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Managing Schedules
6 Resource Utilization Metrics & How To Measure Them
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What Is Resource Management?

Project resource management allows a project manager to make the most of their resources. It includes resource availability, resource allocation, and resource management. These topics are defined as follows:

  • Resource availability: the number of resources required to complete a project and their availability
  • Resource allocation: the allocation of those resources to complete a project
  • Resource management: the optimization of allocated resources during a project

Related: Resource Allocation Spreadsheets: Free Template + Easy Example

6 Key Resource Utilization Metrics

Project managers and resource managers analyze resource utilization metrics to understand which resources are used, how they’re used, and whether their application is appropriate. The goal is to identify inefficient resource uses, then develop a strategy to improve resource utilization.

But which performance metrics are the most important to track? The following list of metrics is not comprehensive. You might find there are other metrics or strategies that are more useful for your projects, teams, and company. Regardless, these metrics should still be considered. They are useful in determining whether resources are being utilized optimally.

1. Resource Utilization

This is a breakdown and analysis of a team member’s available hours and how much time they spend on each project. It is also known as the billable utilization rate.

The easiest way to determine your utilization rate is to use the following formula:

Working hours / Available hours = Utilization rate

That is the basic formula for utilization. An important consideration is to define available. More than likely, it doesn’t mean forty hours per week. After all, everyone has meetings, projects, and other responsibilities. The utilization rate here is based on a team member’s time spent on a project versus how much time they have assigned for it. You can think of it as billable hours versus available. Here’s an example:

36 working hours / 40 available hours = 90 percent team member utilization rate

2. Ramp Speed

This is a measurement of the time it takes for a team member to reach the desired resource utilization rate. If ramp speed is too slow, the team member might need additional training or support.

3. Planned Value

This isn’t an actual value; it’s an estimate of the costs of planned projects during a specific period. To calculate it, multiply the budget by the completed planned project percentage.

4. Gross Profit Margin

The gross profit margin is a measure of profitability. It’s useful in determining which projects are the most and least profitable. To determine this, subtract the costs of sold goods from revenue. Divide that number by revenue and multiply it by one hundred.

5. Resource Effort Variance

This metric is a measurement of projected hours and hours worked. This can be calculated per resource, project, or department. This metric is useful for determining how many hours are needed for a project. The trends surfaced from this data can help guide managers in project planning.

6. Resource Cost Variance

Cost variance provides budgetary insights. It’s determined by subtracting a project’s costs from its earned value. It’s used to determine if projects are on budget and how they can impact earnings.

SMART Goals and Resource Utilization Metrics

As project managers track resource utilization metrics, it’s important to set and achieve goals related to these metrics. Setting goals and benchmarks will help ensure that resources are properly utilized and that budget and time are being spent accordingly. Each goal should be specific, measurable, achievable, realistic, and time bound—hence the SMART acronym.

Specific

team members can’t achieve a goal unless it’s clearly defined. Who is involved, what are they trying to accomplish, when must they accomplish it, which obstacles and/or requirements will hinder progress, and why must they accomplish this goal? Most projects will contain smaller goals within the overall goal.

Measurable

What is the measure of success? There’s no single definition that answers this question, and it varies by project. Consider the goal and what achieving it looks like. Data such as revenue, automated reports, surveys, and work products are useful success indicators.

Achievable

How important is the goal, and how can it be accomplished? Does the team have all the required tools and abilities to accomplish it? If not, what can be done to support the team?

Relevant

How does the project and goals fit with the rest of the company’s goals? Both should be clearly aligned with the company.

Time Bound

What is the goal’s deadline? What will progress look like at the halfway point?

The Importance of Resource Utilization Metrics

Project Resource Costs

Correct resource utilization ensures proper project funding and support. Managers can redistribute excess resources to other projects that might need additional support. Billable tasks are funded with actual hours and not by what seems available.

Doomed Projects

Performance metrics are useful in determining whether a project should be killed. A study by the Project Management Institute found that there are several early warning signs that indicate a project could fail:

  • Overzealous advocacy
  • Immature technology
  • Lack of corporate technology road maps
  • Requirements instability
  • Ineffective acquisition strategy and contractual practices
  • Unrealistic program baselines
  • Inadequate systems engineering
  • Inexperience workforce and high turnover

Further, a study by Kappelman, McKeeman, and Zhang found even more warning signs of impending project failure:

  • Lack of support from management
  • A weak project manager
  • Team members lacking required skills and knowledge
  • Lack of success criteria

The accurate application of resource utilization metrics can help keep projects off the proverbial chopping block.

How to Track Resource Utilization Metrics

Resource utilization metrics are determined through equations and basic math. This data can be tracked in a spreadsheet. For small projects or departments, a project manager can keep track of this data on their own. It also depends on the metrics they must track. Many metrics require constant, time-consuming updates. The data generated from these metrics can easily overwhelm the best project managers.

Resource Management Software

Resource utilization metrics are one of the most important tools available to a project manager or business owner. This valuable data ensures that resource usage is optimized. Fortunately, project managers can tackle this difficult task by using resource management software.

Resource Management Software Features

This software simplifies resource management and allows you to make data-backed decisions. It can also help you plan for future projects by providing you with a resource overview.

Which Resource Management Software Is the Best?

It depends on many factors such as your goals and the size and type of your organization. Find out more about how to choose resource management software based on your specific needs, and get a list of the best options available on the market right now.

Other Types of Software

There are other types of software that can support it and your business, however. For example, project scheduling, marketing resource management software, and project management software make it easier to track and complete a variety of tasks.

While some might view software as the only solution to tracking resource utilization software, it’s also true that spreadsheets and databases can accomplish these tasks as well. The difference is a matter of cost and time. You might be able to accomplish this challenge on your own, but it will inevitably eat into your available hours.

Managing a Metric Ton of Data

Resource utilization metrics require constant attention, but the insights they provide protect team members, resources, and projects from waste. These metrics also help guide projects from inception to completion and beyond. Indeed, metrics are a necessity in today’s technology-driven landscape.

For more help regarding resource utilization metrics, project resource management, or digital project management, subscribe to The Digital Project Manager newsletter.

List of Related Tools: Resource Tracking Software

By Ben Aston

I’m Ben Aston, a digital project manager and founder of thedpm.com. I've been in the industry for more than 15 years working in the UK at London’s top digital agencies including Dare, Wunderman, Lowe and DDB. I’ve delivered everything from film to CMS', games to advertising and eCRM to eCommerce sites. I’ve been fortunate enough to work across a wide range of great clients; automotive brands including Land Rover, Volkswagen and Honda; Utility brands including BT, British Gas and Exxon, FMCG brands such as Unilever, and consumer electronics brands including Sony.

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