)
)
A large part of project management is ensuring that your team has the time, skills, and resources needed to complete jobs on time. As a project manager, you need to be able to assess the available hours from your team members and their talents before you put together a project plan. This process is called resource management.
Understanding resources is essential for several reasons, and it has a major impact on the billable hours and, therefore, your company's profitability. It helps you optimize your resource usage and increase productivity and efficiency – not just how much people do, but how it contributes to revenue-generating work. In this article, we’ll help you understand what resource utilization is, why it’s important to use, and what it can do for you and your team.
What is resource utilization?
Resource utilization is a KPI (or metric) of resource planning used to help project managers and leaders understand performance and effort over a specific amount of time. It measures your team's productivity on billable work, and can help you understand if your organization is over or underutilizing resources. In client-based work, it’s the proportion of time employees spend on tasks that can be billed to clients.
Resource utilization differs from resource allocation in a few key ways. Resource utilization measures the efficiency of your resources, while resource allocation is the process of picking the right resources for different projects. However, both elements are part of resource planning and resource management.
What is the resource utilization formula?
Calculating your resource utilization rate depends on a formula. This formula helps you understand your utilization percentage and your team's efficiency. The typical resource utilization formula is:
Resource utilization =Total billable hours / Total available working hours x 100
This metric will help you understand exactly how many actual hours are available for projects and how many of those hours go towards billable time. Here’s an example.
Let’s say you have a graphic designer on your team who works a 40-hour work week. Each week they spend about 35 hours on billable tasks and the rest of the time on internal tasks like administrative activities or meetings. You would plug those figures into the formula to get:
Resource utilization = 35 total billable hours / 40 total available working hours x 100 = 87.5%
This means that the employee's resource utilization rate is 87.5%. This will provide a baseline for all of your employees that you can use to predict project hours, whether or not you need to find more billable time for employees or if you can find ways to increase billable hours.
Remember that certain factors will impact this rate, like days off, overtime, reporting time versus actual time, and different working time for full-time and part-time employees.
Pro top: In Teamwork.com, managers can set unique utilization targets for every team member — recognizing that not everyone will have the same billable expectations. For example, leadership roles naturally carry less billable time than frontline contributors. Benchmarking against individual targets makes it easier to track how each person is performing relative to their role.
)
Why resource utilization is important
Resource utilization is an important part of project management. It helps managers do their jobs better and get the best results out of employees. Here are a few of the major reasons why you should spend time figuring out your resource utilization rates and calculating the rate for each employee.
Increases profitability
The higher your resource utilization, the greater the proportion of employee time that’s being charged to clients – which directly translates into increased revenue. Consistently directing effort toward billable work ensures that your profit centers continue to grow, while also giving you clearer visibility into the financial health of your business.
Reveals operational efficiency
High utilization is a signal that teams are not just busy, but working effectively. It suggests that the majority of time is going toward billable, value-generating work rather than being lost in inefficiencies. On the other hand, persistently low utilization can be a red flag. It may point to too much time being consumed by non-billable tasks like admin or internal meetings, or to deeper workflow bottlenecks that slow delivery. Looking at utilization this way makes it a diagnostic tool: when it’s healthy, it confirms alignment; when it dips, it highlights areas where processes or priorities need adjusting.
Improves project costing and scoping
Understanding historical utilization data gives you a solid evidence base for future planning. By looking at how resources were actually used in past projects, you can create more accurate budgets, set realistic timelines, and forecast resource needs with greater confidence. It takes the guesswork out of scoping and ensures your estimates are rooted in real performance rather than assumptions – which means fewer surprises mid-project and more reliable delivery for clients.
Helps resource planning and financial forecasting
If utilization consistently runs above the upper limit, it may be a sign that workloads are unsustainable and that additional hires, smarter scheduling, or process improvements are needed to protect your team from burnout. Conversely, if utilization is too low, it can expose overcapacity, misaligned staffing, or hidden inefficiencies that drain profitability. Tracking these patterns over time doesn’t just help with day-to-day resourcing — it feeds directly into long-term financial forecasting, giving you the insight to scale sustainably and invest with confidence.
Leads to happier team members
Tracking utilization creates visibility at the individual level, which naturally encourages accountability — people can see how their time contributes to client work and the overall success of the business. It also helps direct focus toward activities that actually generate value, rather than getting lost in busywork. When utilization is balanced, the benefits compound: employees avoid burnout, stay more engaged in their roles, and teams as a whole perform at a higher level.
9 techniques to improve resource utilization
Now that you know why resource utilization is valuable let’s look at ways to improve your resource utilization and create better planning processes.
1) Put the right tools in place to properly manage tasks
Trying to work without the right tools is impossible. To improve resource utilization, you need to have the right programs and software options that make it easier for your team to do business and manage their tasks.
Resource management software like Teamwork.com makes it easy for teams to track their time, manage tasks, communicate with each other, deliver results to clients, and then some! Learn more about our resource management tool here.
When you have the right tools in place, you can get a better picture of what your team schedules look like (long and short term), know who is responsible for which tasks, and see who is over or under capacity. All of the improved efficiency works to optimize your resource utilization over time.
)
2) Roll out an in-depth resource planning schedule
A resource planning schedule helps teams organize and structure time so that tasks and projects are completed on time and by the right people. It’s an integral part of project management and can help improve resource utilization. When your team members have their work schedules clearly laid out, it helps them do their jobs better and lets you get a better idea of timeframes, deadlines, and responsibilities.
In-depth resource planning schedules give you clear visibility into team workloads and give project managers a deep look into the organization's usage of time and resources. Investing in detailed software is better — and more cost-effective — than trying to organize your team on spreadsheets.
