How to Build a Strategic Resource Plan Without the Manual Lift of Spreadsheets

Whether you’re still working with spreadsheets or beginning to explore new strategies, this ebook has something for you. We break down complex concepts into simple, actionable steps, offering valuable insights to enhance your competitiveness and drive long-term success.

Meet BigTime Foresight – our new resource management solution. Foresight reduces the effort required to keep track of your firm’s resources and makes it easy to pivot without worrying about what loops will go unclosed.

View our webinar for a walkthrough of how Foresight ensures firms never leave revenue on the table or resources on the bench.

During the webinar, we’ll cover how to:

• Compare project plans to service delivery goals to better understand future demand
• Maximize profitability by visualizing the best resource plan
• Gain clarity into employee utilization from a unified view and prevent turnover
• Increase forecast visibility for the near- and long-term, backed by financial metrics

During the webinar, we’ll cover how to: 

• Gain insight into how your demand pipeline affects resource availability 
• Effectively characterize all supply probability and normalize the assignment roles
• Gauge your progress against benchmarks from peers 

From the webinar, you’ll take away:

• How to mitigate ill timing of a hire or potentially a bad hire
• How to obtain the right resource with the right skills for planned and prospective work
• How to increase employee engagement and reduce attrition on your team

In this article, we’ll explore strategies for success in resource allocation during times of economic uncertainty shared by the Managing Director of the Resource Management Institute, Ryan Childers during a recent webinar.

Keep on reading to discover how to navigate resource allocation to achieve long-term sustainability.

Why Resource Management is Critical to Succeed in Today’s Economic Conditions

In the current economic landscape, effective resource management emerges as a cornerstone of success for professional service firms for the following reasons:

Control Over Costs
Labor costs the most for service providers. Smart resource management directly affects finances, making it vital for financial success.

Enhanced Projects and Service
Resource management is critical to better projects and customer service. It’s about putting the right person with the right skills in the right place at the right time. This leads to successful projects and happy customers.

Smart Resource Use
Resource management means using resources smartly. It’s like a puzzle, fitting the right person and skills where they’re needed. This makes things work well and prevents waste.

Valuing People
Organizations must be strategic about managing their people. Effective resource management means matching tasks with skills, and keeping employees content and productive. This helps the organization succeed overall.

Today’s Reality

For a growing professional services business, the current landscape brings its challenges. Outside factors, such as a downturn in the economy, can magnify existing gaps in crucial financial and resource data, revealing the need for comprehensive visibility into these aspects. This insight becomes increasingly crucial for effective decision-making and maintaining operational resilience, enabling businesses to proactively address vulnerabilities and navigate uncertainties. 

Think about how the factors below have changed the way you do business. 

Traditional Factors: 

• Utilization pressure 
• Capacity constraints
• Maintaining a skilled workforce
• Project profitability
• Employee satisfaction
• Customer satisfaction 

Today’s Factors: 

• Global pandemic 
• Remote workforce 
• The “Great Resignation” 
• Economic downturn 
• Layoffs
• Employee engagement concerns
• AI and machine learning

What Good Resource Management Looks Like

Placing the right person in the right role at the right time brings remarkable benefits. It ensures projects are executed excellently, meeting deadlines, budgets, and maintaining high quality. This approach also helps achieve utilization targets, making the most of resources. Customers end up satisfied due to the expertise being used effectively and employee engagement improves as individuals are aligned with suitable tasks, making work more fulfilling. This synchronization of people, timing, and tasks is the foundation for dependable and successful service delivery.

Good resource management is critical for firms like yours. Read our blog, Why Resource Management is Vital to Growing Your Professional Services Business to learn more.

Effective Resource Management Requires: 

Highly skilled resource managers: Many companies tend to limit resource managers to staffing roles, but this perception falls short of the mark. The role demands individuals who are strategic thinkers equipped with specialized training. Recognizing resource management’s strategic significance empowers these professionals to orchestrate personnel allocation in ways that amplify project success and overall organizational performance.

An agreed enterprise process specific to resource management: Often, large enterprises invest considerable time attempting to create resource management processes from scratch, believing their circumstances are unique. However, the wiser approach is adopting an industry-standard framework that can be tailored to individual needs. This practice not only streamlines resource management but also establishes a common vocabulary and training baseline across the organization.

Effective use of process automation technology (PSA/PPM software): The synergy between process and technology is pivotal. The process should drive the use of technology, not the reverse. Resource managers play a pivotal role in fine-tuning the configuration and utilization of automation tools like Professional Services Automation (PSA) software that includes Resource Management software. This ensures that these tools seamlessly align with the workflow and process requirements, amplifying efficiency and accuracy in resource management.

10 Best Practices for Resource Management

To build a more resilient operational flow for your professional services organization today and in the future, follow RMI’s best practices below. 

