Resource Management

What is Utilization Rate? 

The Utilization Rate is the rate at which you utilize the total available time of your resources. It measures the productivity levels of your employees and can be a great helping hand in doing capacity planning and forecasting resource demand. In Forecast’s Utilization report, we distinguish between two types of utilization –  billable utilization and resource utilization.

Billable utilization rate

Billable utilization measures how much of their total available time your employees spend on project-related activities. It’s a percentage scale from 0 – 100%. The formula for billable utilization is: 

(Total Registered Billable Hours / Total Hours Available)* 100. 

Factoring in only billable hours, the ideal billable utilization rate is usually set at around 80%. This limitation is caused by natural necessities, including internal meetings, training, and other non-billable activities. 

Agencies, consultancies, software businesses, and other professional organizations delivering services use billable hours to tie work back to their clients and invoice them accordingly. Company-wide billable utilization is also an indicator of how operationally efficient the business is.

Resource utilization rate

In turn, resource utilization is a general business metric to track the daily productivity of your employees, which includes both billable and internal time. 

The formula for calculating resource utilization is:

(Total Registered Hours / Total Hours Available)* 100.

If you’re measuring daily, weekly, or monthly resource utilization, the ideal rate to target would be 100%. 

Overall resource utilization can reveal trends about the company’s overall productivity, inform your hiring strategy, and shed light on over- or underload. When the individual utilization rate is too high, it means the team member’s workload is too high, while their skill set is in high demand.

Having a healthy utilization rate is often the result of good scheduling practices. Check out our full guide to resource utilization here. A resource scheduling tool is often used for this purpose as well.