Understanding resource utilization is crucial to portfolio success and lower attrition rates. Compared to resource allocation, which involves staffing a project and managing the resources assigned to it, resource utilization refers to the process that focuses on the efficiency of individual resources.
However, given the ever-evolving nature of project work, we never want to aim for 100% resource utilization. This is a fast-track to employee burnout and missed deadlines. Keeping that in mind, how can you determine your organization’s ideal resource utilization rate? Let’s dive in.
Understanding resource utilization
One of the primary benefits of effective resource utilization is portfolio success. When resources are managed efficiently, organizations can optimize project completion times and achieve higher success rates. Proper resource allocation can also reduce attrition rates by ensuring employees are not overworked or overstressed, leading to burnout and dissatisfaction.
Effective resource utilization can also help organizations identify and mitigate potential bottlenecks in their project management processes. By having a clear understanding of their resource capacity and allocation, organizations can better identify areas where they may be over or underutilizing resources. This information can help them make informed decisions about project planning and allocation.
Calculating resource utilization
To calculate resource utilization, divide planned hours by capacity hours. Of course, in order to obtain these figures, you must first assign your staff to projects for the expected duration and then determine how much time each person has to work on the project.
The standard rate of utilization for most organizations ranges from 75% to 90%. However, several factors can influence this rate. For example, you’ll want to consider time spent in meetings, including preparation and post-meeting follow-up. You should also factor in the amount of training hours required of employees each month, quarter, or year, and the level of task switching your team encounters daily, which can negatively impact productivity.
Setting realistic expectations
It is important to note that not all working hours will be spent on project work. After all, resources are people, and people require downtime between projects. On top of that, your employees will inevitably have additional responsibilities outside their assigned project work.
You should also keep in mind that utilization rates might be uniform across the organization, or they may need to be tailored to each individual team. Additionally, the ideal rate may change over time depending on the nature of the current portfolio. Always remember to evaluate and adjust as needed.
One of the most important factors to finding your organization’s optimal utilization rate is to understand the needs of your staff. Listening to feedback and iterating on the process are critical to achieving your desired outcomes. Resource utilization can be a complex process, but with careful planning and implementation, it can lead to significant benefits for your organization.
Finding your organization’s ideal resource utilization rate is a critical component of portfolio success and can significantly impact an organization’s attrition rates. By understanding the factors that influence resource utilization and carefully planning and implementing resource allocation strategies, organizations can optimize their project completion times, reduce bottlenecks, and improve overall efficiency. Moreover, paying attention to the needs of employees can help ensure they are not overworked, which can lead to burnout and low productivity. In short, finding your ideal resource utilization rate is a key ingredient in achieving both portfolio and organizational success.