Utilization in consulting is a crucial metric, because management needs to understand how much time staff members are spending doing billable tasks versus non-billable tasks. Billable utilization and average hourly rate are mission-critical for the financial health of a company.
Many organizations distinguish between Billable Utilization and Productive Utilization (overall utilization including marketing, sales, general management, training, internal projects, etc.)
Utilization is key to overall organizational profitability and productivity. Utilization should be examined in conjunction with overallrevenueandprofitper person. Usually, the biggest driver of capacity utilization is the maturity of the business development process (marketing, sales, recurring revenue).
1 billable team member of a consulting firm worked on a project for 1 year. This represents 1,450 hours billed. Assuming 52 working weeks and 10 holidays in 1 year (2,000 hours) the annual employee utilization in this case is 72.5%.
We recommend tracking utilization at the granular level and over time. For example, utilization could go down by 5% during the year, which is significant for a company with 30 employees (30 × 2,000 × 0.05 = 3,000 hours).
Utilization measurement helps to answer the following questions:
Who are the most productive employees?
Which person might burned out and needed a vocation?
Which department has better productivity?
Metric.aiprovides the best view on utilization through all possible angles: overall company utilization, by clients, employees, departments, companies, offices, and roles.