Posted by Rachel Ho Jun 11, 2022 10:00:00 AM

To optimise your business and increase productivity, you need to ensure that your resources are utilised as effectively as possible by getting things done more quickly and efficiently. That’s where Tessaract comes in.

Find out how you can optimise your digital workflow and ensure you're working at operational efficiency with optimal resource utilisation, and how Tessaract can help you with workflow automation.

What Is Resource Utilisation?

Resource utilisation refers to how efficiently your company can turn its resources (e.g., time, people, and money) into an output (e.g., revenue, profit). When used with other objectives and key results or key performance indicators (OKR or KPI), such as sales and profit margins, it becomes a valuable metric. 

Using resource utilisation metrics, you can determine whether or not your staff is fully booked. It explains how to plan projects to utilise all available resources to their fullest extent.

A project manager can also determine if any employees are over-or under-utilised with the help of this tool, as well. That would allow them to reassign the duties to someone else or find underutilised employees so that they could be given new assignments.

Why Is Resource Utilisation Important?

Reasons why resource utilisation is important:

  • It helps you identify your weaknesses and strengths in your business to improve them and make your business more profitable.
  • It allows you to take advantage of opportunities when they arise because you know what resources you need to fulfil your business’s demands.
  • It helps you make informed decisions to work smarter regarding resource management and acquisition so that your business has what it needs to function effectively and efficiently on a day-to-day basis.
  • It ensures that all employees are given sufficient training to do their jobs well and productively, ultimately increasing employee retention and reducing turnover costs. 
  • It allows you to optimise your business’s performance by ensuring that your resources are being used efficiently.
  • It allows you to plan for future growth and expansion because you have a good idea of what resources and business needs will be needed as your business grows.
  • It helps you make informed decisions regarding when to expand or contract so that your business has all it needs, which can help increase profitability by reducing waste and ensuring that all employees are fully utilised.
  • It helps ensure that your company is prepared for an emergency or natural disaster. It gives you an idea of how many resources are available on hand if needed during such an event.

How to Calculate Resource Utilisation?

Here are some essential terms and examples for calculating and measuring resource productivity, utilisation, and efficiency.

Ratio of Utilisation (Utilisation Rate)

To arrive at the resource utilisation formula, you must first determine the percentage of resources utilised.

Actual Hours Worked (by a specific resource) divided by Total Available Hours is the utilisation percentage.

Utilisation % = Actual Hours Worked/Total Available Hours

You can see which projects are taking up the most of your resources' time if you choose a period (weekly, monthly, or quarterly). Project managers can use this information to determine which projects are most profitable for the company. This data can influence your company's future course.

For example, if 1450 hours are worked out of a possible 1500 available hours, the utilisation rate would be: 

Utilisation rate = 1450 Hours Worked / 1500 Available Hours = .967 = 96.67% utilised

Realisation Rate

The realisation rate is the amount of money collected from standard billing rates. Unlike utilisation, it directly links to revenue and billable time. You'll see discounts from the standard rates, fee reductions taken before sending the bill, and write-offs that have been mutually agreed upon (fee reductions after you send the bill).

To figure out the Realization Percentage, divide the total number of billed hours by the total number of billable hours. The result is the percentage of time it takes for the resource to make money for the business.

Calculating Realization Rate

Suppose 1450 hours were billable hours out of 1500 hours worked. And 1350 of 1450 were billed to the customer to obtain the projected revenue.

Then, Realization Rate = 1350 Billed Hours / 1450 Billable Hours = .931 = 93.1%

How to Maximise the Effectiveness of Available Resources - Improve Resource Utilisation

A resource utilisation tool makes it simple for project managers to calculate staff utilisation and productive utilisation. Here's how you can increase your efficiency in utilising your available resources and reduce time spent on repetitive tasks.

Advantages of Digital Adoption (2)-1

Leverage Visibility

The project manager is responsible for many projects, and they all impact one another. Instead, you should create a plan to see all of your resources at once when it comes to integrated project management. Some helpful practices such as managing a weekly workplan can help you manage your project pipeline and project objectives strategically. As a result, you'll be able to assess your team's capability and performance more accurately.

Keep an Eye Out for Scope Creep

Different projects require varying amounts of time and resources to finish. Project managers and team leaders are in charge of ensuring everything stays on schedule and within budget. A good resource utilisation tool makes it possible to prioritise all ongoing projects and distribute the available resources equally.

Compare Your Booked Hours and Actual Hours

Projects don’t always proceed as planned, and unavoidable difficulties and setbacks. Generally, it's good to compare your scheduled hours (pre-booked hours) with the actual hours you worked. This way, you'll know if the project plan needs to be tweaked before anything goes wrong or changes are made.

Prepare for Anything

Prepare for any deviation by imagining and running scenarios. You'll be able to adjust quickly. For example, you must know if your project's budget has been exceeded or if a resource has been lost.

How to Maximise Productive Utilisation of Employees?

A 100% utilisation rate does not imply that the resources are being used to their full potential. To determine whether they are being productive, it’s necessary to conduct an assessment. 

The project and resource managers are always responsible for ensuring that their team's productivity is maximised and their potential is utilised to the fullest extent possible.

So, how do you get the most out of your resources while not overburdening them? As a result, having the right software for the digitalisation of managing and utilising resources is extremely important to achieve resource levelling. Here's how it works.

5 Step Approach to Write a Key Performance Indicator (3)

Identify the Resources that Are Under- or Over-utilised: 

Your resources will be under-utilised or over-utilised if your team is given too much or too little work. In some cases, a lack of skilled resources can overburden or utilise a single skilled resource and cause employee dissatisfaction, resulting in lower profits.

Increasing the Visibility of the Resource

Additionally, overwork can lead to double bookings and overallocation. Identifying under- and over-utilised resources and eliminating double bookings can be easier with the right resource utilisation tool.

Effective Bench Managing

There are many ways to manage the bench effectively, but the most important is strategic. Reduced bench time is achieved by reducing non-billable hours so that the resources are only used for billable or strategic work. Features like time tracking will be useful if you need to exactly track the amount of time that you are billed for your work, especially for legal or accounting industries,

Predicting Future Demands

The team leader can more accurately predict future demands by using the appropriate resource utilisation tool. This tool's comprehensive reports allow them to quickly fill open positions with benched talent.

Reducing Non-Billable Activities

For project managers, tracking the overall billable use of the highly skilled resources of their team with optimal resource utilisation is critical. Profits are generated only when the resources are actively engaged in billable tasks and fully utilise their total capacity. Non-billable and tedious tasks that are not part of strategic or billable work must be reduced due to this imperative.

Improve Efficiency with Workflow Automation

Tessaract's ideal workflow automation solution provides an easy way to automate business processes and optimise resource utilisation while saving time and increasing your staff’s productivity. Tessaract's business management software comes with easy integration and great deployment options to make your business run smoothly and efficiently.

Tessaract is suitable for organisations of all sizes from small to enterprise organisations that want to improve collaboration, enhance work productivity and performance, and increase oversight. Tessaract enables you to nurture a high performance culture in your company to achieve your OKR and KPI goals with an agile workflow. Get started by scheduling a demo or watching videos of Tessaract's functionalities like digital signing or client onboarding.

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Rachel Ho

Written by Rachel Ho