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No matter which way you slice it, if your organization’s resource utilization rate isn’t optimized, you’re losing money  💸

• If utilization rates are too low, your team probably isn’t spending enough of their time on revenue-generating work, and you might end up taking on fewer projects than you have capacity for
• If utilization rates are too high, you might be spending extra on overtime pay and expensive freelancers (and possibly even hiring costs, when team members move on to new opportunities because they’re unhappy and burned out 😬)

For people planners, maintaining a healthy utilization rate is a dynamic process filled with unpredictability: people take time off, project scopes change, and non-billable tasks pile up. Not to mention, there’s a fine line between boredom and burnout.

What is resource utilization?

In the context of people planning, resource utilization is a metric that indicates how much of a team’s total capacity for work is utilized.‍

For example, if a resource is available for a full 40 billable hours this week and they have been allocated 20 hours of work so far, resource utilization is at 50%. 

Total capacity is influenced by several variables, like:

• Work hours (full-time or part-time)
• Time off (both planned and unplanned)
• Total billable hours vs. non-billable hours
• Current and new projects
• Project scope
• Task dependencies
• Project timelines and due dates

To add more complexity, these factors a) constantly fluctuate and b) vary from person to person. Just imagine how impossible it feels to measure and maintain utilization for dozens or even hundreds of people scattered across the globe, with their own regional holidays, pre-planned vacations, unpredictable sick days, varying skill sets, and different schedules.

And if you don’t have to imagine, because you do it every day… here, take this hug instead 🫂

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Resource utilization goes hand in hand with capacity planning 🤝

Capacity planning ensures your organization has the right resources available; resource utilization tracks how effectively they are used in day-to-day operations. You might try every trick in the book, but if you don’t plan your team’s capacity first, there will be imbalances in resource utilization.

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A real-life resource utilization example: Atlassian

Atlassian is a global enterprise software company that builds products for developers, project managers, and content managers. 

Emily Feliciano, the Senior Creative Resource Manager, is in charge of capacity planning and managing resource utilization for Atlassian’s 50+ in-house creative team. Feliciano fields up to 60 requests each week, and initially relied on a mix of project management tools, meetings, and her team members’ word to gauge utilization. But there was a problem:

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Emily Feliciano

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Sr Creative Resource Manager at Atlassian

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When you have an internal team with no set hours or budgets, it becomes very challenging to track the amount of work someone is doing, how much effort they’re putting in, and at what point we should start to be concerned with their utilization—whether they’re underutilized or overutilized.

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The lack of a dedicated resource and capacity management system resulted in inefficiencies and frequently missed deadlines. So, Feliciano advocated for the adoption of ����ɫ��Ƭ (that’s us! 👋), a resource management tool she had grown to love in previous agency roles.

Feliciano and her team use this instant, real-time visibility into current team utilization and available resources to:

• Track project resources accurately: the team’s shared Schedule dashboard gives them a comprehensive view of each team member’s workload, and enables Feliciano to allocate work effectively
• Find the right people for the right projects: Feliciano can to team members to create tailored views of utilization based on factors like role, location, skill sets, department… and anything else that makes sense for her team
• Identify resource underutilization and overutilization: Feliciano keeps a close eye on utilization, sorting team members by utilization rate and spotting imbalances in workload at a glance

With this accurate and always-on picture of her team’s utilization, Feliciano has seen on-time project delivery rates soar from 40% to an impressive 90% 👏��

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Get the insights you need to monitor and improve utilization rates

Use ����ɫ��Ƭ to track how your team uses their time, gain the insights you need to improve performance, and achieve optimal utilization rates.

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How to calculate resource utilization rate

In agencies and professional service organizations, measuring resource utilization rate is crucial to ensure efficient resource allocation, improve team productivity, and maintain project timelines. It also helps team leaders determine if they are pricing their projects correctly.

Here are two ways to calculate it:

1. Resource utilization formula

A simple way to calculate your team’s utilization is to divide the number of scheduled hours by the number of available hours and multiply by 100.

‍Utilization rate = (Total number of billable hours / Total number of available hours) x 100‍

Let’s say a designer on your team works 40 hours per week. If 34 of those hours are considered billable time while six are left for other tasks (like administrative work), your calculation is: 34 / 40 x 100 = 85.

The designer’s utilization rate is 85%.

While this formula works, we can all agree that whipping out your abacus each time you want to know the utilization rate of an individual team member isn’t exactly a practical solution, especially when we’re dealing with 100+ people working different schedules.

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Pro tip: a percentage means nothing without context

Accurately measuring utilization rate is crucial to avoid imbalances in workload distribution. But without proper context, you might have one team member allocated at 100% utilization when working only three hours a day, while another is at 50% but completely overburdened because of issues like:

• High complexity of specific allocations
• Frequent client calls
• Unforeseen project dependencies
• Underestimated task durations

Emily Feliciano, the Senior Creative Resource Manager at Atlassian, suggests people planners dedicate time to assess the true workload behind each task, and ensure that the quantity of allocations doesn’t misrepresent the actual time needed to complete them.

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2. Automated resource utilization calculation

A (much, much) simpler way to get not only the percentage but the necessary context, too, is to sit back, relax, and let a dedicated resource management tool calculate utilization rate for you 💆‍♀️ 

For example, if you’re using ����ɫ��Ƭ, the tool would measure utilization for you with the following calculation:

‍Utilization rate = (Total number of scheduled work hours / Total number of available work hours in the same date range) x 100‍

And here are some examples of what this looks like: 👇

⏰ If you want to compare your team’s scheduled vs. available hours:

The displays data about your team’s scheduled hours that you can compare with their available time. View any date range—for example, today, the upcoming week, or the previous month—to see the percentage (or hours) utilization for each team member, as well as an aggregated team total at the top left.

