiency. Rather, it can often turn out to be counter-productive.<\/span><\/p>\n Managers can predict the utilization rates of the resources based on the resource schedules and implement necessary measures to optimize them.<\/p>\n Now that we know how to calculate the utilization rate let\u2019s understand the significance of a resource utilization report.<\/p>\n Most advanced resource management tools provide resource utilization reports and heat maps. Let\u2019s look at the benefits:<\/p>\n Improving overall profitable resource utilization<\/strong> requires a comprehensive study of every individual’s utilization level. It allows managers to take proactive measures for better resource planning.<\/p>\n Real-time visibility<\/strong> of utilization enables managers to monitor their resource\u2019s performance at any given time.<\/p>\n Getting involved with either strategic or billable tasks<\/strong> ensures that the resources are investing their time and effort in productive work. When resources are working on strategic or billable projects, it eventually generates revenue for the firm, thereby improving the ROI.<\/p>\n With a resource utilization tracker<\/strong> and its centralized visibility<\/strong>, resource managers<\/a> can systematically mobilize benched resources or resources working on BAU activities to strategic & billable projects. This practice drives better ROI and contributes towards the top line.<\/p>\n When analyzing the effective utilization of resources by work function or by the department, managers can plan for the future demands of the pipeline projects<\/a>. They can forecast new resource requirements based on the bench report<\/strong>. Resources on the bench can be provided with further training\/ shadowing opportunities in advance to make them billable.<\/p>\n Resource utilization is influenced by several factors that can impact the efficiency and effectiveness of resource usage. It includes,<\/p>\n Resource availability is a critical factor that impacts the overall utilization of resources. When there is a resource crunch, utilization tends to be lower because there aren’t enough resources to complete project tasks. In contrast, when resources are abundant, utilization tends to be higher as more staff is readily available to take on various assignments.<\/p>\n The cost of resources is another essential factor that can impact their utilization. Resources that are expensive may be used more conservatively, while resources that are more affordable may be used more extensively. The total cost of resourcing should be considered when determining the value of utilizing a particular resource, as it may include additional overhead expenses.<\/p>\n Resource capacity refers to the amount of work that a resource can achieve within a specific time period. Moreover, capacity is an important consideration as it helps to ensure that the workload is manageable and that resources are utilized efficiently. Resources with higher capacity (full-time employees) can be utilized more effectively, while resources with lower capacity (part-time or contingent workers) may require more selective utilization.<\/p>\n Skill proficiency plays a significant role in resource utilization because it determines the level of efficiency with which a resource can be utilized. When a resource is experienced and highly-skilled, they can complete tasks faster with precision, resulting in higher-quality deliverables and increased productivity. This, in turn, can lead to better resource utilization as more work can be accomplished within a less time. On the other hand, a resource with average skills may be limited in the types of tasks they can perform, which can result in lower utilization levels.<\/p>\n These factors play a critical role in determining how resources are utilized. Now, let\u2019s learn about the different types of resource utilization formulas.<\/p>\n Overall resource utilization is one of the main KPIs of a cost center. It can be further split into billable utilization, non-billable utilization, and strategic utilization.<\/p>\n Overall resource utilization<\/strong> is the method of measuring the total utilization of a resource against its availability or capacity. It is the cumulative time that an employee spends on billable, non-billable<\/strong>, and strategic<\/strong> activities. It can be calculated by comparing the total resource capacity against the total work allocated to an employee.<\/p>\n Which means;<\/p>\n Overall Resource Utilization = Actual\/Allocated Total Time \u00f7 Resource capacity<\/strong><\/p>\n Billable resource utilization<\/strong> is the way 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<\/strong> is termed billable time for which the client has committed to pay.