Every organization should monitor Resource Utilization (RU). Resource utilization refers to the percentage of time and effort that a resource, such as an employee, machine, or equipment, uses effectively and efficiently to complete tasks or projects.

It is a measure of how effectively an organization is using its resources to achieve its objectives. From experience, a poor understanding of resource utilization in a department puts projects at risk.

How Long is a 40-Hour Week?

We typically measure resource utilization by comparing the use of a resource to the total available time. For example, if an employee works a 5-day week, for 8 hours per day, and spends 6 hours working on a project, then the resource utilization rate for that employee would be 75% (6/8 or lowest 3/4).
On many projects, an employee's utilization is not just the time committed to the project but includes the so-called "day job." Functionally structured organizations with a project management function can find the project team member reporting to a line manager (day job) and a project manager. Therefore, an employee likely is over-committed when project resource planning is conducted by adding the day job hours.

This dual reporting is one of the shortcomings of a hybrid organization structure, where the project team members report to the project manager and the functional or line manager.
For example, we hire an accountant in the Finance Department as a full-time employee. A project starts that needs an hour-per-day time commitment from the accountant.

If the accountant is a salaried employee, the hours committed to the project are theoretically taken care of by the Finance Department. This accountant is paid hourly, and the time commitment in the Project Resource Plan and the costs (hourly) are applied. Determining the cost structure can get complicated with back charges and funds transfers within the organization.

Billable and Non-billable

  1. The billable utilization rate measures a resource's time to generate revenue or billable work. Utilization rate is typically associated with employee billable hours. Most organizations look for above 90% billable. At 75% billable utilization begins a review of releasing a resource. Conversely, billable hours logged above 115% usually start the thought of adding another resource.
  2. Non-billable utilization rate: This measures the unavailable time of a resource or talent. For resources, this can be equipment updates or repair times, and for talent, it accounts for things such as internal projects, research, administrative tasks, training, or breaks.

As a project manager and department manager in an engineering organization, it is a requirement to be billable and keep your employees billable. Therefore, the accounting department published a weekly billability report to let managers know their personal and department billable percentages, with a cut-off of 75%. In addition, a disaggregation of the project produces the Work Breakdown Structure (WBS) of the total work to meet the project scope. This will provide a sum of the expenditures throughout the project. The charge number includes training (if part of the project plan) and project activities and excludes bathrooms or breaks. This information helped staff planning and future work planning.

Capacity and Productive

  1. Capacity utilization rate measures a company's (or equipment) production capacity. It is calculated by dividing actual output by the maximum possible output, then multiplying by 100. The resulting percentage indicates how much a company utilizes its available resources. For example, a machine with a capacity of 1,000 parts per 8-hour day presently produces 800 units daily. In addition, machine updates and preventative maintenance and cleaning happen during the second shift.

  1. Effective utilization rate: This measures the percentage use of the time that a resource has to complete productive work, excluding non-productive activities such as change-over, routine maintenance, or breakdowns. The machine mentioned under the capacity utilization rate is only in production 3-days per week. Again for the equipment mentioned, the effective utilization rate is 60% for a 5-day week or 100% for 3-days.

Measuring resource utilization can help organizations identify opportunities to optimize resource allocation, reduce waste, and increase productivity. It can also help organizations make informed decisions about resource hiring, capacity planning, and project prioritization.
A few years ago, a bakery with only one dough-making system wanted to expand its product line to its customers. The dough-making equipment was at capacity, making a single product. A project to develop free time for the dough system to create new products.
The bakery was a 5-day, 3-shift operation: two shifts producing and third shift cleaning & sanitizing. Additionally, due to health regulations, modifying the 8-hour 3-shift was impossible. The team conducted capacity and productivity studies to uncover solutions, in doing so, specific improvement areas discovered are in the dough and dough-feeding systems. As a result, the dough system was at 100% capacity and 100% effective utilization. However, by automating some feeding systems and adding weight controls to the equipment, the current 100% productive utilization rate for the existing product is cut to a 3-day operation. This change opened 4-shifts per week for test batches of new products.

A few Ways to Improve Resource Utilization


Assuming the organization is using software to develop resource plans. It is critical to make sure all information is consistently updated. Consider getting one if the organization is not using a resource software or application. The advantages go beyond just having resource information by employee. Most resource software can forecast trends based on tasks and utilization.


When creating a project plan, a project manager may occasionally find employees overloaded with other tasks on other projects. Or a project manager may find the organization doesn't have the in-house skills for particular tasks. This might require outsourcing. To do successful outsourcing, the project manager must develop a clear Statement of Work (SOW) with expectations. Next, they must work with Procurement to establish suppliers that match the SOW. This outsourcing exploration becomes a coordinated effort to meet the task(s) requirements.

Track Reality vs. Expectations

Some systems will connect talent and resources to Work Breakdown Structures (WBS), connecting billing to work, allowing for easy tracking of hours against the project plan, and identifying discrepancies. Tracking reality is how we discover the veracity of the project plan.
Executing this one activity cannot be mentioned enough. While some software applications do a simple calculation on schedule variance, a greater exploration of the numbers may need to be reviewed from accounting (time charges) to verify resource utilization.

Resource Leveling

Resource leveling is a project management technique that involves adjusting the project schedule to balance the workload of resources (such as people, equipment, and materials) throughout the project. Here are the steps to perform resource leveling:

  1. Identify the critical path: First, identify the essential path of the project, which is the sequence of tasks to complete on time for completion of the project within the scheduled period.
  2. Determine resource requirements: Identify the resources required for each task on the critical path, including the number of people, the amount of equipment, and the materials needed.
  3. Identify resource constraints: Determine the availability of resources and any restrictions that may limit their use, such as a limited number of skilled workers, equipment that is in high demand, or materials that are in short supply.
  4. Adjust the schedule: Adjust the project schedule to balance the workload of resources over time. This adjustment may involve delaying tasks, splitting tasks into smaller segments, or assigning more resources to tasks that require more work.
  5. Re-evaluate the schedule: After adjusting the schedule, re-evaluate the critical path and make any necessary changes to ensure the project's timely completion.
  6. Monitor and adjust: Continuously monitor the project progress and adjust the schedule as needed to address any resource constraints or changes in project requirements.


To plan the project requires knowledge of the topics, where possible, but projects often undertake efforts that come with uncertainty or missing knowledge. That missing knowledge may be how to achieve the project scope, the required talents, and more.
Projects are not operations, and businesses are not in a static environment. Therefore, adjusting and responding to emergent issues in the project is essential for success and may impact the organization's resources and talent.