How is utilisation rate calculated?

Billable or productive hours divided by total available hours, expressed as a percentage. Available hours should exclude leave and holidays, or the rate will look lower than it is.

What is a good utilisation rate?

There is no single benchmark; it depends on the role, since managers and support staff carry non-billable work. A rate that stays very high for long periods can signal overload rather than efficiency.

How is utilisation different from productivity?

Utilisation measures how much available time went on productive or billable work; productivity measures what that time produced. A team can be fully utilised and still have low output.

Where does utilisation data come from?

Mostly from approved timesheets, with available hours taken from attendance and the leave calendar. Unapproved or late timesheets make the rate unreliable for the period.

HR & payroll glossary

Utilisation rate

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Definition

Billable hours as a share of available hours over a period, used mainly in services firms. Available hours should exclude leave and holidays, and the definition of billable has to be agreed, otherwise two teams' rates cannot be compared.

In practice

Services firms usually review utilisation monthly, once timesheets for the month are approved, and they look at it by person, practice and grade. Each grade normally has a different target, because a senior manager carries sales and review work that a junior consultant does not.

As an example, an analyst with 168 working hours in a month takes 16 hours of leave and a public holiday of 8 hours, leaving 144 available. With 115 billable hours, utilisation is 115 / 144, or about 80%. Dividing by 168 instead gives about 68% and misstates the month.

Utilisation also shows bench time. When a person's rate drops for several months running, the question is whether they lack a project rather than whether they are working, and the answer belongs in resourcing and workforce planning, not in a performance review on its own.

Treated in depthProfessional Services

FAQs

Utilisation rate: common questions

Billable or productive hours divided by total available hours, expressed as a percentage. Available hours should exclude leave and holidays, or the rate will look lower than it is.
There is no single benchmark; it depends on the role, since managers and support staff carry non-billable work. A rate that stays very high for long periods can signal overload rather than efficiency.
Utilisation measures how much available time went on productive or billable work; productivity measures what that time produced. A team can be fully utilised and still have low output.
Mostly from approved timesheets, with available hours taken from attendance and the leave calendar. Unapproved or late timesheets make the rate unreliable for the period.

HR & Payroll Glossary

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