In the modern business landscape, resource utilization is a key performance indicator. The businesses strive to achieve optimum utilization of their workforce to enhance profitability.
It is crucial to the firm as it has a direct impact on their bottom line. However, it’s not as simple as it seems, especially in the case of multi-faceted or complex projects. Resource utilization varies based on the types of industry. These are:
- Overall resource utilization.
- Billable resource utilization.
- Non-billable resource utilization.
- Strategic resource utilization.
Before diving into the technicalities of how to measure each type, let’s gain an in-depth understanding of the same.
Measuring Overall Resource Utilization
Overall resource utilization is the method of measuring how much a resource is utilized in totality against its availability or capacity.
Which implies;
Overall Resource utilization = Actual or allocated total time / Available resource time or resource capacity.
Measuring Billable Utilization of Resources
Billable utilization is the method of measuring how much a resource is utilized for billable work against its availability or capacity.
Which means;
Billable Resource utilization = Actual or allocated billable time / Available resource time or resource capacity.
Read More: What Are Billable Hours? Key Strategies to Optimize Them
Measuring Non-Billable Utilization of Resources
Non-billable resource utilization is a method of measuring how much a resource is utilized for non-billable work against its availability or capacity. Non-billable work is related to non-billable projects, BAU, meetings, etc.
Which means;
Non-Billable Resource utilization = Actual or allocated non- billable time / Available resource time or resource capacity
Measuring Strategic Utilization of Resources
Strategic resource utilization is the method of measuring how much a resource is utilized for strategic projects. Strategic projects are for achieving long term strategic goals of the business.
So, we measure Strategic utilization as:
Strategic Resource utilization = Actual or allocated strategic time / Available resource time or resource capacity
Read More: How to Measure Different Types of Resource Utilization? A Quick Guide
Example of Types of Resource Utilization
Let us take the following example to get a better understanding of the concepts mentioned above:
For example,
If the capacity of an employee is 40 hours/week, and total work allocated to this person is 44 hours.
Let’s assume, 44 Hours of work has been allocated in the following ways:
- 16 hours are allocated to billable work.
- 20 hours are allocated to non-billable work.
- 8 hours are allocated to strategic work
So, this person’s different resource utilization will be calculated as:
Overall Resource utilization = 44 hours / 40 hours = 110%
Billable Resource utilization = 16 hours / 40 hours = 40%
Non-Billable Resource utilization = 20 hours / 40 hours = 50%
Strategic Resource utilization = 8 hours / 40 hours = 20%
The Glossary
Read More: Glossary of Resource Workforce Planning, Scheduling and Management
