How to Measure Planned and Actual Utilization Percentages

Project profit is only one part of what drives business. Companies can have profitable projects, and yet still lose money. This is typically from having too few employees working on revenue-creating projects. 

This can stem from over-hiring, poor resource staffing, low productivity, or a host of other people management shortfalls. This leads to what we refer to as “margin leakage.” You can mitigate this is by managing planned and actual utilization rates.  This blog will discuss two key metrics in services: Actual vs. Planned Utilization. 

What is Planned vs. Actual Utilization?

Planned utilization measures the time your resources spend working that can be billed to a client. Actual utilization, then, is a view into how much work a particular resource has scheduled, both in the past and future. What’s important about this specific report is that it highlights the relationship between an individual’s actuals and scheduled hours compared to predefined organization and personal targets that are necessary to achieve to improve or meet overall company profitability goals.

This metric is helpful for you to know where you land month-over-month — are resources hitting scheduled targets, and if not, you can dig into what happened. You can also use this data in aggregate to see where improvements need to be made, for example you are running at 62% utilization, but target is at 65%, so you are 3% under. It is typically leveraged to assess the utilization of a specific person, month, or practice area, and you should have various filters so you can drill down where needed.

Decisions To be Made

If there is no variance between actuals and scheduled, you are properly scheduling resources across projects and each person is at maximum utilization. When you discover a variance, you should move resources around to maximize time spent on billable work. If you are consistently seeing actuals over scheduled, it means you are not properly scoping projects. Furthermore, viewing utilization performance on a month over-month basis should be used to make hiring, staffing, and overall personnel usage decisions.

Information Required

• Billable Actual Hours: Billable hours logged up to the day of reporting.
• Scheduled Billable Hours: Hours that a resource has been scheduled in the past, present, and future.
• Utilization Targets: User-specific goals set by the organization for maximum financial gain.
• Resource Work Weeks: Actual billable potential for a resource based on their work week (ie: 10 versus 50 hours).

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