9 Resource Management KPIs That Every Business Must Track

“What gets measured gets managed.” – Peter Drucker.

In the current business landscape, organizations cannot simply rely on approximation, gut instinct, and informal performance tracking to manage their resources. They need to identify, define, and monitor resource management KPIs to effectively measure and optimize workforce performance and operational efficiency. These KPIs allow firms to analyze how effectively the talent pool is utilized, identify deviations, and make data-driven resourcing decisions.

In this blog, we will understand the nitty-gritty of resource management KPIs, which include the definition, critical KPIs, and steps to track them. The blog will also delve into how a modern resource management tool helps firms monitor KPIs.

Let’s start!

What Are Resource Management KPIs?

Resource management KPIs are quantifiable indicators that reflect how effectively a business identifies, allocates, and utilizes resources, such as people, tools, finances, etc., to meet project and organizational goals. These metrics are used to assess the efficiency and effectiveness of the resource management practices followed in the organization.

Moreover, by setting SMART KPIs and regularly monitoring them, firms can identify areas of improvement, make data-driven decisions, and maximize workforce productivity. This further contributes to better project outcomes, enhanced business performance, and improved ROI.

Now that we have understood the definition of resource management KPIs, let’s move on to its importance.

Why is it Important to Monitor Resource Management KPIs?

Resource management KPIs are quantitative measures that help firms track how effectively their workforce is being planned, allocated, and utilized against predefined benchmarks. By continuously monitoring these metrics, managers can make informed, data-driven decisions to build and maintain a competent talent pool.

In addition, these KPIs also enable managers to optimize resource allocations, i.e., make timely staffing adjustments to ensure the right people are assigned to the right projects or tasks. This ensures seamless task progression, controls overall costs, and keeps projects on track.

Furthermore, these resource management KPIs help managers assess how effectively resources are utilized against their capacity. In instances of discrepancies, i.e., under or over-utilization, firms can take suitable measures to optimize workforce productivity, improve the resource health index, and drive better project outcomes.

Read More: What is Resource Management? A Comprehensive Guide

Having understood the importance, let us shift our focus to the most critical section, i.e., how do you measure resource management within a firm?

Critical Resource Management KPIs

Below are 10 critical resource management KPIs that every manager should know for efficient project delivery within time and budget. Let’s have a look.

Utilization Rate

The utilization rate is the percentage of hours a resource spends on billable or productive tasks against their available working hours or total capacity. While a high utilization rate indicates that resources are fully utilized, a low rate signals under-utilization and lower productivity.

The formula to calculate the utilization rate is –

For example, a consultant is available for 160 working hours in a month but spends only 100 hours on billable project work.

Then, utilization rate = (100 ÷ 160) × 100 = 62.5%, indicating under-utilization.

Read More: What is a Utilization Report and 5 Steps to Build an Effective One

Demand Forecast Accuracy

A key resource management KPI that measures how closely the predicted resource requirement matches the actual demand over a specific period. This enables firms to refine their existing methods, improve demand forecasting accuracy, avoid last-minute scrambling for resources, and control costs.

The formula to calculate the demand forecast accuracy is –

For instance, a construction company predicts 10 engineers for a project but actually requires only 8.

Then, demand forecasting accuracy = (1- (10-8)/8) * 100 = 80%, indicating that the firm’s prediction was slightly overestimated by 20%.

Resource Availability Rate

This KPI measures a resource’s availability by comparing the time they are available for work against their total working hours. A higher availability rate signals that resources are free for productive work, while a low rate indicates maintenance issues (in the case of machinery or equipment) or commitment to other tasks.

The formula to calculate the resource availability rate is –

Suppose an employee is scheduled to work 180 hours a month but is available for 120 hours due to planned leave.

Then, resource availability = (120 ÷ 180) × 100 = 66.6%, indicating the employee is available for 66.67% of their total scheduled working hours.

Read More: – What is Resource Availability in Project Management, and Why Does It Matter?

Resource Allocation Efficiency

This is an essential resource management KPI that measures how effectively an organization assigns its available resources to tasks or projects based on their skills, availability, capacity, and priority of projects. This helps ensure that there are no instances of over– or under-allocation and that resources are utilized optimally.

Billable vs. Non-Billable Hours

This resource management KPI tracks the amount of time resources spent on client-related, revenue-generating work, i.e., billable hours, compared to internal and administrative tasks, i.e., non-billable hours. By monitoring this ratio, firms can implement strategies to improve overall billability and profitability.

Then, to calculate the ratio between billable vs. non-billable hours –

For instance, an IT employee worked 180 hours, out of which 120 were revenue-generating tasks, and 60 were spent on internal meetings and training.

Then, billable to non-billable ratio = (120 ÷ 60) = 2:1

Read More: Key Differences Between Billable & Non-Billable Work and Its Importance

Planned vs. Actual Hours

Planned vs. actual hours is one resource management KPI that measures the variance between the estimated time for tasks and the actual hours spent on completing them. While a positive variance indicates that the task was completed in less time than planned, a negative variance highlights that it took longer.

The formula to calculate planned vs. actual hours worked is –

For example, an Audit company’s planned hours for a task were 90 hours; however, it took 110 hours in actual hours to complete it.

Then, the time variance = ((90 – 110) ÷ 90) × 100 = -22.2%, indicating a negative variance, meaning the task took 22.2% more time than initially planned.