1. Use a centralized approach to resource management with transparent visibility enterprise-wide to all available resources
2. Benchmark operational efficiency using 2080 for your utilization denominator. Adjust for different work situations e.g. type of work, vacation standards, etc. by adjusting your targets
3. Implement a documented resource management process with supporting training
4. Focus on the metrics that matter: project performance, utilization, customer, and employee retention/satisfaction
5. Build and operate a Resource Management Office (RMO) to manage resource management for your enterprise 
6. Invest in your resource managers’ training and career paths
7. Let your process requirements drive a use-case-driven selection process for automation tools. Process design should precede PSA/PPM tool selection
8. Leading delivery organizations have a robust capability for capacity planning/forecasting to meet the dynamic needs of the business
9. A properly designed skills database and process will include defining skills by role, implementing regular updates by employees, and conducting proper validation of employee data by management or SMEs
10. Processes should be developed to better balance priorities for project allocations between the need for business efficiency (utilization) with organizational objectives for employee engagement and retention

Resource Management Processes 

What is JITR? 

Comprised of six dynamic processes, each finely tuned to address the intricacies of modern business, JITR redefines how organizations optimize their resources and is ideal for a professional services organization. These processes, outlined below, encapsulate a comprehensive strategy that seamlessly aligns workforce capabilities with project demands, ensuring optimal efficiency, flexibility, and productivity. Used by hundreds of of enterprises worldwide, JITR is a scalable commercial-grade solution for resource management that enables a common taxonomy for resource management.

Skills Inventory

The skills inventory process of JITR is a fundamental building block of effective resource management. A properly designed skills inventory database and process will include defining skills by role, implementing regular updates by employees, and conducting proper validation of employee data.

Keep these questions about employees in mind: 

• Who do we have? 
• What do they know?
• Where are they?
• Are they available?
• What do they want to do?

Putting the Foundation in Place for a Skills Inventory Process

Create a unified and standardized list of roles and skills across various units and departments. This list should be shared and discussed with both supply and demand stakeholders.

Implement technology such as a PSA software to centralize skills data. The Resource Management Office (RMO) should take the lead and oversee the skills database.

Strike a balance in the number of skills required for effective work planning. Categorize and subcategorize skills logically for clarity.

Leverage skills data to facilitate task assignments, capacity planning, and evaluations of team strengths and weaknesses in skill areas.

Establish comprehensive policies and procedures for updating skills to ensure their relevance aligns with evolving business needs.

Three Steps to Improve Forecasting and Capacity Planning

Resource forecasting and capacity planning improves an organization’s ability to proactively meet the needs of our future demand, ensure effective utilization of our team, and has a positive impact on delivering projects on time and on budget.

Step 1: Establish a Process and Baseline

• Define the parameters of inputs and outputs (data capture, analysis, and reporting)
• Determine who needs to be involved and held accountable (see step 3)
• Document your forecasting process and educate those responsible
• Establish a baseline (either new or something historical where you have source data and assumptions documented)

Step 2: Execute the process

• Educate people on the process and the value in doing it
• Put appropriate interlocks in place to support the process
• Get your resource management process enabling technology solutions in place 
• Execute the process and measure accuracy/progress
• Review forecast vs. actuals and re-examine disparities and drivers of those disparities

Step 3: Ensure accountability and continuous improvement

• Consider metrics to measure and hold people accountable
• Use of a forecast accuracy index can be helpful. This can be applied to delivery, sales, and other responsible parties.
• Make continuous improvement a must-have and set progressive targets for forecast improvement and accuracy.

Final Words

While not always easy, proper resource management can be the guiding light professional services firms need to get them through a turbulent economic environment. With the right tools and guidance, you should feel confident in setting up your firm with the right resource management processes in place to come out on top. 

About RMI

The Resource Management Institute (RMI) is dedicated to the advancement of resource and workforce management thought leadership, best practices, and standards.

RMI is currently welcoming new members! Interested in joining? Visit their website to learn more.

About BigTime Software

BigTime provides robust resource management software, streamlining project assignments, aligning skills, and optimizing workforce allocation. Its user-friendly interface offers comprehensive visibility for informed decision-making, enabling efficient operations and successful project outcomes. 

In this blog, we’ll delve into why resource management is important and explore the broader implications it has on the success and sustainability of professional services businesses. Discover how optimizing resources by leveraging resource management software to maximize operational efficiency can give your firm the competitive edge needed to stay ahead of a turbulent economic climate and your competitors. 

What is Resource Management?  

Resource management encompasses the strategic allocation and utilization of an organization’s employees to achieve its goals and objectives. While billable time and money are commonly recognized as key resources, resource management goes beyond these factors. It involves effectively managing the team members responsible for executing a task or project in the most cost-effective and beneficial way for both the firm and its clients.

By optimizing the allocation and utilization of these resources, businesses can enhance their productivity, efficiency, and ultimately, their growth potential.

