Why is Calculating Resource Utilization a Game Changer and How can a Resource Utilization Tool Help?

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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 the optimum efficiency. Yes, 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. Before we move ahead, let's first see what resource utilization means.

What is Resource Utilization?

What is Resource Utilization

Resource utilization is an important metric that shows if 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 is over-or under -utilized. That would help them in re-allocating the responsibilities to someone else or find people who are under-utilized so that they could be assigned new projects.

The Difference Between Resource Allocation and Resource Utilization

Though both these processes have the same purpose, there are some key differences.

  • Resource allocation means selecting the right employees for a project, managing them during the project execution, and re-allocating or altering the workload, if required.
  • Resource utilization is the process of measuring how efficient your resources are. By allocating you organize a project, but utilization makes it successful.

Why is Resource Utilization Important?

  • Provides an overview of the people and other resources involved in your project
  • Supports utilization planning
  • Makes project and resource planning and management more transparent
  • Allows you to identify the problems before they actually appear
  • Offers you control over the projects

How to Calculate Resource Utilization?

Let's see what are some of the most important terms of resource utilization for calculating employee productivity, efficiency, and utilization.

Utilization Rate

Talking of the resource utilization formula, you should first calculate the utilization percentage.

Utilization Percentage = Actual Number of Hours Worked (by aparticular resource) divided by the Total Available Hours.

If you select a range of time (example, weekly, monthly, or quarterly), it gives you an insight into the projects that your resources are spending their time on. This information helps project managers to understand which projects are profitable for the organization. This information can drive the direction of your businessin future.

Utilization Rate

For Example:1500 Hours Worked / 1600 Available Hours = .93 = 93.75% Utilized

Realization Rate

Realization is different from utilization 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 it by the Total Billable Hours. The result shows what percentage of time is the resource taking to bring revenue into the business.

Realization Rate

For Example: Of 1500 hours worked, 1400 were 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.

How to Improve Resource Utilization?

Improve Resource Utilization

With a resource utilization tool, calculating staff utilization and productive utilization becomes easy for the project managers. Let's see how you can improve your resource utilization

Leverage visibility:

There are multiple projects that a project manager handles, and they do affect each other. Thus, rather than viewing projects as different entities, you should create a resource utilization plan that enables you to view all the resources. That way, you can evaluate the capacity and performance of your team more effectively.

Be careful of the scope creep:

Various projects demand different times and resources to complete. The team leads or a project manager is responsible to keep everything on track with regards to the timelines and the budget. A good resource utilization tool helps in putting all the active projects upfront and also enables to allocate the resources equally amongst them.

Analyze booked hours vs. actual hours:

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 hours booked in the preparation stage and compare them with the actual hours worked in real-time. This will provide you an opportunity to see if the project plan needs any tweaking before any variation or problem comes up.

Be prepared for any scenario:

Imagine and run situations that will enable you to ready for any change or deviation. For example, if your project over-shoots the budget or if you lose a resource, you will be able to adapt to the change quickly.

How to Maximize Productive Utilization?

Productive Utilization

Having a 100% utilization does not essentially mean that the resources are productive. Therefore, it is important to evaluate if they are engaged in productive or mundane activities. It's always the responsibility of the project and resource managers to make sure that their team's utilization is productive, and their potential is used to the optimum level.

So, how do you maximize resource utilization without over-burdening your resources? Well, the right resource management software and resource utilization tool can be a game-changer. Here is how it helps.

Identify the under- and over-utilized resources:

If your team has been allotted more or less work than the 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.

Enhance the resource visibility:

Overwork can also contribute to double booking which causes over-allocation. The right resource utilization tool can help projects managers identify under- and over-utilized resources in all the projects and solve this problem of double booking.

Managing the bench effectively :

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 assignedonly to billable or strategic work.

Forecast the demands in the future:

Having the right resource utilization tool helps the team lead to forecast the exact demands of the projects in the pipeline. With comprehensive reports that such a tool provides, they can easily fill the vacancies with the capable benched resources.

Reduce non-billable activities:

It is important for project managers to track the overall billable utilization of their team's highly skillful resources with optimum resource utilization. The resources are gainful only when they are working on billable work and are fully utilized in terms of capacity. Hence, reducing non-billable and mundane tasks which are not part of strategic or billable work is very important.

Regular check on resources:

Project managers should also keep a track of resources so that they spend the least or no time on non-value add tasks like meetings and discussions. They should encourage their resources to improve billability, avoid below-par performance, and enhance their productivity and profitability.

Measuring Resource Utilization by Tracking Real-Time Using eResource Scheduler (eRS)

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.

How can eResource Scheduler Help?

eRS Cloud offers comprehensive resource utilization and availability reports that are also configurable to suit your business. The end-users can configure the reporting views easily for gaining a better understanding of the data. Colour coding enables to 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 and availability reporting at all levels. Besides that, configurable graphs provide simple visual data representation which helps in quick and well-informed decision-making.

By gathering reliable insights, project managers can optimize their resource pool and maximize 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 hours your team is spending on billable and non-billable tasks. 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 and employee utilization. What's more? Book a 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.

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