Businesses hire the best-fit employees across geographical boundaries to accomplish strategic objectives. But, simply hiring the right skillset will not guarantee business sustainability and profitability. As resourcing costs are significantly high, they must be effectively utilized to the highest potential to get maximum returns. This will help enhance business efficiency, ensure timely delivery of projects within budget, and meet business goals.
However, achieving optimal resource utilization is easier said than done. Improper use of resources may lead to over and underutilization. This will ultimately affect the performance, and productivity of the employees, lower their self-esteem, and lead to poor quality of work.
Therefore, it is essential to implement strategies to improve and maximize utilization in the workplace.
In this blog, we dive deep into resource utilization, its benefits in project management, and how Saviom’s resource management software can maximize the same.
Resource utilization: definition and types
Resource utilization is a critical KPI that measures the productivity of each resource based on its availability and capacity. Utilization metrics help managers to determine and monitor the resources’ work rates and evaluate their over or underutilization.
It is classified into four types that enable managers to effectively analyze each team member’s time spent on the tasks.
Overall resource utilization
It refers to the time an employee spends on all the activities like billable, non-billable, and strategic against their total availability.
Billable resource utilization
When employees work on projects that are billed to clients are known as billable projects. Therefore, evaluating the total hours the resource is utilized for billable work is billable resource utilization.
Activities like training, administration work, BAU, and meetings, that are not billed to clients refer to non-billable work. Evaluating the resources’ time for these activities is non-billable utilization.
Strategic Resource Utilization
Every organization has long-term goals and strategic projects. The time spent on these tasks is strategic resource utilization.
As you know what resource utilization is, let’s understand why it is critical for an organization.
5 essential benefits of optimal resource utilization
Optimally utilizing business resources helps ensure successful project delivery,
1. Improves employee performance and productivity
It has been observed that employees’ productivity and performance decline when they are constantly given non-billable work or overutilized beyond their capacity. When this situation persists for longer, the employees experience burnout, stress, dissatisfaction, etc. This will adversely affect their health, lowering productivity.
By tracking and improvising utilization rates, employee performance can be significantly improved. In addition, if the resources are overloaded with work, appropriate optimization techniques like resource leveling and smoothing can be implemented. In this way, workforce productivity can be enhanced effectively.
2 Boosts return on investment (ROI)
When the workforce is actively working on billable and strategic projects, it eventually generates revenue for the firm, thereby improving the ROI. Therefore, it’s imperative to periodically mobilize them from non-billable to billable work to ensure business profitability.
Forecasting the utilization rates helps managers be proactive and take corrective measures to maximize the billable utilization. Therefore, this practice drives better ROI and contributes towards the top line.
3. Helps distribute workload evenly among resources
Often critical resources are frequently overloaded with work. At the same time, other employees are utilized inefficiently against their capacity. This created an imbalance in the resource health index, as few employees get burnt out and subsequently leave the organization while others spend idle time on the bench resulting in billing loss.
To avoid this, managers must ensure uniform workload distribution across the talent pool. They can implement on-the-job training opportunities for junior resources or upskill them to improve billability. 360-degree visibility into allocations helps managers find the best fit available worker for every project.
4. Prevent employee burnout and disengagement
When employees are overloaded with work, it leads to burnout, stress, and frustration. Similarly, when the employee skills are not leveraged effectively, it leads to disengagement in work. For example, a junior resource assigned to a critical high-priority project will cause delays and stress and lead to subpar deliverables. Eventually, in both cases, the productivity of the organization is affected.
Therefore, the onus is on managers to strike the right balance of the workload on employees by setting realistic deadlines. This will promote the work-life balance of resources, maintain their mental health and boost their morale.
5. Facilitates timely delivery of projects
Meeting the project deadlines is very important for the success of the organization. By optimally utilizing the resources, managers can ensure all project tasks are completed on time.
By identifying the best-fit resource for the right task will ultimately prevent burnout and disengagement. This will positively impact employee productivity and performance, ensuring timely delivery of projects and enhanced customer experience.
How can resource management software optimize workforce utilization?
Tracking resource utilization through excel spreadsheets or manual registers is time-consuming.
Here’s how it can help
The ERM tool provides enterprise-wide visibility into all the resource profiles and their work schedules. It helps keep track of the resource’s current engagements and their future allocations. That way, managers can identify what percentage of an individual’s capacity is spent on billable, strategic, or non-billable tasks. Accordingly, they can mobilize them to billable/strategic work and maximize productivity.
The forecast vs. actual reports gives a real-time view of resources’ performance. Managers can take the data from the schedule and timesheets to determine whether the time taken by the employees on specific tasks is as per the forecasted time.
With insights into utilization heatmaps, managers can quickly identify under/overutilized resources. Accordingly, they can implement suitable optimization techniques like resource leveling and smoothing based on the project’s nature. It thus helps enhance profitability and engages the workforce.
Additionally, it provides people-on-the-bench and project vacancy reports that allow the team leads to manage the bench effectively by promptly assigning suitable tasks to the workforce before they hit the bench. This method ensures the resources are engaged and their productivity is high at all times.
Lastly, using the tool, managers can publish open positions. Employees interested in the open positions can show their interest, and the most suitable employee for the project/task is selected. This, again, enables employees to take ownership of the job, leading to better performance.
Jeff Bezos says, “Our highest cost is not power, servers, or people. It’s a lack of utilization. It dominates all other costs.” Maximizing utilization improves the employees’ efficiency and impacts a business’s profitability and success.