Defining resource management also involves identifying and prioritizing resource needs, developing strategies to acquire and allocate resources, and monitoring staff utilization to ensure optimal outcomes. This holistic approach to resource management enables businesses to make informed decisions, minimize waste, and maximize the value derived from their resources.

Resource Management Process Challenges

Achieving effective resource management without a dedicated solution presents a myriad of challenges for companies, often resulting in inefficiencies and hindered growth. 

Here are some common processes companies who don’t have a dedicated solution may employ, along with their drawbacks:

Manual spreadsheets: While seemingly straightforward, manual spreadsheets are prone to errors, lack comprehensive visibility, and struggle to accommodate scalability.

Retro-fit project management software: Attempting to repurpose general project management software for resource workflows introduces complexity, making tracking arduous and limiting resource visibility.

Collaboration tools like email and Slack: Relying on communication platforms like email and Slack can lead to information overload, coupled with a lack of centralized data control and limited automation capabilities for seamless scaling.

Ad hoc methods like verbal communication, whiteboards, and sticky notes: These spontaneous methods lack comprehensive visibility and stability, making meaningful reporting challenging.

It becomes evident that specialized resource management solutions have become essential tools for professional services organizations to address these challenges, offering enhanced efficiency, transparency, and informed decision-making.

The Direct Impact of Resource Management on Business Growth 

Ignoring the problem comes with risk. Increasingly, professional services firms are looking for stronger and better-detailed resource planning as they take on new work, look for incremental growth opportunities, and manage teams in unpredictable business environments. 

Organizations that fail to address the resource management process challenges we outlined above are commonly plagued by: 

Inefficient resource allocation: Without resource management, businesses may struggle to identify and allocate the right talent to projects. This can lead to delays, decreased project quality, and dissatisfied clients, ultimately affecting the company’s reputation and potential for repeat business.

Poor employee utilization: A lack of visibility into employee skills and availability can result in the underutilization of key talent. This not only hampers employee morale but also leads to lost revenue opportunities for the business.

Reduced project profitability: Inadequate resource management can lead to project overruns, as projects may take longer than planned or require additional resources to complete. This can erode profit margins and impact the company’s overall financial performance.

Address External Market Conditions of Managing Resources with Confidence

Failure to address the internal challenges around resource planning and management will negatively impact your ability to compete in the markets you choose. The organizations that choose to address these needs will find themselves in a stronger position to take advantage of new market opportunities in the face of:

Increased market competition: In highly competitive industries, efficient resource management becomes a strategic advantage. Businesses must optimize their workforce to deliver projects more swiftly and at a competitive cost to outperform rivals.

Evolving client expectations: Client demands are continually evolving, requiring companies to adapt their resource allocation strategies accordingly. Resource management enables businesses to be more responsive to client needs, fostering stronger client relationships.

Remote work and distributed teams: The rise of remote work and distributed teams necessitates effective resource management to ensure seamless collaboration and coordination across different locations and time zones.

Discover the Benefits of Resource Management for Operations and Finance Teams 

Addressing siloed data and inefficient manual processes through purpose-built resource management software empowers your firm to foster sustainable growth, elevate employee satisfaction, and enhance profitability.

Let’s explore the benefits of resource management more in-depth.

Effective Resource Management Will Optimize Operational Efficiencies and Agility

Enhanced project planning and execution: Effective resource management allows businesses to identify the right talent for each project, matching skills to specific tasks. This improves project planning and ensures that the right people are working on the right projects, leading to higher-quality deliverables and increased client satisfaction.

Improved resource allocation: By having a centralized view of available resources, companies can optimize their resource allocation. This prevents overbooking or underutilization of employees, reducing downtime and idle hours. As a result, teams increase productivity, and project timelines are shortened.

Real-time visibility: Resource management tools provide real-time visibility into project progress and resource availability. Project managers can identify potential bottlenecks or underperforming areas early on, enabling proactive interventions to keep projects on track.

These capabilities dramatically improve the overall agility and adaptability of your operations. Resource demands can change rapidly and resource management enables organizations to quickly reallocate resources based on changing project requirements.

Maximize Financial Flexibility and Foresight With a Resource Management Plan 

Cost optimization: Efficient resource management minimizes resource waste, such as unnecessary overtime, idle time, or hiring external contractors. This leads to cost savings, directly impacting the bottom line and increasing project profitability.

Increased revenue and utilization: Optimal resource allocation leads to higher employee utilization rates, maximizing billable hours. Consequently, this increases revenue potential without requiring additional investments in recruitment or workforce expansion.

Accurate budgeting and forecasting: Clear visibility into resource availability and project timelines allows for more accurate budgeting and forecasting. This reduces the risk of budget overruns, which can negatively impact the company’s financial health.Professional services firms should be striving for at least 12 months of visibility into the financial state of their business — from working capital to existing project plans, forecasted projects, and those in the developing pipeline. Gaining this level of visibility and confidence with resource management software enables businesses to grow in any environment. 

