Of all the metrics and KPIs that project managers and PMOs use to measure performance, resource utilization is one of the most valuable. By understanding utilization within your project teams, you’ll know how employees are spending their time and gain deeper insight into which projects are under or overstaffed. This will naturally lead to more efficient resource management and increased output for your organization.
Read on to learn more about resource utilization in project management and how you can optimize it to improve performance, productivity, and project delivery.
What is resource utilization in project management?
Resource utilization is a measure, expressed as a percentage, of how much of a project team or individual team member’s time is booked for work or actually spent working. To calculate resource utilization, which is sometimes referred to as project utilization, you simply divide the number of hours worked (or the number of hours booked for work) by the number of total hours available.
For example, if you’re planning a project and want to see its projected resource utilization, use the following formula: planned working hours / available hours = resource utilization. So, if your team has a total capacity of 100 hours and you’ve booked them for 87, your resource utilization is .87, or 87%.
Likewise, you can find resource utilization by using the number of hours actually worked. For instance, if an employee clocked 36 hours in a week out of an available 40, the resource utilization score is .9, or 90% (36 / 40 = .9).
Why is project utilization important for managing performance?
As the old saying goes, you can’t manage what you don’t measure. Without a solid understanding of your project team or individual team members’ utilization, you won’t be able to effectively manage them and achieve maximum performance. This ties into the idea of capacity planning. Why is capacity planning strategically important? It gives leaders a better insight into their resources' availability and schedules.
When used in the planning phase, a resource utilization score can show you which teams or team members are fully booked and which have gaps or availability in their schedules. You’ll also be able to identify employees who are overburdened. This is critical data that will help you shift tasks around and reduce the risk of resource burnout. It may also indicate whether it’s time to step up recruiting efforts and add additional resources to your talent pool.
On the backend, a resource utilization score based on actual time worked can help you better prepare for the next project by seeing precisely how long certain tasks take. This will also give you insight into individual employee productivity and help you identify strengths and areas for improvement.
Let's also talk about billability vs utilization in project management. Billability refers to the number of working hours you spend on a project — doing the planning, finalizing deliverables, all the real work that goes into a project's success. But many organizations make the mistake of favouring billability over utilization. Utilization enables a business to recognize that non-working hours or downtime can also be an opportunity for project success, by avoiding inaccurate timesheets that create unrealistic targets and deadlines for teams on every project.
How can I use this information to manage resources?
The whole idea behind resource or project utilization is to help improve the management of resources and, ultimately, the efficiency and quality of project delivery. For example, a low resource utilization score often means that a project is over-staffed or that there are incomplete tasks preventing other tasks from being executed. This can easily lead to blown deadlines and delayed deliverables — and more importantly, unsatisfied clients.
By understanding utilization, you’ll be able to see exactly where your resources are being allocated, where there are gaps in productivity, and where more support is needed. Armed with this information, you’ll be able to deploy your resources much more efficiently and prevent employee burnout.
How can I optimize my resource management?
In order to achieve optimum utilization of resources, it’s critical to have the right strategies and tools in place to track and shift resources as needed. Here are some tips to help you optimize resource management:
Create a collective resource pool
Before you begin assigning resources to individual projects and tasks, it’s important to create a collective inventory of all resources currently available. This will give you a bird’s eye view of what you have to work with for the projects currently on your plate, as well as additional resources you may need for future projects in the pipeline.
For small, simple projects, informing and scheduling resources may be handled via email. But larger organizations that execute complex projects with multiple resources need a better solution. That’s where resource management software comes into play.
Utilize resource management software
With the right resource management software, you’ll be able to assess the resources at your disposal from a global perspective and coordinate them across all the projects in your queue. Wrike makes this easy and includes all the tools you need to visualize and balance team workloads, re-prioritize projects, and redistribute hours in real-time.
If you’re ready to see just how Wrike makes resource utilization a snap, sign up below for a free two-week trial today!