In my previous agency, a core goal of ours was to improve utilization. The aim was to increase profit by improving productivity.
When I joined the agency, people were only tracking time against projects. We could see their resource utilization rate – which showed us the team’s working hours as a % of their total hours.
The truth was, our utilization rates looked poor across the board.
The problem with only tracking project time was that it was hard to tell if less hours were logged because of incomplete timesheets, not enough work, or internal projects. It was clear that we needed to get serious about tracking all of our time.
To understand what people were working on, we created billable vs non-billable activities. The team started tracking their time against either billable (client projects) or non-billable (internal) work.
This highlighted a bigger problem. We expected people to start logging more time on projects with the push for accuracy and completion. But some were still spending just 40% of their time on billable work.
It was clear we had to increase billable activity. So we started measuring our billable utilization rates – the amount of time people spent on billable work as a % of their total availability.
We set a target of 80% billable utilization for doers – designers & developers, 50% for project managers, and 30% for directors. Making sure we allowed time for non-billable activities, such as our own marketing, working on pitches, and internal meetings.
Setting targets allowed us to measure and improve performance. Doers had their work assigned by project managers. Project managers and directors were responsible for meeting their targets and managing their team’s time.
Using billable utilization rates also gave us visibility on whether we had capacity to take on more work, if we needed to drive urgent sales activity, or hire more people. This allowed us to be proactive and make informed decisions.
Improving our billable utilization also had a positive impact on profit. With billable work being prioritized, and time better utilized, we could better plan how and when to take on additional client projects.
To learn more about utilization, check out the resources section below, which includes a recent podcast with Ryan McNamara.
Until next time,
Harv Nagra
Ops consultant & former agency ops director
Learn more about Utilization
🎧 The Handbook: The Agency Operations Podcast
In this episode with Ryan McNamara, we talk about the importance of data and highlight key metrics – including utilization. Ryan shares three areas to focus on for growth – financial literacy, performance development, and operational efficiency.
💡 Blog Post
Read how to improve your billable utilization.
🔎 Help Center
Here’s how to use utilization reports in Scoro.
📕 Case Study
Learn how this agency increased billable utilization with Scoro.