Offering the Best-of-Breed Technology for Resource Management 

We here at BigTime are excited to bring on Primetric, a leading provider of resource management and financial planning software, into our native platform to honor our commitment of helping our customers achieve their desired level of transparency, operational efficiency, and profitable growth. 

The acquisition of Primetric represents an extension of the BigTime platform’s industry-leading features in time tracking, project management, invoicing, and payments. Learn more about why BigTime and Primetric are a natural match. 

Case Study: How Globiox Seamlessly Scaled Their Firm Without Growing Pains

One example of a professional services organization that was able to position itself for sustainable growth after implementing resource management software is Globiox.  

Globiox is a life sciences and pharmaceutical consulting firm that prior to BigTime was using Kantata for a better part of a decade to manage its projects and resources. However, the software required a significant amount of training which the administrative staff could not keep up with.

Vice President, Andrew Rossman, came to BigTime looking for help to improve the evolving needs of their growing firm including: 

• Switching to a virtual work environment as a company that needed online project and resource management tools that accommodated no longer being physically in the office together.
• A solution that would cut down on the administrative time it took to manage their client projects and the resources needed to allocate to specific tasks.
• Cost-effective software that had room for them to grow into without being a heavy investment upfront.  

Conclusion: The Long-Term Benefits of Prioritizing Resource Management for Business Growth 

Resource management is a critical driver of success for professional services businesses. By streamlining talent allocation, optimizing resource utilization, and enhancing project planning, companies can achieve operational excellence and financial growth. As businesses continue to face increased competition and dynamic market demands, resource management and resource forecasting will remain a cornerstone for sustainable growth and success. We hope to be your partner in building that foundation for growth. If you’re interested in a consultation with a member of our team, please follow the button below. 

Frequently Asked Questions About Why Resource Management is Important

What is effective resource management?

Effective resource management involves optimizing the allocation, utilization, and distribution of available resources to achieve maximum efficiency and desired outcomes.

What is an example of good resource management?

A strong example of resource management in professional services is a consulting firm adeptly assigning consultants with the right expertise to client projects, ensuring optimal utilization of skills and timely project delivery.

What is resource management in simple words?

Resource management is the efficient and strategic handling of available materials, personnel, or assets to achieve desired goals while minimizing waste and maximizing productivity.

What is a resource management plan?

A resource management plan outlines the strategy and actions for effectively allocating and utilizing available resources to achieve specific objectives or projects.

Resource management software can help you view and manage resource utilization and allocation, send notices when staff is assigned to a project, and allow you to search the skills available within your organization. It’s pretty easy to see how resource scheduling software can help you better drive the utilization rates of your staff to your current and future projects, thus making the organization more efficient and effective.

Looking for another reason why you should make use of resource management software? When used correctly it can really help reduce employee turnover and improve employee engagement.  

Using Technology to Improve Employee Experience 

Besides issues with one’s manager, people are likely to leave an organization due to a lack of opportunity. Employees today are looking for employment where they can learn and gain experience in newly acquired skills, move to projects they find interesting, and possibly travel.

Now it is unrealistic to think that an employer can be everything to everyone, and I believe that most employees understand the limitations their managers have in defining and managing project teams. What I think is missing in many organizations is the means of giving their employees a voice in the resource decision-making process.

Sure, organizations use strategies such as goal setting and appraisals to have conversations about the desires of an employee. Unless your team is less than a handful of people, when you need to make resourcing decisions you aren’t likely to remember, or even know, the desires of your team members that may have been recorded during these events.

Resource management software allows employees to continually update their skill listings, indicate experience goals, communicate the desire for a new opportunity, and can indicate to those who staff project positions whether they are willing or able to travel — all helping to improve employee retention

Giving your employees an effective means to communicate to you their skills and desires doesn’t guarantee an employee utopia, but giving them an active voice in the resource management process will reduce an employee’s frustrations that often result in them searching out for greener pastures.

Long story short — one needs to add the costs associated with attrition to the reasons why you should have resource management software. 

Optimize Your Team’s Performance with Resource Management Software

BigTime’s resource management software streamlines project planning, allocation, and tracking to optimize team productivity and project success.

By efficiently managing and allocating resources, BigTime ensures that employees are appropriately assigned to projects that align with their skills and interests. The platform also allows for better workload balancing, preventing burnout and stress associated with uneven work distribution.

With resource management software from BigTime, you can: 

• Allocate resources based on skills, experience, and availability to increase billable hours and profitability.
• Monitor resource productivity in real-time to support continuous improvement.
• Match skills and competencies to projects based on detailed staff records.
• Monitor skills gaps and identify training needs to support individual growth and career progression.
• Visualize resource availability, capacity, and utilization with customizable dashboards.
• Improve hiring by forecasting skills requirements for upcoming projects.

BigTime + Primetric will accelerate resource management benefits for the professional services industry with the most comprehensive yet intuitive solution in the market.

