Resource utilization is an analysis of how productively a team is working. The formula for calculating resource utilization appears simple, yet can be pretty obscure.
For starters, you need to calculate
Busy time ÷ Available time = Resource utilization
The equation only requires simple math, right? Not quite. To reach the most accurate value, you need to consider planned time versus actual time teammates spend on projects. You also need to consider time off, holidays, and how regularly resource utilization should be calculated. Not to mention, some teams get projects in spurts, such as product releases or trade shows.
Managers need to be aware that resource utilization calculations aren’t set in stone, but are a general guide to help with assigning resources to the right projects and fields.
Why is it important?
By keeping track of resource utilization, managers can monitor if their employees are being over or underutilized. Resource utilization can be calculated per team member, helping managers find out precisely how to refine their team members’ time and use.
According to Smarter with Gartner, managers shouldn’t aim for 100 percent utilization. Instead, calculate each teammate’s resource utilization to 80 percent. Why not capitalize on the employees 100 percent? Because employees working within the 80 to 100 percent range tend to make more costly and time-consuming mistakes in their haste to keep up with their workload.
The significance of resource utilization
Better project resource planning
Keeping track of resource utilization prevents teams from under or overutilizing members. Arranging for everyone to work at the same capacity boosts productivity, keeping everyone working in that 80 percent sweet spot.
Using your resources to their best potential improves the company’s ROI. Every teammate will have just enough on their plate to be efficient and effective at their jobs, minimizing the number of employees needed for each project while not jeopardizing the quality of their work.
Pre-planning resource utilization also helps projects stay within the project budget. Managers who have experience studying and analyzing resource utilization reports can anticipate and plan for project budgets and how not to exceed them.
Capacity planning for pipeline projects
Managers who keep track of their team’s resource utilization can be agile, reassigning and reorganizing teammates as needed. Projects can be planned well in advance, depending on which employees have the capacity for more work and whether or not the team needs new hires.
How to maximize resource utilization?
Forecast vs. Actual Reports
There are two times a manager can gather resource utilization data: before the project has even started and after. Data gathered before the project has started can be used for “forecast” reports: what managers predict resource utilization will be within a team.
Forecast reports help managers plan for how many team members each project will need and for how long. The actual reports, or the reports conducted during or after the project, help managers understand what went well, what went wrong, and how to plan for next time.
Monitor the utilization for different categories
When recording resource utilization, it’s important to use defined work categories.
For example, when a project exceeds its budget, the project manager can look back through the records to find out which stage tipped the project costs off the edge. If the manager discovers front end development was the culprit, they can look into ways to refine the front end development strategy or process or increase the front end development budget for the next project.
A category that has to be mentioned here as it can be a huge resource waster is “meetings”. Meetings can be hard to monitor and can consume a lot of time when the whole team isn’t being productive. A solution is a meeting analytics tool, preferable one linked with your meeting room booking system – like Joan.
Joan weekly meeting room report allows you to see important metrics such as:
Room utilization rates.
The number of meetings and meeting hours.
Weekly meeting patterns.
Who books the most meetings.
How many meeting are ghost meetings/no-shows.
This offers you one more way of maximizing resource utilization.
The best way to identify under and over-utilized resources is to have a look at employee timesheets. Divide the recorded working hours of teams or individuals by their available hours and voila! If the number is between 70 to 80 percent then utilization is right on track. If the number is higher or lower then some changes should be made.
Effective bench management
When an employee has finished one project and is waiting to start another, they are “on the bench.” Having a strong foundation of a team’s resource utilization can help managers plan for minimal bench time.
Estimating how long a project will take and which stages will require which resources can help managers arrange how and when to transition employees to other projects.
Reduce non-billable use of resources
The best way to cut back on non-billable resources is to track them. Non-billable hours include recruiting, invoices, filling out timesheets, and unexpected changes to the project, to list a few.
Keeping records of how employees spend their time helps managers understand where these non-billable hours are coming from. Once the sources have been pinpointed, managers can look into automating some of the non-billable tasks, planning them into a project’s budget, or think up ways to cut back on non-billable time.
Resource utilization is a key tool for helping companies be efficient and effective. The data collected from resource utilization can keep teams on track and help managers employ team members to their best capacity.
Although most managers use a form of resource utilization on the job today, the technique can always be refined. Keep practicing and be open to new ways to collect employee data for your resource utilization calculations. And if you know meetings are something that’s holding back your productivity, take a look at Joan and see if it can help you out. With resource utilization and office efficiency.