🧑‍💻 If you want to see the percentage utilization for individual team members:

The shows the percentage values of your team’s utilization rates. Color-coded bars to the far right display their utilization level. You can use this to spot trends. For example, if one of your teams is overstretched consistently, that could be a sign you need to request additional resources from another office or hire new staff or bring on freelance support. Here's a quick walkthrough of the utilization numbers in the People report 👇

📈 If you want to see how much of your team’s total capacity is utilized on specific projects:

The dashboard gives you date range insights of scheduled hours within each individual project, and an aggregated total for all projects at the top left.

📝 Note: while you can track time in most resource management tools (), you don’t have to. As you’ll have seen from the three dashboards above, time tracking and timesheets aren’t a must-have to accurately measure and track utilization in your team. 

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Emily Feliciano

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Sr Creative Resource Manager at Atlassian

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Unlike rigid timesheet tracking, a resource management tool allows for a more intuitive approach to managing tasks and provides a comprehensive overview. This is important for understanding team capacity and ensuring it stays balanced, avoiding both overwhelm and underutilization.

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What is the ideal resource utilization rate?‍

The ideal resource utilization rate depends on the context of a project, and differs across teams and businesses. It might not be the answer you were hoping for, but the so-called ‘right’ utilization rate is hard to determine across the board because it depends on factors like: 

• Your industry
• The number of active projects on the go
• Seasonality
• Your organization’s goals and KPIs
• The type of work your team does

For example, if you run a marketing agency that handles advertising for clients in the retail sector, your team’s utilization rate is tied to product launches and retail seasons. In the lead-up to major end-of-season sales, your team may work on multiple campaigns to meet client needs, increasing utilization—but fewer campaigns might occur during slower periods, potentially leading to lower utilization rates.

The problem with fixed utilization rates (and how to solve it) 

Forcing a fixed utilization rate means you run the risk of basing decisions on your team’s perceived capacity rather than their actual one.

The best approach is to customize your team’s utilization standards to your context instead of adopting a universal benchmark.

Closely observe how your team operates, take note of the impact of varying project volumes on work hours, and record data on utilization using a capacity planning tool so you can establish a personalized—and, preferably, flexible—utilization range that aligns with your team’s needs and makes resource forecasting easier.

👉 Check out our pick of superior capacity planning tools to help you reach optimal resource utilization.

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🔥 Hot take: there’s nothing wrong with 100% utilization, if you do it right

You’ll rarely get advice telling you to aim for a 100% utilization rate. Why? It implies that your team’s schedule is packed to the brim with work, while allowing zero time for everything else—i.e. a recipe for burnout.

But this isn’t necessarily true: a 100% utilization rate in your resource management software shouldn’t indicate your team is spending 100% of their time on project work; it should mean 100% of their time is accounted for.

In fact, we at ����ɫ��Ƭ encourage 100% booking with the explicit understanding that this will account for tasks outside of project work. For example, a copywriter in the ����ɫ��Ƭ Schedule might be at 100% allocation for their 40-hour work week, but this is broken down into:

• 34 hours of billable utilization spent on client deliverables
• 2 hours of internal meetings,
• An hour-long cybersecurity training
• 2 hours of administrative tasks

We said it before, and we’ll say it again: the optimal resource utilization rate is yours to determine.

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7 benefits of effective resource utilization

1. Improve workload management: knowing when team members have too much or too little to helps your decision-making process when assigning projects and distributing workloads
2. Get a bird’s-eye view of resource availability: accurate resource forecasting ensures you’ll always find the right person for the job (or have enough time to source additional hands when the right person isn’t available)
3. Keep team members engaged: nobody wants to be twiddling their thumbs all day, or be constantly at maximum capacity without the space to learn, grow, and create
4. Identify growth areas: understanding individual and team utilization rates helps you spot areas where team members might need more support or opportunities to upskill
5. Manage budgets accurately: by showing the time spent on billable utilization versus non-billable work, utilization rates help your company make strategic decisions about new hires or reallocations
6. Prioritize projects effectively: a clear picture of your team’s capacity helps you determine which projects should take precedence, ensuring that high-priority tasks get the attention they need without overburdening your team
7. Create influential reports: recording and analyzing team utilization helps you put together actionable utilization reports for stakeholders about company operations and project progress

[fs-toc-omit]Improve productivity and profitability

Monitoring utilization now is the first step in setting future projects up for success. With a clear understanding of who is available, what skills are on deck, and where the workload stands, teams can seamlessly align their talents with the right projects, ensuring every hour is optimally spent—benefiting your people and your bottom line.

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Calculate your resource utilization rate, automatically

Reports in ����ɫ��Ƭ give you a single view of your team’s available hours (their capacity), compared to their hours scheduled (assigned tasks), to make data-driven resource decisions.

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The learning doesn't stop here! We have a lot more to share with you 👇

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• A very (very) comprehensive introduction to resource management
• A list of 10 effective resource management best practices
• An overview of the best resource management software (& how to choose the right tool)
• The ultimate how-to guide to creating a resource management plan‍
• A summary of the resource management skills you’ll need as a resource manager
• The 10 headache-inducing challenges of resource management and how to overcome them
• Some excellent answers to why is resource management important? (from real people planners)
• A list of 5 resource management techniques you can use to keep your projects going
• An overview of the resource leveling technique to help you complete projects with your available resources
• A deeper look at the resource smoothing technique to keep your projects on schedule

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