How To Track Resource Utilization?

Growing the business and services is the topmost priority for every organization. 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 appraisal.

Resource utilization is a KPI (Key Performance Indicator) 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.

This article takes you through the basic concepts of resource utilization and how to track the same using an intuitive tool.

Let’s first begin with understanding the definition of resource utilization:

#1. What is Resource Utilization?

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’re being under (or over) worked.

Resource utilization Formula = Actual/allocated work time ÷ Resource capacity

It can be measured in hours/days/percentage and FTE (Full-time equivalent).

Optimal Utilization- It is the process of maximizing the utilization 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.

Note: A consistent higher utilization (>100%) of a resource does not inherently mean increased productivity and efficiency. Rather, it can often turn out to be counter-productive.

Managers can predict the utilization rates of the resources based on the resource schedules and implement necessary measures to optimize it.

#2.Significance of resource utilization

2.1 Better Project Resource Planning

Improving overall profitable resource utilization requires a comprehensive study of every individual’s utilization level. It allows managers to take proactive measures for better resource planning.

Real-time visibility of utilization enables the managers to monitor their resource’s performance at any given time.

2.2 Improves ROI

Getting involved with either strategic or billable tasks 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.

With utilization tracking and centralized visibility, resource managers 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.

2.3 Capacity Planning for Pipeline Projects

When analyzing the employee utilization by work function or by the department, managers can plan for the future demands of the pipeline projects. They can forecast new resource requirements based on the bench report. Resources on the bench can be provided further training/ shadowing opportunities in advance to make them billable.

#3.Different types of resource utilization

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.

  • Overall resource utilization

#4.How to track resource utilization?

  • Forecast vs. Actual Reports

Project

Now that we know how to stay informed about utilization rates, let us understand the ways to maximize it:

#5.How to Maximize Productive Utilization?

100% utilization 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.

The question is how do we maximize the utilization rate without draining the resources?

Well, the right enterprise resource management tool can help here.

  • Identify under & over-utilized resources

#6. Conclusion: Track Resource Utilization Smarter than Ever

Resources are the most important asset for any organization and efficient resource utilization is crucial to improve productivity and profitability. If you are facing difficulties to monitor resource utilization, step back and think if you are using the right tool !!

Gathering reliable insights is one of the best ways that help managers to optimize the workforce and maximize utilization rates. The tool’s real-time utilization data allows managers to understand the challenges and adopt strategies in advance.

When did you last hit the ideal utilization rate?

Originally published at https://www.saviom.com on February 6, 2021.

Aakash is the Founder and Lead writer for Sorry, I was on Mute. Read all about the remote work tribe and growth of teleworking at https://www.sorryonmute.com/