There is an art to getting the best out of your team. An organization that can nail its resource management has a crucial competitive advantage in the market. Optimal resource utilization helps strengthen organizational performance by improving productivity and achieving targets in the most efficient way possible.

Unlike tangible goods, project resources such as employees have mental, physical, and intellectual factors to consider. This means that to achieve effective resource utilization, we need to properly align skills, experience, availability, and capabilities with current and upcoming projects. This requires full alignment between leadership, sales, and project teams.

In this article, we will discuss how to improve resource utilization—all with the goal of managing a highly efficient and productive team.

Creating a resource utilization plan

A resource management utilization plan will help your firm put a structure in place to ensure you’re getting the most out of your team.

You may be running at full efficiency, or you might be looking for ways to improve your output. See the steps below to help you build out a resource utilization plan and improve the output of your people.

1. Assess your resourcing as they stand

Do you have projects in the pipeline that exactly match the general competencies of your team? If not, then work with your sales and marketing teams to ensure that you grow this critical part of the business. If so, check the current resource utilization rate of your employees and identify projects that crossover with their skills.

Resource management software like Projectworks can help. Tools such as the 'resourcing by availability' report combined with the skills mapping filter will clearly show where and when you have the right project resources available to get the work done.

2. Determine objectives

Set clear objectives for what you hope to achieve through optimal resource utilization. The obvious goal is to improve project margins, but given that service firms like yours rely on people, you could also consider employee well-being, job satisfaction, and other people-centric ideas that help with morale and indirectly contribute to team productivity.

3. Allocate resources

Based on the analysis of work processes and your objectives, allocate resources to ensure that employees are utilized effectively. This may involve redistributing tasks, assigning new projects, introducing new skill sets, or rearranging schedules. The key to being effective here is to clearly understand who is good at what and shuffle them around in a way that benefits all projects that you have on the go.

4. Evaluate and adjust

Continuously evaluate the resource utilization of your employees and make adjustments to your resourcing plan as necessary. Focus on the ‘soft stuff.’ Is your team assigned to work that is challenging enough for them to be engaged? Are there any clashes on the project team that need intervention? Have you overestimated the abilities of some team members? Or is everything a perfectly optimized, well-oiled machine? Get some data together, organize a team huddle, work out any pain points, bottlenecks, and mismatches, and make the appropriate adjustments.

5. Communicate with employees

Communication is key to ensuring that the resource utilization plan is successful. If you prioritise one on ones with your employees you’ll start to get to know them in a way that’s far beyond the scope of what hard skills they have to offer. They could have information about what the gossip is around the office and give you a good gauge on the health of your culture, which could lead to a diagnosis that no data can show. You also get a chance to chat with them about their workloads, schedules, and responsibilities and actively seek out honest feedback on their role in the business.

6. Monitor and report

Effective and efficient use of resources is an ongoing process. Utilization reports are often built into project management systems, such as Projectwork's utilization target report, which is a great way to measure the success of your resource utilization plan.

Visibility is key when it comes to identifying and prioritizing resource optimization opportunities.

Having data stored in an integrated resource management system can help speed up the accuracy and effectiveness of your project plan.

Taking time to assess such metrics and planning accordingly is invaluable to resource optimization efforts.

Measuring resource utilization

Resource utilization is a key indicator of organizational capacity, performance, and efficiency. Broadly speaking, to calculate utilization, you divide the number of hours worked by the number of hours available to an employee.

Other metrics become more specific, such as billable resource utilization, which is a percentage of billable hours divided by total available hours. This figure highlights profitability and is commonly used as a general resource utilization KPI. In Projectworks, this is represented with a delta that shows the discrepancy between hours resourced and hours actually worked.

Another resource utilization metric is the capacity utilization rate, which measures a team's total utilization rate. This is calculated by adding the resource utilization rates of each resource and dividing it by the number of employees in the organization. Using a high-level metric like capacity utilization can be used as a quick pulse-check for overall resource utilization in project management.

These metrics have something in common: they depend on accurate time tracking, historical data, and visibility across teams and projects. Using this data, it is possible to perform manual calculations, or you can use resource management software like Projectworks to automate, customize, and report live resource utilization figures. The resourcing data is both backward-looking, using staff timesheets to accurately complete the reports, and forward-looking for planned work so that you can make educated resourcing decisions ahead of time. One key thing to remember when tracking and reporting on resource utilization is to set accurate parameters and goals.

For example, Projectworks requires you to specify an employee's standard workweek capacity, with an option to set utilization targets (used to indicate the amount of their workweek that is expected to be on billable tasks). This provides project managers and business leaders with accurate, real-time utilization rates at any given moment.

Improving resource utilization

Business leaders face a number of challenges when it comes to optimizing resource utilization. By effectively pre-empting these challenges upfront, businesses can improve team morale, employee attrition, and retention and ultimately improve profitability, which positively impacts the bottom line.

One of the major hurdles of resource utilization is skill mismatches. Teams may struggle to utilize their employees effectively if they don't have the right skills for the tasks at hand. This can lead to delays, decreased quality, and increased frustration.

A good way to tackle skill mismatches is to map the skills of your team and include them as part of their posting. For example, a developer may know several coding languages as well as be a good negotiator with leadership skills. Skills mapping provides a visual overview of the skills each employee has within a team and compares these with the skills required to complete tasks and projects. Any gaps identified can be remedied (either by hiring or upskilling) to improve utilization rates.

Another common challenge is inadequate planning. A lack of planning will almost always result in low resource utilization due to resources not being available at the right time with the right skills. This can result in overloading employees with work, leading to burnout and decreased productivity. To plan ahead, sales and project teams can use forward-looking resourcing and match it to the upcoming sales and project plan pipelines. By working together, you can easily plan projects for deals that haven’t yet been won around the existing project pipeline. This will enable you to manage business and client expectations well in advance.

Tools like Projectworks provide a platform from which teams can review past utilization data, predict and forecast revenue, as well as being able to book resources ahead of time.

A simple way to improve the accuracy of utilization reporting is by embedding a culture of accurate and diligent timekeeping into the company culture. Using integrated project management systems can reduce barriers for employees to create better habits around timekeeping. Systems like Projectworks make timekeeping less onerous and even provide a timekeeping widget for employees to easily track time.

Summary

Resource utilization is an integral part of managing any business, and optimum utilization of resources can help the organization reach its goals more quickly and efficiently. As a business leader or project manager, it’s your responsibility to ensure that the right people are assigned to the right tasks at the right times.

To do this, you need to have visibility into your team's utilization and capacity so that you can make informed decisions about resource allocation. With an integrated project management system like Projectworks, it’s easy to track and report on your team’s utilization rate in order to achieve optimum utilization of resources. This ensures that projects get completed on time and within budget, allowing the organization to reach its goals efficiently and profitably.

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