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Emily Weissang

How to Create a Resource Utilization Plan in 3 Easy Steps

Navigate the path to project success and business sustainability with a resource utilization plan - here's how.

In our day to day work, it’s sometimes difficult to see the forest for the trees. 

Taking a step back and getting a wide-angle view of a situation is often the best way to solve problems or work around tricky challenges.

For resource managers, the resource utilization plan is a way of achieving that wide-angle view - taking in the big picture of timelines, targets, and constraints to create a plan that serves as a baseline.

But what goes into creating a resource utilization plan, and how can you ensure that your plan is as fit-for-purpose as possible? Let’s explore this, and more.

What is a resource utilization plan?

In short, a resource utilization plan is a document that outlines how resources are planned to be utilized during the span of a project (or projects). It aims to optimize resource allocation and boost resource use.

The purpose, ultimately, is to set out how an organization can use its resource potential to the fullest - without spreading people too thin, and to avoid having employees stuck on the bench without project allocations.

In addition, the plan improves visibility and transparency into how much time people have, and how they could spend it to maximize their impact on relevant projects.

Among other things, this plan will require you to:

  • Define different types of utilization for different roles (i.e. billable vs non-billable utilization)
  • Set proper utilization targets that take roles and seasonal fluctuations into account
  • Allocate resources across relevant tasks and targets
  • Consider constraints related to capacity, availability, deadlines, and budgets
  • Calculate ahead for potential delays and bottlenecks

An example of a resource utilization plan

Whilst your plan should include and make reference to the basic project details - such as timelines and relevant dates, and identified stakeholders - the focus of your resource utilization plan is what resources you need and how you will be using them. 

This means identifying what roles are required for the project (for instance, does the project need a backend developer, or a business analyst), and how much of their time is required.

To illustrate how this might look, we’ve created the example below in Runn's People Planner:

  • People and Roles. In the planner you can see that there are 10 people assigned to the project, with each of them having a distinct role, like Developer, Designer, or Project Manager.
  • Resource allocation. Once you have your project scope, timeline, and relevant assignments, you need to assign relevant people. In the planner, you can see a detailed breakdown of when each resource is going to work on their part of the project, and how much time they are expected to spend on it.
resource management software for resource utilization

Why resource utilization planning is important

The main reason why resource utilization planning is so important is because it’s the only way to run a project-based business sustainably.

In our recent webinar "Transforming Resource Management Through Experimentation", we touched upon the topic of common pitfalls of the traditional resource management approach. Sarah Koegler, a consultant at organizational design experts The Ready, mentioned that underutilization and overutilization top the list:

We know the impacts of overutilization or underutilization: if you don't get that right, overutilization can lead to burnout...staff members are just stretched too thin. But underutilization has financial downsides for also leads to low motivation, low engagement."

Burning-out (and subsequently burning through) talented staff is an unsustainable business practice. Unless you want your business to be stuck in a permanent hiring crisis with a revolving door of staff, it’s not worth scheduling more work than you have the capacity to complete.

On the flip side, staffing costs are expensive - indeed, they’re probably your biggest overhead. Which means that underbooking people is also poor practice. Quite simply, you don’t want to be in a situation where your staff cost you more money than they make.

Hitting resource utilization targets is important for your business’ financial health. But it's unlikely that you'll hit utilization targets by accident. With a resource utilization plan, you can apply optimization techniques like resource leveling or resource smoothing to ensure that you're always on the right track.

Optimizing resource use also helps you improve your resource utilization rate and avoid having people on standby, which means lower project expenses and faster delivery. 

But, again, it’s not possible to optimize and improve without being able to produce resource utilization reports. Being able to gather and analyze this data comes along with a solid resource utilization planning process. 

How to create a resource utilization plan

There are several crucial steps to creating a thorough resource utilization plan. Here are the essentials: 

Allocate people to projects

resource allocation challenges

Resource allocation is not just about matching people to projects. There are a lot of other things you need to consider like everyone's availability, skillset, seniority, preferences, relevant costs and priorities.

Your core goal here is to find the sweet spot between allocating an even and balanced workload to everyone on the team, while also making sure that all the work that needs to be done has someone to do it.

But, beyond this, be sure to look into everyone's skillset and seniority to spot opportunities for them to grow and work on the skills they want to develop or obtain.

team members in a skills inventory

Set utilization targets (goals)

To ensure that your plan is purposeful, you should decide on a target utilization rate that you are aiming to achieve through your resource planning. 

This may vary between roles. For example, you might set a higher utilization target for roles that do customer-facing, chargeable work, compared to roles that have more internal administrative responsibilities associated with them.

In any case, we caution that a utilization rate of 100% should not be your yardstick. It’s unrealistic — but it's also counter productive. It means that people have little to no breathing space to deal with the inevitable hiccups that can arise. As a result, even the smallest setback risks causing a delay.

Ideally, your utilization goal should be about 80%, meaning that 80% of your people's time will be filled up with billable work.

Utilization goals will help you ensure high productivity levels, improve billing accuracy, increase project profitability and resource use, as well as gain the visibility needed to improve how resources are used in your projects.

To calculate resource utilization, you can apply the typical resource utilization formula if you want to look into billable utilization, non-billable utilization, or both.

Formula for billable utilization

If this sounds like a lot of math that will be pretty complicated and onerous to look after - that’s because it is. However, you can use tools that sort the numbers out for you.

With Runn, for instance, all the numbers update in real time after every change you introduce to your project plan. What's more, the system will alert you in case your team members already have too much on their plate and need to have their workloads optimized.

In Runn's Utilization Report below, you can see a detailed breakdown of each resource, their role, status, billable and non-billable utilization, as well as the cases where resources are already spread too thin. With that information in your hands, you can look into the outliers and optimize their workloads for better resource utilization rates.

resource utilization rate for project managers

No more tedious number-crunching. Runn updates all of your utilization and capacity stats in real-time - so you're always looking at the latest version of the resource plan. Try for free today.

Track planned and actual utilization

Same as many other indicators in resource management, resource utilization is not a constant.

If there is some scope creep in the parameters of the project, for example, your resources will take a hit and you will see it directly reflected in their work if you track resource utilization.

If someone takes time off and their team members will need to fill in for them, the resource utilization for that remaining group is also going to change.

With that said, it is important to understand that resource utilization is not just numbers and KPIs. Before anything else, it is a reflection of your people's outlook when it comes to work and growth, this is why leading resource managers call for a kinder way to interpret utilization rates.

Christine Robinson, former Director of Resource Management at Baker Tilly, called it 'The Story of an Hour' in our recent webinar "Resourcing for Success".

When I spoke to one of the team members about logging hours, he seemed to brush it off as just another box to check. But…I stressed that it's not just about tracking individual hours, but the collective impact they have on organizational performance. 

This influences decisions affecting everything from meeting objectives to providing opportunities for professional growth like training or attending conferences. It's crucial to understand that these figures reflect the workload necessary for successful operations."

The story of an hour

In a project based business, where each hour of a skilled worker's day is the most valuable resource, the impact of utilization rates cannot be overstated. But by creating a resource utilization plan, you can ensure that a path to healthy, sustainable growth stays within your sights.

What's more, a platform like Runn can make creating a resource utilization plan straightforward and fast, and you won't have to make manual updates like you would if you were using an Excel spreadsheet instead.

If you're curious to see how Runn can help, we've got great news: it's free to try, and you can set up an account in seconds using just your email address. Give Runn a go ➡️

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