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Resource Utilization: What is it and Why is it Useful?

November 30, 2018 | By Sean Pales

Project managers have a lot of responsibilities. It’s their job to ensure projects succeed on time and within budget. It’s a job that requires managing a lot of moving parts, with PMs making project decisions in advance and on the fly.

It’s this shapeshifting nature of projects that means, even with the best team and all the resources and time in the world, projects can still fail or not live up to expectations if resources aren’t utilized properly.

Resource utilization can be a formula for success. In this article we’ll be looking at the benefits of resource utilization and how you can make sure you’re getting the most out of all the resources available to you.

What is resource utilization?

Resource utilization is the measure of how much of your available resources you are currently using. It can help you to plan how to utilize your resources more effectively to ensure that your organization is being as productive as possible.

Effective utilization of resources can be helpful for both employees and employers. Not only does it ensure that employees have enough work to make their role viable and profitable, on the other side of the spectrum it can also prevent overworking and burnout – providing a more balanced work life overall.

Resource allocation vs. resource utilization

These processes might sound similar, but they have some slight and important differences:

Resource allocation sees a project manager choosing suitable staff for a project and then managing them as the project is completed, reassigning them, or altering their workload if necessary.

Resource utilization, however, is the process of strategically measuring how effective resources are. A resource utilization example is checking if a certain employee is being maximized in between projects. While allocation organizes your project, it’s utilization that makes your project successful.

Both processes are key to achieving project success, however resource utilization is often undervalued. Creating a robust framework for assessing the conditions of existing resources might seem complicated, but with the right tools it can be easy. Once you’ve decided on the budget and resources available, and the metrics you want to use to measure efficiency, you can implement resource management into your projects.

Calculating a resource utilization formula

When it comes to calculating a resource utilization formula, the most common formula for project managers is full-time equivalent (FTE). This is used to calculate how optimally a resource is being used in terms of available workable hours.

To calculate this, divide the allocated hours a resource will work during a project by the total number of workable hours available in the project. Multiply the result by 100 to create a percentage, and the product will indicate the effectiveness of the resource. For example, if a worker has been allocated to a project for 45 work hours, and that project has a total of 60 workable hours, then that resource has a utilization of 75% as per the FTE resource utilization formula. 

It’s best to aim for a rate of around 80% – anything above this risks employee burn out, and anything less will not utilize resourcefully. Creating a resource utilization analysis report can show you all the resources you have available and how they’re currently performing. There’s no perfect formula to guarantee success since every project is different – this is something which can be difficult to manage in a DIY project management tool like Microsoft Excel.

In the past PMs relied on Excel to calculate resource utilization rate, but Excel doesn’t have the capacity for data projections and scenario analysis that more advanced tools do. Resource utilization requires high-quality tools to give project managers the agility and insights they need.

What are the benefits of resource utilization?

Resource utilization, ultimately, helps you make the most of your available resources:

  • Proper utilization of resources is important for maintaining productivity, because it prevents staff from underperforming or being overburdened by workloads and burning out
  • Projects can be managed with better visibility, reducing the risk of oversights
  • Maximum utilization of resources gives you a better ROI
  • It ensures that specific resources aren’t being over- or under-utilized
  • It allows PMs to be agile and reschedule resources as quickly as possible to avoid problems surfacing or becoming worse

Resource utilization tips

With an intelligent resource management platform, project managers have dedicated tools to approach and master resource utilization:

  • Leverage visibility – projects may be run separately, but they affect each other. Instead of viewing projects as separate entities, create a resource utilization plan that allows you to view all resources. This way, you’ll be able to assess capacity and performance more effectively.
  • Beware of scope creep – projects will inevitably demand extra time and resources, and it’s a project manager’s job to keep them from going over time or budget. Resource management software can put all active projects front and center, utilizing resources equally amongst them to put things in perspective.
  • Compare booked hours with actual hours – it’s rare that a project ever runs according to plan, so make sure to examine the hours booked in preparation for the project and actual hours worked in real time. This will give you a chance to see if the project plan needs adjusting before anything goes wrong.
  • Always be prepared – visualize and run scenarios that will help you prepare for a change of circumstances. If your budget changes or if you lose a resource, you’ll be able to adapt more quickly.

Effective utilization with Tempus Resource

To deliver successful projects on time and on a budget, project managers need intelligent resource management software. Tempus Resource gives project managers the ability to see individual resource availability and reallocate resources quickly if needed.

What-if scenarios allow risk-free project visualizations – it’s possible to see what will happen to a project if its budget or timescale changes. These visualizations enable risk-free decisions. Heat maps and cool maps offer easy visibility of resource performance, so project managers can quickly see if resources are being over or under-utilized.

Project managers need a tool that works as hard as they do. Tempus Resource can give you the resource insights you need to guarantee project success.

Tempus Resource helps you create resource models with intelligent data forecasts, reduce risk, and increase ROI. To find out more about resource management, get in contact with us today.

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