SAVIOM’s Forecast Cost vs Actual report provides real-time insight into project cost variances.

Resource Cost Variance

Resource cost variance is the difference between the forecasted cost and the actual value incurred by resources in a task or project. By monitoring this gap, firms can track whether their projects are on a budget and take necessary actions if necessary. A positive variance indicates the project is under budget, and a negative variance signals cost overruns.

The formula to calculate resource cost variance is –

Suppose the planned resource cost for an IT project was $65,000, but the actual resource cost incurred was $50,000.

Then, resource cost variance = $65,000 – $50,000 = $15,000, stating the project has saved costs.

Read More: Reduce Resourcing Cost by 10-30% with Modern Resource Management Solution

Revenue Per Resource

It is a critical resource management KPI that measures the revenue generated per employee within a specific timeframe. It provides insights into staff productivity and profitability, helping evaluate how effectively resources contribute to the company’s bottom line.

The formula to calculate revenue per resource is –

For example, a Law firm generates a revenue of $650,000 over a quarter with a team of 30 employees.

Then, revenue per resource = $650,000 ÷ 30 = $21,666, indicating each employee’s contribution during that quarter.

Resource Turnover Rate

Employee turnover rate measures the frequency at which resources leave an organization over a specific period. It is typically assessed for both voluntary and involuntary separations. While a high turnover rate indicates poor resource management, a low turnover rate signals a stable and engaged workforce.

The formula for calculating the employee turnover rate is:

For instance, a construction company had 350 employees at the beginning of 2024. Throughout the year, 100 employees left, and 20 were onboarded. By the end of the year, the company had 270 employees in total.

Then, employee turnover rate = (100 ÷ 310) × 100 = 32.26%, indicating the percentage of employees left relative to the average number of employees.

Read More: 12 Simple and Effective Ways to Reduce Employee Turnover in 2024

After understanding key resource management KPIs, let’s see how to track them.

How To Track Resource Management KPIs?

Here’s a step-by-step approach to tracking resource management KPIs and meeting organizational objectives successfully-

Understand Current and Future Business Goals

The first and foremost step in tracking resource management KPIs is understanding the business objectives. It is crucial to know what the organization is trying to achieve now and, in the future, whether it is increasing revenue by a specific percentage, entering new markets, or expanding service offerings to establish relevant KPIs.

Set Clear KPI Benchmarks

The next step is to define performance benchmarks, which will serve as reference points to assess whether resources are allocated and utilized efficiently. This involves setting specific and realistic targets based on industry standards or past data to easily identify areas of improvement, as well as suitable measures to drive operational excellence.

Read More: Top 15 Operational Metrics That a Business Should Monitor

Continuously Monitor and Analyze Data

Now, by tracking and analyzing the gathered data, firms quickly detect emerging trends, anomalies, or inefficiencies. This real-time visibility helps identify and address issues such as resource shortfalls, cost overruns, employee burnout, etc., ahead of time. Thus, firms can take timely corrective action and stay in control throughout the project lifecycle.

Utilize a Robust Resource Management Tool

A dedicated resource management tool provides a centralized platform to track KPIs through advanced analytics and customizable dashboards. It streamlines data collection, eliminates manual errors, and enhances reporting accuracy. Thus, firms can make data-driven decisions in alignment with broader business objectives.

Read More: How Can You Make Data-Driven Decisions with Resource Management Software?

Having understood the steps to track resource management KPIs, let’s know how a robust tool helps.

How Can a 5th Gen Resource Management Tool Help in Tracking KPIs?

Robust resource management software like SAVIOM offers advanced features that help resource managers track resource-related KPIs effectively. Here’s how –

• The tool has an all-in-one resource planner that provides a multi-dimensional analysis, allowing managers to gain 360-degree visibility into every resource across different teams, departments, projects, and locations.
• The embedded capacity planner helps managers forecast pipeline project demand, understand potential resource shortage/excess ahead of time, and take timely resourcing actions if needed.
• Next, the embedded heat map offers real-time visibility into workload distribution, allowing managers to easily track over/underutilized employees and optimize workloads to maintain a healthy resource health index.

SAVIOM’s Embedded Heatmap offers managers quick insight into current utilization levels of resources

• The software’s intelligent matchmaking recommends and assigns the best-fit resources based on role, skill, cost, availability, and other factors, ensuring competent resource allocation to projects.
• The early warning feature alerts managers of overloading, double-booking/scheduling conflicts, etc. This allows them to take corrective measures in advance to avoid potential bottlenecks and ensure smooth project execution.
• Next, the tool’s exclusive KPI forecaster helps managers predict future KPIs like utilization rate, resource allocation efficiency, planned vs. actual hours, and more, enabling proactive decision-making.
• The real-time BI analytics, reports, and dashboards offer deep insights into metrics like utilization, availability, forecast vs. actual cost analysis, project progress, etc., enabling data-driven decisions.

Conclusion

Effectively tracking resource management KPIs is vital for ensuring that an organization’s resources are aligned with its strategic objectives, utilized efficiently, and contributing to overall business success. Thus, by incorporating these KPIs, firms get the necessary visibility to identify strengths, detect inefficiencies, and make informed, data-driven decisions that enhance overall productivity and profitability.

So, what resource management KPIs are you tracking to achieve your business goals?

The Glossary

Read More: Glossary of Resource Workforce Planning, Scheduling and Management

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