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Glossary · Term 002

Utilization

Utilization is the share of an employee’s defined available work time charged to client project work.

Definition

Utilization compares time charged to project work with a defined pool of available employee hours. A firm might calculate it as project hours divided by working hours, but firms set the denominator differently: some remove holidays, leave, or training, while others include some of those hours. They also differ on which project tasks count, such as whether quality review or project administration qualifies. Owners may view utilization by person, team, office, or firm and over a week, month, or longer period. The measure can help show workload patterns and available capacity, but it does not tell whether work is priced well, collected, or profitable. High or low results need context such as role, project phase, leave, quality, and workload sustainability. Utilization is not the same as realization, which compares fees earned or collected with a value basis, and it is not a direct measure of employee performance. See what utilization is and how an owner can use it and utilization and profit.

How owners use it

  • Compare project hours with defined available hours by role or team to understand delivery capacity.
  • Review utilization alongside project margins and workload patterns when assessing staffing needs.
  • Example: An employee charges 30 project hours out of 40 available hours, so utilization is 30 / 40 = 75%.
  • State whether leave, holidays, training, and nonbillable project tasks are included before comparing periods.
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