<\/p>\n Which implies;<\/p>\n Billable Resource Utilization = Actual\/Allocated Billable Time \u00f7 Resource capacity<\/strong><\/p>\n Non-billable resource utilization<\/strong> is a method of measuring time spent by a resource on an activity that cannot be billed to a client. This time is generally related to BAU, internal meetings, admin, training & workshop, bidding work, etc.<\/p>\n Which means;<\/p>\n Non-Billable Resource Utilization = Actual\/Allocated Non-Billable Time \u00f7 Resource capacity<\/strong><\/p>\n Strategic resource utilization<\/strong> is the method of measuring how much a resource is utilized for strategic projects<\/strong>. It is the time spent by a resource that is related to a strategic activity to meet the long-term goal of the organization.<\/p>\n We measure strategic utilization as;<\/p>\n Strategic Resource Utilization = Actual\/Allocated Strategic Time \u00f7 Resource capacity<\/strong><\/p>\n Keeping a tab on utilization levels is imperative to assess employees\u2019 productivity<\/strong>. However, it\u2019s not easy to do so for every resource manually. There are advanced resource-tracking tools that can help you track resource and project performance in real time.<\/p>\n A resource scheduler<\/strong><\/a> can let managers have a periodic check on resource utilization<\/strong>. Moreover, managers can draw a comparison using actual vs. forecast utilization reports. The actual number of hours is drawn from the timesheets<\/a>, and the forecast time is taken from the resource schedule.<\/p>\n It is important to periodically monitor and track resource utilization<\/strong> under different categories. Below-mentioned are three main categories in which you can track resource utilization: Project, Team, or Individual.<\/p>\n In this scenario, the cumulative utilization calculation of all the resources working on a specific project is considered. An appropriate tool can aggregate and display this information as per the requirement.<\/p>\n In a shared-services model<\/strong>, it is required to track and monitor the team\u2019s utilization effectively. They either work on specific issue resolution based on a ticket or work under multiple project managers<\/a>.<\/p>\n Tracking individual resource utilization based on the allocated work against the resource capacity lets managers evaluate the resource performance. It ensures that the resources are neither under or overutilized<\/strong>.<\/p>\n Now that we know how to measure resource utilization in project management let us understand the ways to maximize it:<\/p>\n 100% utilization<\/strong> doesn’t necessarily mean the resources are productive. It is essential to check that they are not engaged in mundane admin activities. Thus the onus is on resource managers to ensure their utilization is productive and their skillset is used to the maximum potential.<\/p>\n The question is how to improve utilization without draining the resources.<\/strong><\/em><\/p>\n Well, the right enterprise resource management tool<\/strong> can help here.<\/p>\n When the allotted work is less or more than the resource capacity, it causes underutilization<\/a> and overutilization of resources. Skill shortage<\/strong> leads to overutilization because a particular resource may be assigned to different projects at the same time.<\/p>\n Poor visibility of resources<\/strong> can contribute to this cause as it can lead to double booking<\/strong>, eventually causing overallocation<\/a>. The right resource management tool helps managers to detect under and over-utilized resources in a project. Therefore, it allows organizations to maintain optimal utilization of resources as well as a healthy resource index.<\/p>\n Bench management in any organization is an ongoing activity and must be carried out strategically. Reducing bench time entails reducing non-billable hours<\/strong> that ensure the resources are allocated to billable or strategic work<\/strong>.<\/p>\n The right resource management software<\/a> helps managers to forecast the demands of the pipeline projects in advance. Using the project vacancy<\/strong> and benched reports<\/strong>, they can go ahead and fill the vacancies with the competent benched resources.<\/p>\n It is important for an organization to monitor the overall billable utilization of its highly skilled resources with optimal resource allocation<\/a>. A resource is profitable only if its working hours are carried out on billable or strategic work<\/strong> and is fully utilized against its capacity.