Did you know that a single uptick in your utilization rate can significantly impact your firm’s business?
If there’s one thing we can all agree on it’s that we want our projects to be profitable. And if we can make more profit on our projects this year than the year before- even better. When it comes to increased project profitability, utilization is a powerful metric to boost your profitability and overall business growth.
As a business owner or project manager, it’s essential to be aware that utilization rate is critical to your bottom line, so you should always seek ways to improve it.
What is Utilization Rate?
Utilization rate is a metric used by firms to reveal their employees’ productivity and efficiency based on a percentage of time spent working on productive activities.
When measuring your project’s performance, utilization is crucial if you’re billing hourly or hourly-not-to-exceed. Utilization is also valuable information if you’re working on a fixed-fee project. Utilization allows you to get a picture of your project’s efficiency in terms of billable versus non-billable hours.
Total and Billable Utilization
Most firms monitor two types of utilization in their projects: total utilization and billable utilization.
Total utilization is the metric that measures the percent of the time your paid employees or resources spend on any work considered productive. This type of work can include proposal writing, business development, etc.
Billable utilization is the percentage of time you can bill to clients. These billable hours are time spent on revenue-generating activities such as client meetings and project tasks.
When it comes to utilization, it’s unproductive to assign more work to your team members without having insight into their current utilization rate and how they’re using their valuable time.
So, how do you start improving the utilization rate in your firm?
Provide Real-Time Visibility and Data
We know that successfully improving your project’s utilization rate is vital to your firm. The first step to improve utilization rate is to implement a resource management dashboard that is customizable. A customizable dashboard can fit your team’s needs and provide real-time visibility and data.
When your dashboard includes features such as time and utilization tracking, this gives you an inside look at critical metrics in real-time to create a high level of visibility into your team's performance towards these set time goals.
Look for a project management dashboard that allows your team to receive complete visibility. This is much more valuable to the project's success when the entire team can access the information. The real-time data can show your team how they are performing daily. Now they can take immediate action to improve their performance and help the project reach its time goals by taking on more tasks when they have the available time.
Include Time Tracking Software
Now that you have your dashboard in place, the next step is to implement time tracking. Time tracking is a beneficial place to start when analyzing your utilization rate.
All firms and professional services need to track time to see successful results from their projects. And almost all firms that do not have time tracking software in place will admit to needing to improve their tracking processes.
Start by simplifying projects and how you capture their time to improve utilization rate with time tracking. Time tracking software can keep the process simple and avoid messy spreadsheets by allowing your team to input their time easily from any device and include detailed notes if needed.
An essential step for improving the utilization rate is implementing regular audits of utilization and time (daily or weekly). Audits ensure entries are filed by all resources and give you the control of keeping regular insight into your project’s utilization.
Time tracking software is beneficial to improving the utilization rate because it allows you to review under-or over-utilized employees and make sure the under-utilized ones are billable once again
Reduce Non-Billable Time
When tracking time, it is crucial to track non-billable work too. When using time tracking software and analyzing your utilization, you should identify several separate non-billable tasks employees spend time on- such as administrative and marketing tasks. Once you have your non-billable work recorded, track against these categories to see a distribution of time and trends.
Doing this allows you to reduce non-billable work so that only the activities that add direct value and advance future utilization, revenue, and margin achievements are implemented.
Get Rid of Spreadsheets
As we mentioned earlier, spreadsheets are messy. Any manager can attest that nothing can throw off utilization more than the chaos of managing time, resources, schedules, and billable rates all on one or more spreadsheets.
When it comes to project management, there are many moving pieces to keep track of and each piece plays a necessary part in getting an accurate read on your utilization rate.
If your team is still using spreadsheets, now is the time to stop. Spreadsheets are time-consuming, but they can also produce errors. When your project profitability relies on those numbers, you do not have room for error.
One of the best things you can do right now to help improve your utilization rate is to get rid of your spreadsheets and save yourself some precious time with an innovative platform that will handle everything for you all in one place.
Set Expectations for Clients
Another way to increase your team’s utilization rate is to address additional tasks and questions that come up. This starts with managing your client's expectations. Before you begin a project, it’s important to provide realistic estimates and timeframes to the client to ensure you have highlighted the risks and deliverables. What eats up unnecessary time is the back and forth of clarification and small changes because you didn’t communicate the project scope.
When you ensure that everyone involved in the project has a clear understanding of the scope, risks, and deliverables, there are less likely to be project issues and fewer budget overruns.
A good project management software tool can help you create a clear project management process for everyone involved.
Always Refine Your Planning
Project planning tools help you keep track of your planned utilization versus actual utilization.
Plus, when you take advantage of a project management tool, you can spot poorly utilized resources and even identify potential untapped skills or training requirements to help boost your utilization rate in the future.
Project Management, Time Tracking and Real-Time Visibility with CORE
BQE CORE provides real-time visibility, time tracking, and overall project management to help analyze and improve your utilization rate.
By scheduling a free demo, you can see just how easy it is to improve your utilization rate and manage your project’s profitability all in one simple, customizable platform.
To help your firm grow and see profits all year long, schedule a free demo today and see just how much time and money you can save!