3) Track team members’ time (temporary or ongoing)
Time tracking is a crucial part of resource utilization. Time tracking helps you learn exactly how many hours employees spend on billable tasks and how much time is spent on internal meetings or administrative tasks in real time. To maximize profitability and get more out of your team’s time, you should be tracking hours both temporarily to get a snapshot and on an ongoing basis to gather more data.
When you track time, you learn how long projects actually take to complete, which can help you with billable utilization. You also can learn more about when employees are underutilized or overutilized and can rearrange tasks to make everyone happier.
Pro tip: Before you track, estimate. Adding estimated time to tasks helps calculate capacity, plan commitments, and balance workloads realistically. Sum up daily and weekly estimates to avoid overloading your team.
)
4) Forecast future projects
When new projects come in, it’s important that you know if you have the bandwidth to manage them and who will be responsible for taking on those new tasks. Resource utilization will help you accurately forecast and plan future projects. It will help you make better decisions at the beginning of planning to avoid reworking schedules and assigning tasks. It will also help you make sure that the right employees are assigned to the project.
Time tracking and resource utilization also help you understand the scope of future projects, which makes it easier for you to forecast the time needed to complete tasks. This makes it easier for you tocommunicate with clients about the goals and outcomes of their projects and improve resource utilization plans.
Pro tip: Forecasting isn’t only about knowing whether your team has the capacity to take on new work. Because utilization is tied to billable hours, it also gives you a preview of potential revenue. With Teamwork.com, you can go a step further by modelling how each person’s time and cost rates will affect project profitability. That way, you’re not just checking availability – you’re predicting financial outcomes before a project even begins.
5) Minimize non-billable activities
Non-billable activities are unavoidable in the workplace. There will always be a need to do non-billable things like checking emails, filing paperwork, doing internal marketing, attending meetings, and working with other team members. However, sometimes these types of activities can take up too much time. You always want to minimize the time spent on non-billable tasks as they don’t bring in direct revenue to the company.
By looking at resource utilization, you can determine which employees have many non-billable hours — and why. Then you can consider making changes like shortening meeting times or assigning them to more projects if they have room in their schedules.
6) Analyze actual hours vs. planned booked hours
Any project manager can tell you that no project ever goes exactly as planned; challenges, changes, and roadblocks are part of the job. That’s why it’s critical to look beyond the plan and compare how work was scoped against how it actually played out.
With Teamwork.com, there are two powerful ways to do this:
Track project budgets in real time
Instead of monitoring hours in isolation, you can set a project budget based on hours (not just financial amounts). Each time log automatically subtracts from that budget, so you always know how much time you have left. You can even set alerts at specific thresholds (say, 50% or 80%) so you’re notified the moment a project starts to consume time faster than expected. This real-time visibility helps you keep projects under control without waiting until it’s too late.Analyze with the Estimated vs. Logged Time report
For a deeper dive, the Estimated vs. Logged Time report lets you compare how much time was allocated to individual tasks versus how much was actually spent. This analysis reveals which tasks consistently take longer (or shorter) than expected, helping you pinpoint bottlenecks and improve scoping accuracy. Over time, these insights build a knowledge base that makes your future project estimates, timelines, and budgets far more reliable.
)
By combining real-time tracking with after-the-fact analysis, you get the best of both worlds: the ability to spot overruns before they snowball, and the data you need to make every new project smarter than the last.
7) Leverage AI utilization insights
Resource utilization can be tricky to monitor in real time, especially when projects are fast-moving and teams are spread across roles. That’s where AI-powered insights can help. With Teamwork.com’s new Utilization Summary, managers get an at-a-glance view of where people’s time is going. AI can quickly spot patterns in workload, highlight when someone is consistently over capacity, and even flag underutilized talent that could be better deployed. Instead of manually piecing together reports, AI provides proactive recommendations so you can rebalance work before issues escalate – keeping projects on track and people engaged.
)
8) Report on utilization regularly
It may sound obvious, but one of the most effective ways to improve utilization is to make it visible. Utilization reporting should be part of your regular management rhythm — not just something you check when there’s a problem.
With Teamwork.com, the Utilization Report gives you far more than just progress against billable utilization targets. It brings together:
Estimated utilization: What was planned in advance
Available vs. unavailable time: Factoring in vacations, public holidays, or other downtime
Billable and non-billable time logs: Showing where work is really going
By reviewing this report consistently, you can spot capacity issues before they become blockers, identify areas where billable hours could be increased, and ensure workloads are balanced fairly. Over time, these reports also build a dataset that supports bigger-picture decisions around hiring, project forecasting, and profitability.
9) Align skills and roles to the right work
Utilization isn’t only about filling time – it’s about matching the right people to the right tasks. When work is aligned to skills, projects run more smoothly, tasks get completed faster, and quality improves. Misalignment, on the other hand, often leads to inefficiencies, rework, and wasted billable hours. By mapping roles and skill sets to client deliverables, you ensure that tasks are handled by the most qualified team members. This approach also creates opportunities for cross-training – letting staff stretch into new areas while giving the business more flexibility to cover different types of billable work. The result: stronger utilization, more resilient teams, and happier clients.
Utilize your resources efficiently with Teamwork.com
At Teamwork.com, we understand how important it is for you to have the right resources for your projects. We also know that you need the right tools in place in order to achieve your goals and track your billable hours to set your team up for success. That’s why we offer plans and tools for every sized business to plan projects better and improve your efficiency.
To learn more, sign up for Teamwork.com today and discover how we transform businesses and bring about more success for our customers.
)
)
)
)
)
)
)
)