<\/p>\n Resource managers should do a utilization analysis and keep a check on resources so that they spend minimal or no time on mundane tasks such as meetings and discussions. It helps them enhance billability, prevent below-par employee performance<\/a>, and gain maximum productivity and profitability.<\/p>\n Resources are the most important asset for any organization, and optimal resource utilization is crucial to improve productivity and profitability. If you are facing difficulties in monitoring staff utilization, step back and think if you are using the right resource management techniques and tools!!<\/p>\n Gathering reliable insights is one of the best ways that help managers to optimize the workforce<\/strong> and ensure maximum utilization of resources. The tool\u2019s real-time resource utilization report<\/strong> allows managers to understand the challenges and adopt strategies in advance.<\/p>\n How do you calculate utilization rates in your organization? When did you last hit the ideal utilization rate?<\/strong><\/em><\/p>\n SAVIOM is the market leader in offering the most powerful and configurable solutions for deploying appropriate resources<\/a> to suitable projects. With over 20 years of experience, this Australia-based MNC has helped more than 100 clients across over 50 countries address specific business challenges. SAVIOM also provides tools for project portfolio management, professional service automation, and workforce planning software<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":" Growing the business and services is the topmost priority for every organization. However, simply adding resources to projects does not guarantee productivity. They must be effectively utilized on billable or strategic work to get maximum efficiency of the resource. Many cost centers set a minimum utilization target for the resources that are used during performance […]<\/p>\n","protected":false},"author":3,"featured_media":15462,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[43,37,1],"tags":[],"yoast_head":"\n![\"Get](\"http:\/\/ec2-52-95-249-27.ap-south-1.compute.amazonaws.com:8000\/blog\/wp-content\/uploads\/2022\/09\/MicrosoftTeams-image-2022-09-28T144043.523.png\")
<\/a><\/p>\nHow to calculate resource utilization?<\/h2>\n
![\"Resource](\"http:\/\/ec2-52-95-249-27.ap-south-1.compute.amazonaws.com:8000\/blog\/wp-content\/uploads\/2021\/02\/Resource-Utilization-and-its-Significance-1024x136.png\")
<\/a><\/p>\nImportance of resource utilization report<\/h2>\n
Better project resource planning<\/h3>\n
![\"Experience](\"http:\/\/ec2-52-95-249-27.ap-south-1.compute.amazonaws.com:8000\/blog\/wp-content\/uploads\/2023\/02\/Experience-the-Future-of-Resource-Management-Software-1024x179.png\")
<\/a><\/p>\nImproves ROI<\/h3>\n
Capacity planning for pipeline projects<\/h3>\n
![\"Best](\"http:\/\/ec2-52-95-249-27.ap-south-1.compute.amazonaws.com:8000\/blog\/wp-content\/uploads\/2021\/04\/Best-practices-capacity-management-1024x136.png\")
<\/a><\/p>\nFactors affecting resource utilization<\/h2>\n
Availability of resources:<\/h3>\n
Resource costs:<\/h3>\n
Resource capacity:<\/h3>\n
Skill proficiency:<\/h3>\n
How to measure different types of resource utilization?<\/h2>\n
Overall resource utilization<\/h3>\n
Billable resource utilization<\/h3>\n
Non-billable resource utilization<\/h3>\n
Strategic resource utilization<\/h3>\n
![\"How](\"http:\/\/ec2-52-95-249-27.ap-south-1.compute.amazonaws.com:8000\/blog\/wp-content\/uploads\/2022\/11\/How-to-Measure-Resource-Utilization-1024x136.png\")
<\/a><\/p>\nHow to track resource utilization?<\/h2>\n
Forecast vs. actual reports<\/h3>\n
Monitor the utilization of different categories<\/h3>\n
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![\"resource](\"http:\/\/ec2-52-95-249-27.ap-south-1.compute.amazonaws.com:8000\/blog\/wp-content\/uploads\/2020\/12\/resource-forecasting-guide-project-managers-1024x136.png\")
<\/a><\/p>\nHow to maximize productive utilization?<\/h2>\n
Identify over and underutilized resources<\/h3>\n
Effective bench management<\/h3>\n
Reduce non-billable activities of resources<\/h3>\n
![\"Resource](\"http:\/\/ec2-52-95-249-27.ap-south-1.compute.amazonaws.com:8000\/blog\/wp-content\/uploads\/2023\/01\/Resource-management-guide-for-project-management-1024x136.png\")
<\/a><\/p>\nConclusion: Track resource utilization smarter than ever<\/h2>\n
The Glossary<\/h2>\n
![\"glossary\"](\"http:\/\/ec2-52-95-249-27.ap-south-1.compute.amazonaws.com:8000\/blog\/wp-content\/uploads\/2022\/10\/glossary-1.png\")
<\/a><\/p>\nSAVIOM Solution<\/h2>\n