In the fast-paced world of professional services, efficiently managing resources is vital to ensure sustainable growth and success. Effective resource management involves optimizing the allocation of talent, skills, and assets to meet project demands. This is a critical function that professional services businesses continue to struggle with.

The need for this has never been more apparent (and never more difficult) than today as the US economy struggles to course-correct amid the churning waters of high inflation, job turnover, and global socioeconomic uncertainty. That is why we here at BigTime are excited to announce that we have made another strategic investment to help our customers achieve their desired levels of transparency, operational efficiency, and profitable growth by acquiring Primetric, a provider of resource management and financial planning software.

Why BigTime and Primetric are a natural match

The acquisition of Primetric represents an extension of the BigTime platform’s industry-leading features in time tracking, project management, invoicing, and payments. The combined capabilities will allow professional services businesses to achieve the financial visibility and operational agility that are the underpinnings of financial strength:

• Both Primetric and BigTime have been focused on providing solutions to mid-market professional services firms that make it easier for them to run their business.
• Professional services businesses will now be able to plan and build their project plans from a single source of truth for project data – from scoping and planning resource allocation all the way through execution, resource utilization, invoicing, and payment.
• CFOs and Finance Managers can make better decisions with more accurate financial forecasts, while Operations Officers and Project Managers can create purpose-built project plans that accelerate the delivery of value to their clients.

These combined capabilities broaden the functional capacity of the BigTime platform, providing new ways to solve more complex workflows from a single solution provider.

What to expect from BigTime with Primetric

This move marks a significant step forward in BigTime’s commitment to meeting the growing list of mission-critical needs for Finance and Operations professionals within the professional services sector. We hope to enable professional services businesses with the resource visibility they need to go beyond basic operational improvements to drive value to their firms, employees, and customers by:

• Optimizing time and skills of resources: Effective resource planning ensures that the right resources are allocated to the right projects at the right time, resulting in successful (and profitable) project execution with higher employee engagement, all while minimizing the risk of employee burnout.
• Minimizing project and financial risk: With Primetric’s capabilities, when resource managers build project plans, that information is automatically available to Finance Managers, facilitating accurate financial forecasts. This key connection ensures that teams match the right resources to the needs of the client to complete projects on time and within budget.
• Maximizing profits: Effective resource management drives more efficient execution of project plans, avoiding cost overruns and unnecessary delays.
  Building a culture of transparency – When a business has clear visibility into key resources and their skills, allocation, and utilization, teams operate more efficiently and effectively to deliver value to their clients.

By streamlining talent allocation, optimizing resource utilization, and enhancing project planning, companies can achieve operational excellence and financial growth.

As businesses continue to face increased competition and dynamic market demands, resource management will remain a cornerstone for sustainable growth and success. We look forward to being the partner that professional services businesses choose to build that foundation for growth.

To learn more or to share our big news view the press release here. 

If you’re interested in joining us on this journey and staying up to date on industry best practices and feature releases, you can sign up for our newsletter here.

What is Billable Utilization?

Billable utilization. Every professional services firm I’ve ever worked with—whether they’re a management consultancy, a digital marketing organization, or a technology implementer—calculates and measures billable utilization. Every professional services manager—from the executive leadership level to delivery managers to department heads—tries to improve billable utilization. Every billable consultant is, at least in part, evaluated and compensated on billable utilization.

The problem is, not everyone has a common understanding of billable utilization or how to calculate it.

Billable Utilization Rate Formula

On the face of it, billable utilization, also known as a utilization calculation or utilization rate, is a simple concept that measures how much time people are spending generating revenue. You take the hours that people are billable, divide by the hours they’re available and come up with a percentage using this billable utilization rate formula:

Other Names for Billable Utilization

When it comes to how to calculate a utilization rate to determine an organization’s billable utilization metrics, other terms you may come across include:

• Utilization calculation
• Employee utilization calculation
• Consultant utilization rate
• Utilization rate formula
• Billable utilization calculation
• Consulting utilization rate
• Effective utilization formula
• Employee utilization rate
• Billable rate
• Utilisation percentage
• Resource utilization in project management

However you refer to it, when you use the formula for utilization rate, the next step is to compare that percentage to other firms, to other departments, to other people, and then (at least in theory) you have a way of measuring performance. This assumes everyone is calculating utilization the same way. 

The trouble is, things are rarely that simple if you really want to use something like professional services billable utilization to drive beneficial behaviors. Here’s what you need to think about when measuring billable utilization for your professional services firm.

Grab your FREE copy of Billable Utilization & Other Metrics That Matter for Professional Services to learn more about billable utilization and actionable strategies for improving it. >>

Billable Utilization Formula: The Numerator

Explanation:

The numerator of the utilization calculation is driven by what behavior you want to encourage. Most services organizations take a very simplistic view and just measure billable utilization… time spent working on billable projects.

A Simple View:

Such a one-dimensional view, however, can sometimes lead to contradictory incentives. Should the less efficient consultant who spends more time on a particular task than a more efficient consultant get more utilization credit?

