How to Calculate Resource Utilization: A Guide for Project Managers
Posted: Sun Jan 19, 2025 6:53 am
One of the easiest ways to check whether your resource allocation efforts are successful is to monitor your team’s utilization and resource capacity. Before we introduce you to the various resource utilization metrics and formulas, we would like to define resource utilization in a way that is understandable. Therefore, in this article - as in many others - we provide a comparison of the definitions, meanings and terms used by project managers.
Insight into staffing or resource utilization is associated with the concepts of “overutilization” and “underutilization.” You should be familiar with both of these concepts. Why? Having too much work or responsibility on a project (multitasking) doesn’t mean it will be completed to the end or with the features it was designed to have. So before israel telegram phone numbers you get started, take a look at the findings of Gartner’s study How to Avoid Overloading Your IT Project Team. Overloading your staff typically has a negative impact, as it reduces productivity and increases errors. Gartner research shows that teams with underutilized staff can reduce the time to business value by 30% or more. Knowing this, it makes sense to keep a close eye on resource utilization metrics.
The role of resource utilization in project management
Where is resource utilization in the project management process?
To paraphrase the Project Management Institute (PMI) definition, project management is understood as the use of specific knowledge, competencies, skills, tools, software, processes, and methods to create something "of value to people." This can easily be interpreted as project management being about doing things with what we have. Mentally and physically.
And if we wanted to be sarcastic, we could take advantage of the ambiguity of the phrase "value for people" and say that the proposed concept of the PMI project could also mean the creation of a social movement, including a political or religious one.
However, compared to the PMI definition mentioned above, the Project Management Association's proposal can be considered more rigorous, emphasizing objective and measurable criteria such as time and budget.
In business, both, although they may be discussed, establish a certain framework for a project. Whether we are talking about a client task or a task given by the company director to the marketing department, the task must be completed within the expected or, in fact, commercially reasonable time and yield a return. So, according to APM: Project Management is the application of processes, methods, skills, knowledge and experience to achieve specific project objectives according to project acceptance criteria, within agreed parameters. Project management has end results that are constrained by a limited time and budget. So, unlike in just management, if in project management we are talking about projects, each of them has requirements such as time and budget for each project to be completed. The following are some examples of project resources (with several requirements):
To create an atomic bomb with an explosive power no less than that of the "Tsar Bomba" within 24 months, without exceeding a budget of $50 million.
by 31 March 2025, to build a dam on the Vistula River, not exceeding 120 million.
to create a desktop app (including conversion path analysis and selection of the best one) for a shoe manufacturer in 8 weeks ($12,000).
to update brand positioning (including distribution of new BTL material) within 12 months, within a budget of $100,000.
Based on the examples above, we can imagine how many steps, administrative tasks and procedures are involved in each project. How many people with the relevant skills are involved in each of them?
So, as mentioned, project management is the application of a process. Or we can say it directly: a project is a process. And the process is called the project management life cycle. On the Internet, you can find a breakdown of this process divided into 3, 4, 5, even 6 and 7 stages. However, the most popular of them belongs to the aforementioned PMI and provides for 5.
As you can see, each phase is a group of tasks, and each phase presents a number of different issues and challenges. It is also worth adding - especially for those who are just starting out as a project manager - that these phases should not always be viewed chronologically. Some elements can be started earlier, while others are an ongoing process throughout the project (such as activity management or - more specifically, the topic of this article - the use of a resource planning tool). And each of them - in some way - is optimized throughout the process. Resource leveling is an important technique used to balance the allocation of resources and avoid over- or under-utilization during the project lifecycle.
Returning to the main topic, in which part of the PM life cycle process is resource utilization important?
Of the five stages of the process, resource utilization is the third stage. It is part of the monitoring and control stage, or more precisely, part of performance management.
Initiation and conception
Planning
Launch and execution
Monitoring and control - it involves checking performance, i.e. resource utilization.
Project completion
For managers, resource utilization is the most valuable and useful performance management indicator and the main indicator of operational efficiency.
Insight into staffing or resource utilization is associated with the concepts of “overutilization” and “underutilization.” You should be familiar with both of these concepts. Why? Having too much work or responsibility on a project (multitasking) doesn’t mean it will be completed to the end or with the features it was designed to have. So before israel telegram phone numbers you get started, take a look at the findings of Gartner’s study How to Avoid Overloading Your IT Project Team. Overloading your staff typically has a negative impact, as it reduces productivity and increases errors. Gartner research shows that teams with underutilized staff can reduce the time to business value by 30% or more. Knowing this, it makes sense to keep a close eye on resource utilization metrics.
The role of resource utilization in project management
Where is resource utilization in the project management process?
To paraphrase the Project Management Institute (PMI) definition, project management is understood as the use of specific knowledge, competencies, skills, tools, software, processes, and methods to create something "of value to people." This can easily be interpreted as project management being about doing things with what we have. Mentally and physically.
And if we wanted to be sarcastic, we could take advantage of the ambiguity of the phrase "value for people" and say that the proposed concept of the PMI project could also mean the creation of a social movement, including a political or religious one.
However, compared to the PMI definition mentioned above, the Project Management Association's proposal can be considered more rigorous, emphasizing objective and measurable criteria such as time and budget.
In business, both, although they may be discussed, establish a certain framework for a project. Whether we are talking about a client task or a task given by the company director to the marketing department, the task must be completed within the expected or, in fact, commercially reasonable time and yield a return. So, according to APM: Project Management is the application of processes, methods, skills, knowledge and experience to achieve specific project objectives according to project acceptance criteria, within agreed parameters. Project management has end results that are constrained by a limited time and budget. So, unlike in just management, if in project management we are talking about projects, each of them has requirements such as time and budget for each project to be completed. The following are some examples of project resources (with several requirements):
To create an atomic bomb with an explosive power no less than that of the "Tsar Bomba" within 24 months, without exceeding a budget of $50 million.
by 31 March 2025, to build a dam on the Vistula River, not exceeding 120 million.
to create a desktop app (including conversion path analysis and selection of the best one) for a shoe manufacturer in 8 weeks ($12,000).
to update brand positioning (including distribution of new BTL material) within 12 months, within a budget of $100,000.
Based on the examples above, we can imagine how many steps, administrative tasks and procedures are involved in each project. How many people with the relevant skills are involved in each of them?
So, as mentioned, project management is the application of a process. Or we can say it directly: a project is a process. And the process is called the project management life cycle. On the Internet, you can find a breakdown of this process divided into 3, 4, 5, even 6 and 7 stages. However, the most popular of them belongs to the aforementioned PMI and provides for 5.
As you can see, each phase is a group of tasks, and each phase presents a number of different issues and challenges. It is also worth adding - especially for those who are just starting out as a project manager - that these phases should not always be viewed chronologically. Some elements can be started earlier, while others are an ongoing process throughout the project (such as activity management or - more specifically, the topic of this article - the use of a resource planning tool). And each of them - in some way - is optimized throughout the process. Resource leveling is an important technique used to balance the allocation of resources and avoid over- or under-utilization during the project lifecycle.
Returning to the main topic, in which part of the PM life cycle process is resource utilization important?
Of the five stages of the process, resource utilization is the third stage. It is part of the monitoring and control stage, or more precisely, part of performance management.
Initiation and conception
Planning
Launch and execution
Monitoring and control - it involves checking performance, i.e. resource utilization.
Project completion
For managers, resource utilization is the most valuable and useful performance management indicator and the main indicator of operational efficiency.