How do you know if your resource management strategy is working? If every project is well-resourced and everyone is at capacity? It might be easier than you think — keep an eye on these 5 critical resource management KPIs. Disclaimer: We've visualized these metrics, using built-in reports in Runn.
A high resource utilization rate indicates that a resource is being fully utilized; that is, they are working as much as they can in a given period.
This metric is usually expressed as a percentage, with 100% representing full resource utilization and, in most cases, an impossible-to-reach scenario.
In reality, people take time off work, go on vacations, and simply work on some tasks that are essential for the company but are not exactly increasing its revenue — this is why project managers shouldn’t book resources for more than 80% of their time.
Your total team utilization is, therefore, the amount of time resources are working in a business day or week.
Your billable resource utilization, on the other hand, marks the amount of time they spend working on tasks that bring revenue (like working on a client’s project).
Why this metric is important: Tracking utilization can help you identify resources that are under the most pressure and surface opportunities for new hires. Other than that, it's a good way to understand where you're earning or burning money. Resources with high billable utilization bring the most profit to the business. When the utilization rate is low, however, you may not be getting the best bang for your buck.
Note that the ideal billable utilization rate would be around 80%.
Billable hours are the total number of hours that your project team actually invoice for, which might be different from the total number of hours they spend working.
Non-billable hours are hours spent on things that don't get invoiced (admin work, training, general upkeep), which can eat into the profit margins of your projects if they add up quickly.
It’s a good idea to watch these numbers to make sure they're in line with each other by month or quarter so you'll know if you need to increase revenue or decrease cost somewhere to keep profits high.
Why this metric is important: The most obvious reason is that by knowing your billable hours, you know how much to charge clients. Tracking billable hours will help you keep your finances in order and make sure you get paid for every minute of work you perform for clients. Non-billable hours, in turn, are a good indicator of how much time is consumed by admin tasks. If an employee's work schedule is 160 hours per month, then you should aim for about 130 billable hours, plus 30 hours of non-billable work.
Schedule variance (SV) shows whether the project is going according to the schedule you initially drafted for.
Tracking schedule variance can help you understand if people are spending more hours on a project than expected, and, accordingly, whether it's costing you more.
If the Schedule Variance is positive, it usually indicates that the project is ahead of schedule, while a negative schedule variance indicates that the project is behind schedule. If the schedule variance is zero, you're right on track.
Why this metric is important: If someone's resource schedule doesn't match up with their actual hours worked, that's a sign that there's something either wrong with their workload or their expectations. Schedule Variance can help you spot bottlenecks before it's too late and course-correct when needed.
This metric is self-explanatory. It shows whether your team is working the hours they are scheduled.
This is a great indicator of how efficiently people are working. If they're on task and getting things done fast enough to finish early, this is a good thing — but if not, that could be an issue.
Get in the habit of checking this KPI each week as a way of monitoring employee productivity.
This KPI helps you measure the amount of revenue each employee brings in for every hour worked. To figure this out, divide their total sales by their total hours worked.
This tells you if an employee's sales are keeping up with their workload or if they're falling behind because they aren't able to make enough projects in a given time.
If you're in a service business, it's important to set goals and keep track of the results. Setting KPIs (key performance indicators) for each aspect of your resource management will help you ensure that you have smooth operations and that your business is running at peak efficiency.
After all, a business's success doesn't just depend on how well you can sell. It also depends on how well you can keep your team functioning at a high level, and how well you can develop that team in the first place.
This is why it's essential use resource management software to track the performance of each project and how much value it is bringing to the business overall.
Book a demo with Runn to see how you can keep all of that resource management data points at your fingertips at all times!
Learn why resource utilization is an important business metric and follow three easy steps to analyze and optimize your team's billable utilization.
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