What about a person who does a bunch of work that you can’t charge the client for because someone else had to redo it? How do you measure people who aren’t working directly on billable projects but rather internal projects, yet are still doing work vital to the organization? Do these situations still benefit from a singular focus on billable utilization as their employee utilization rate?

A Nuanced View:

Many top-performing professional services firms take a more nuanced view, and oftentimes have multiple resource utilization measures. In addition to measuring billable utilization, they may also measure:

• Chargeable utilization: measures time spent on billable projects, but only billable time that actually generates revenue
• Productive utilization: measures the number of hours spent on non-billable work deemed vital to the ongoing business of the firm, such as business development or product development
• Total utilization: measures overall utilization, for example, to make sure someone in the finance department isn’t consistently logging 100-hour weeks

Billable Utilization Formula: The Denominator

Explanation:

The denominator of the resource utilization rate is driven by how the organization defines each person’s availability. Like the numerator, how an organization calculates the denominator may also drive behavior.

A Simple View:

For example, people are generally not working on billable projects or generating revenue during company holidays or sick time. Given that, the decision of whether or not to count those hours as available hours in the denominator affects the utilization calculation. 

If people feel that taking sick time will count against them when computing their utilization, they may be less likely to stay in bed when they’re ill. In addition, since the summer months and the holidays are oftentimes peak times for vacation, including time off and holidays in the denominator can lead to variability due to seasonal effects in utilization. 

As a result, there are some advantages to keeping time away from the office out of the calculation.

A Nuanced View:

Like with the numerator, many top-performing firms will also take a more nuanced view of the utilization calculation’s denominator, depending on what they are trying to measure. 

They may want a better understanding of the capacity of their team. In other words, how much productivity are they getting out of current staff without adding or removing people from the organization? 

On the other hand, they may want an understanding of the efficiency of their labor investment. In other words, how much productivity is the company receiving in comparison to what they’re paying for? That difference may be non-existent if the entire staff is salaried. However, when you start factoring in subcontractors paid on an hourly basis or non-exempt employees eligible for overtime, it’s a whole different story. 

As employee billable utilization rates improve, benefits include higher on-time project delivery rates, lower project overruns, and more executive real-time visibility. (Source: 2022 SPI Research)

Professional Services Utilization Benchmarks

Explanation:

Once a firm has settled on an approach to calculate a utilization percentage, the next step is to determine what a reasonable utilization target is. Or, perhaps I should say what its approaches are and what reasonable utilization targets are—both of which may vary depending on the firm’s needs and goals.

If you don’t know better, you may constantly strive toward the 100% utilization rate mark. However, a “perfect” utilization percentage suggests that employees are overworked and may have little to no job satisfaction. What if the utilization rate is above 100%? Then your organization is guilty of poor resource allocation, management, and planning.

A Simple View:

Many organizations aim for utilization rates around 80% and will measure billable utilization against a 2,000 hour per year target when benchmarking themselves against the market. It’s simple, it’s consistent, it doesn’t require a ton of thought, and it’s easily comparable to industry benchmarks like the SPI Benchmark Survey.  However, it’s also important to consider the demands of clients and the nature of the job.

A Nuanced View:

Also, companies may take a slightly more nuanced, but still straightforward measure for individual team members in the form of bonus calculations or metrics on individual dashboards. This measure is often utilization-based on productive hours divided by working hours minus holidays and time off. This can then be compared to a minimum productive utilization target.

Minimum and Maximum Utilization Targets

In addition, more sophisticated firms may use both a minimum and a maximum utilization target to improve the discipline of professional services resource management. Maximum targets may be used to help control overutilization, which may lead to unwanted employee attrition as described in this Forbes article on consulting burnout. Maximum billable or chargeable targets can also help ensure partially-billable managers set aside sufficient time for other activities such as staff development or account management.

In Summary

To sum it all up, a fairly simple notion of determining how busy people are is more nuanced than meets the eye, depending on what the organization is looking to accomplish. 

Firms should consciously and deliberately decide which assumptions and approaches to use and understand what behaviors those decisions are likely to drive. Everyone who is responsible for measuring and optimizing resource utilization rates needs to understand the assumptions and ensure that the approaches are used consistently with their intent. 

One of the most important aspects of measuring and managing utilization is being able to do it easily and consistently. Professional Services Automation (PSA) Software can help consulting firms do this, resulting in a higher utilization rate of 7 percentage points. This translates into improved billable utilization of nearly a whole month per billable employee per year.

PSA solutions yield several core benefits to professional services organizations, but most executives only need to look to the relative 11% (from 68.1% to 75.3%) increase in billable utilization as a primary reason to select PSA. (Source: 2022 SPI Research)

Finally, it’s important to understand that the different methods of calculating professional services billable utilization are not all mutually exclusive. Instead, they can be used in concert with one another. It’s also critical to know that optimizing utilization in isolation can actually be detrimental to the health of a services organization, and needs to be done in concert with all the other KPIs in the business.

