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.
1. 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.
Overall Resource utilization = Actual or allocated total time / Available resource time or resource capacity.
2. 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.
Billable Resource utilization = Actual or allocated billable time / Available resource time or resource capacity.
3. 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.
Non-Billable Resource utilization = Actual or allocated non- billable time / Available resource time or resource capacity
4. 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
5.Example of Types of Resource Utilization
Let us take the following example to get a better understanding of the concepts mentioned above:
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%
6. The Glossary
7. The SAVIOM Solution
SAVIOM is the market leader in offering the most powerful and configurable solutions for managing enterprise resources effectively. Having more than 20 years of experience this Australia based MNC has established its global presence across 50+ countries and has helped top global companies address their business needs. SAVIOM also provides tools for project portfolio management, professional service automations and workforce planning software.