How to calculate team utilization? Practical examples
Time is money - especially when we are talking about your employee’s time. Naturally, the time of an entire team is even more precious. However, managing it is more complicated than managing the workload of individuals. Fortunately, team utilization can help you do that and avoid the most common obstacles.
What is team utilization? Definition
Utilization rate - definition
Utilization rate is the measure of time used for billable work (or, in other words, for work in commercial projects) and non-billable tasks (internal work). Utilization is generally expressed as a percentage of the total time an employee spends working.
Team utilization - definition
However, for team utilization things are a bit more complicated. Team utilization is used to measure the time a group of specialists spend on both billable and non-billable work. Thanks to this indicator, managers can determine how the work is going, and whether it is really as productive as they would like it to be.
Why is measuring resource utilization so important?
Good question - you wouldn’t like to add another pile of calculations to your busy schedule, would you?
Fortunately for project managers, utilization rate is not one of these awful, useless calculations. In fact, it can help you with all the elements of resource management, including:
- better forecast resources for the weeks and months to come,
- find inefficiencies, overtimes, benches, and other problems, and optimize workforce in your company,
- improve the morale of staff,
- identify the specialists and teams that are benched or overworked, and improve their workload,
- make informed decisions about resource allocation.
How to measure resource utilization? Resource utilization formula
Now, let’s get straight to the point: how to calculate resource utilization rate for both all the team members and an entire team?
Calculating resource utilization: general formula
Calculating an utilization for an individual employee is fairly simple. To do that, simply divide the number of allocated hours by the number of total hours available. The latter number can be affected by absences, sick leaves, public holidays and time offs, making your resource management and resource allocation a bit more complicated.
For example, let’s assume that John the programmer has no absences planned in the next month and he is ready to work for 160 hours. His manager decided that he should be assigned to Project A for 120 hours. Therefore, John’s utilization for the month is 75%.
Team utilization: general formula
But what changes if John also has his colleagues in the team?
On a very general level, a project manager calculating utilization rate would just need to add all the planned hours and all the available hours from all the employees in the team, and then divide the former number by the latter.
However, that’s when resource management gets a bit more complicated, as the number of available days needs to get adjusted whenever an employee is absent because of:
- public holidays,
- planned time off,
- any other absence.
Additionally, some of your employees may only work part-time. Their case may be even more complicated!
As a result, the number of available hours may differ for each employee.
But let’s not get discouraged: take a look at a few examples of such calculations below.
Resource utilization formula for a team: a simple example
We will start with a fairly simple example: a very peaceful month with no planned absences and a single public holiday.
Our team consists of 5 people, and each of them, if there was no holiday in the month, would have worked for 160 hours. However, with one day off, the maximum number of hours for each employee would drop to just 152 hours. The team was then assigned to project A for 140 hours a month.
As every employee in the team has the same number of working and available hours, resource utilization for a team in this case will be the same as a utilization of an individual:
(140/152) * 100 = 92,1%
Utilization rate for a team: complex example
But what if some of the team members plan to change their availability even more? Let’s add that variation to the equation.
Just like in the previous example, let’s assume that our team of 5 was supposed to work for 160 hours per person this month. As we already know, that number dropped because of a public holiday that forced us to deduct another 8 hours from the general availability per person, leaving us with just 152 available hours per person.
Three of the people in the team are going to be available for 152 hours. However, Person 1 is taking 3 days off, and is being left with only 128 available hours. Person 2, on the other hand, will be gone for a week and has only 96 hours left.
Now, managers have to ask themselves: can I allocate 140 hours per person to this team once again?
Resource utilization rate - summary
To check that, let’s calculate the availability of the entire team. With 3 people working for 152 hours, 1 person working for 128 hours and 1 person working for 96 hours, the team may be available for 680 hours. If the manager wanted to assign 140 hours of work per person to that team, he would need 700 hours, which accounts for 102% of the team's capacity. In short, the team cannot do its work without overtime!
Can I make the calculations for team's utilization rates easier?
Of course - you can measure resource utilization without making a single calculation in Excel!
There are numerous capacity planning tools that are capable of calculating resource utilization automatically and helping you create an effective resource utilization plan based on the project schedules and other information. Primetric is one of them!
How Primetric measures utilization?
Primetric measures resource utilization rates for every employee every time their schedule changes. Any additional allocation results in the utilization rate changing in the employee profile, providing project managers with real-time information about their availability. It makes tracking resource utilization much easier!
What if I want to check the company's or team members rate?
No problem - our resource utilization software got your back!
If you want to measure resource utilization for teams or groups of people, you can check the general resource utilization rates in your company using a utilization report. It includes both planned and tracked allocations, along with their costs and billable resource utilization. In the report, you can see your company’s situation, as well as its details for each of the employees - just like shown below.
Do I need to check people’s utilization every time I allocate them?
Of course, you do not have to browse the profile of all the people in the company to see their availability - our resource management software can do this for you.
When choosing the right person for the project in its search bar, you will only see the people who still have some unassigned time to offer. However, if you decide to create allocation over their basic limit, you will be notified - that’s how we try to prevent you from making mistakes in your resource planning!
What if I want to know the resource allocation and project management process even better?
No problem - here are a few articles you could read to expand your knowledge with some skills all project managers should know. Click below to read about:
- managing schedule conflict like a professional resource planner,
- Jira resource allocation with all its features,
- project scheduling in project management,
- resource management plans and their creation,
- resource planning process you simply need to have.