To learn more about these other metrics, download our white paper, Metrics that Matter for Professional Services, or read more about billable utilization in our post about how optimal resource utilization can fuel growth. And don’t forget to download the SPI Research for benchmarking targets.

The price for poor resource allocation and management and utilization rate is getting costlier for businesses by the day, from hiring costs to clients dissatisfaction and contract termination. BigTime allows project managers to handle communication, resource management, and invoicing financials within the same comprehensive platform. Request a demo to learn more today!

Frequently Asked Questions About Billable Utilization

What is billable utilization?

Billable utilization measures the percentage of available hours that employees spend generating revenue for project-based services. The utilization rate formula is defined as: Billable Utilization % = (Number of Billable Hours / Number of Available Hours) X 100%. It’s one of the most important Key Performance Indicators (KPIs) measured by almost all professional services firms.

What is the billable utilization rate formula?

The billable utilization rate is calculated by this formula: Billable Utilization % = (Number of Hours People are Billable / Number of Hours People are Available) X 100%

What is utilization rate?

In simple terms, the utilization rate is the portion of an employee’s total working hours that is productive. 

What is chargeable utilization?

Chargeable utilization is slightly different than billable utilization in that it does exactly what it says. It takes the work and hours that are actually chargeable to a customer, telling you what percentage of total hours billed contributes to your service organization’s revenue.

What is productive utilization?

Productive utilization measures the number of hours spent on non-billable work deemed vital to the ongoing business of the firm. It is a much more holistic measure that thinks about all of the work in a professional services organization, not just billable or chargeable. Not all good work is work that’s delivered to customers. It’s work that can be delivered internally that helps advance our business overall.

What is the meaning of utilization rate?

Billable utilization rate is essentially a measurement of the percentage of available time spent working on billable projects. It’s one of the most important Key Performance Indicators (KPIs) measured by almost all professional services firms.

How do you calculate utilization?

Utilization in professional services measures how much time people spend generating revenue. The utilization formula is: hours people are billable divided by the hours people are available, then multiplied by 100 to come up with a percentage.

What is utilization in professional services?

In the world of professional services, utilization is a measure of how efficiently you are using your resources. It can be thought of as a ratio that compares the amount of time you spend working on client projects with the amount of time you have available to do so.

How can billable utilization be improved?

According to the most recent Professional Services Maturity Benchmark report by SPI Research, the following factors have a direct correlation with improved billable utilization:

• Providing good leadership direction
• Utilizing effective communication
• Implementing a PSA tool
• Executing very effective service marketing
• Increasing the deal pipeline
• Limiting service discounts given
• Decreasing the amount of time it takes to recruit and hire
• Improving on-time delivery
• Developing effective estimating and process review processes

Why is billable utilization important?

Billable utilization is important to a professional services organization because it measures how well the business is using its resources and helps ensure revenue targets can be met.

Why is the calculation of utilization rate important?

Utilization percentage calculation helps you carefully evaluate internal resources allocation per project and check if the amount charged is profitable to the business. Calculating utilization rates also helps you analyze the individual approaches to job execution methods and optimize them until they are efficient.

What is a billable utilization example?

Billable utilization percentage can be calculated by dividing total productive hours by total available hours, then multiplied by 100. For example, if an employee’s productive and billable time in a 40-hour week is 26 hours, the employee utilization rate is 65% ((26/40) x 100).  

In this post, we’ll dig into types of resource plans in professional services and three obstacles to overcome on your way to truly effective resource planning in project management. As anyone who has ever managed projects can tell you, the right resources at the right time is critical to project success and it starts with planning resources for your project the right way.

What is a Resource Plan?

What Are the Two Types of Resource Plans in Services Firms?

1. Resource Management Plans – This type of resource plan takes a firm-wide look at the resources available in the delivery organization. Essentially, this type of resource plan encompasses the “supply” side of a delivery organization. You may find resource management plan examples organized by practice areas and/or competencies. This view of the workforce may include skills and certifications, and could be managed by HR or a dedicated Resource Manager or department.
2. Project Management Resource Plan – In contrast, a project management resource plan looks at the needs of a given project and what resources are required to fulfill and deliver against those needs. An initial project management resource plan might identify the types of resources needed by title or skill, an estimate of the time required to do their work and probably key dates when the resource would need to be working on the project and delivering. These placeholders would then be filled with the staff assigned to the project.

For the sake of this post, we’re going to look more closely into project management resource planning and how to avoid some common pitfalls.

Three Major Hurdles to an Effective Project Management Resource Plan

Planning Resources Challenge #1: Failing to Gain Project Consensus

Properly defining and communicating the project scope is the first key hurdle to overcome on your way to more effective resource planning. Of course, gaining buy-off on project scope from your customer and project acceptor is the ultimate goal to the start of any successful project.

Ideally, the project manager (PM) charged with delivery has had input into the project scope prior to the final contract being signed. If not, starting with “What did we sell?” will accomplish a baseline set of assumptions from which to operate.

Keep in mind that planning resources in project management is about skills and timing but also cost. What you can “afford” for a team is determined by the contracted project budget and also the target profit margin. A successful resource plan for your project will satisfy both measures. Syncing your project assumptions with Finance early on is a great way to ensure everything from billing, reporting and even revenue recognition will go smoothly and according to plan.

Gaining consensus means every stakeholder knows “what good looks like” for them and goals are clearly communicated across the project team.

Resource Planning Challenge #2: Ignoring Risk Factors

Failure to identify gaps in resource plans, scope or risk associated with delivery will affect much more than budget and timing.  Too often, a project resource plan is clouded by overly ambitious resource requests, resulting in staff being over scheduled and unable to complete tasks in a timely fashion.

Creating a realistic resource plan isn’t just the PM’s job. The Resource Management Institute (RMI) surveyed resource managers and found that fully 84% of firms see forecasting and capacity planning as their top resource management challenge. Second to that was managing an inventory of skills. Understanding if your organization is accurately predicting employee utilization helps you understand the risk to your project resource plan. If there is risk that a given resource might be overscheduled, not qualified or simply out on extended leave, get a plan in place to adjust accordingly.

By addressing the many workforce management challenges related to project and staff planning at the start of a project, managers can understand the true potential risks associated with delivery.

Source: RMI Survey Series, Inhibitors to Effective Resource Management, 2022

Planning Resources Challenge #3: Focusing on the Wrong Measurements

Measuring progress against timeline, budget and scope are often what most project managers prioritize, and rightly so. On time, on budget and to expectations are the foundational metrics of great delivery and key to customer success. When considering your resource plan and the staff you will manage on your project, there are other professional services KPIs to put in place to give you leading and lagging success indicators.

Consider billable utilization. Projectmanagement.com cites overallocated resources as the #2 reason (behind scope creep) that projects fail.

A historical measure of billable utilization will provide insights into project burn rate, but also how hard your resources are working. Ideally every project manager would have visibility into total billable utilization by resource (not just tied to their projects) to understand what else their team is working on, and how hard. Looking at forecasted utilization will also provide insight into availability should your project scope shift. As it will inevitably do.

Overcoming Hurdles With Resource Planning Software Tools

Systems like a professional services automation (PSA) solution provide resource planning software tools that allow these views into projects and people for utilization and other measures. These views are critical to keeping teams on track and resource planning accurate. But not every measure is quantifiable in a system. Qualitative measures like whether the work your team is doing is what they want to do, or feeds their career ambitions, are also good to capture.

Ultimately the project manager needs to understand all three hurdles, and surmount them, in order to truly create a project management resource plan that will stand the test of the duration of the project. Certainly things will change, and the longer the project the more certain that becomes. But starting from a plan that syncs with resource managers, stakeholders and the team itself will get everyone started on solid footing.

Resource Plan Summary

In summary, ensuring your professional services organization creates an effective project management resource plan relies on many factors, including the avoidance of these three common resource planning challenges:

1. Failing to gain project consensus
2. Ignoring risk factors
3. Focusing on the wrong measurements

By jumping major hurdles around setting project scope, assessing blind spots and risk, and putting the right measures in place, including forward-looking staff planning, project managers will achieve improved results and greater project success. If your organization is looking for ways to more efficiently create project resource plans and overcome these hurdles, reach out to us to get a resource planning demo.

Frequently Asked Questions About Resource Plans

What is resource planning in project management?

A resource plan in project management is the process of assigning people to projects by identifying the type of skills, availability, resource profiles and interests, and staff needed to complete a project on time and on budget.

What is resource planning with an example?

You may find resource management plan examples organized by practice areas and/or competencies. This view of the workforce may include skills and certifications, and could be managed by HR or a dedicated Resource Manager or department.

What are three resource planning challenges?

1. Failing to Gain Project Consensus – Properly defining and communicating the project scope is the first key hurdle to overcome on your way to more effective resource planning.
2. Ignoring Risk Factors – Failure to identify gaps in resource plans, scope or risk associated with delivery will affect much more than budget and timing.
3. Focusing on the Wrong Measurements – When considering your resource plan and the staff you will manage on your project, there are other professional services KPIs aside from measuring progress against timeline, budget and scope to put in place to give you leading and lagging success indicators.

Why is a resource management plan important?

Resource management plans are important because having the right resources at the right time is critical to project success, and it starts with effectively planning resources for your project.

What are the 2 types of resource plans in project management?

The two types of resource plans in project management include:

1. Resource Management Plans – This type of resource plan takes a firm-wide look at the resources available in the delivery organization.
2. Project Management Resource Plan – In contrast, a project management resource plan looks at the needs of a given project and what resources are required to fulfill and deliver against those needs.