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Human Resource Utilization Rate?

By bittoo_m ·
I am a project manager at a (software :)) consultancy. We're expected by the senior management and clients to have an average human resource utilization rate of 70%.

Now, we're also going in for a CMM assessment soon. Along the journey we've ended up adding many processes needed for compliance. From a customer perspective, this has resulted in a reduced utilization rate!

So my question: Is 70% a fair expectation for utilization? We're a mid sized company (about 100 technical people) - any opinions about a similar sized company from associates of or customers of a similar company will be great.

I've read reports about some companies in India having utilization as high as 85-90%! Any ideas on how this can be managed?

Thanks a ton for your help!
BittooM

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by jeanneleez In reply to Human Resource Utilizatio ...

How far below 70% are you? Will you lose your certification? You may want to identify the return on investment by identifying measures that define the cost of quality. These measures include the cost of correcting problems, the cost of identifying problems, the cost of preventing problems, and the cost of correctly developing software.

Companies that complete projects that are outsourced (let's say India) are focused on the single outcome. I have found, in my experience, that the outsourcer need to incur the costs of compliance to any standards regardless of the system. And then you pay the outsourcing company again or you fix it internally for compliance. That's how an Indian company can boast of 85% utlization rates.

How long have you been using this methodology?
If this is not your first year, you may want to show a historical progression...
Not knowing enough about your particular situation, you want to showcase the cost of rework decreases, translated to savings of $XXXX over a one-year period based on specific project costs. Or any of the other successful outcomes (if any) as your bottom line.

You may want to introduce the issues that kept you from acheiving this number this year, the specific compliance processes and their cost to utilization this year. This may help you define your plan for next year, showing how, focusing on the ulization rate, your group will meet or beat the 70% rating.

If you can identify the problem, develop a plan to fix it, make it happen in the time alloted, you should be okay.

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by RealGem In reply to Human Resource Utilizatio ...

I think that 70% is very reasonable; that leaves a lot of time for training, office meetings, and all those other necessaries. Companies that are hitting 95% utilization, by the way, are not investing very heavily in their people. Instead, they are just milking them until their skills are stale.

Well, sounds like something has to give. Here are some options:
- compliance processes that are job-specific should be billed to the client and counted as utilization.
- execs need to determine which is more important: utilization or CMM compliance.

You must make sure that you escalate this immediately if you see a problem. But be sure to support your concerns with real data from your project.

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by DC_GUY In reply to Human Resource Utilizatio ...

Our company is larger, with an IT staff closer to 1,000. That should make our "utilization rate" lower because larger staffs have more meetings with longer walks between them, and bigger companies have more charity drives and talent shows. But our target is 75%, and we're not quite at CMM Level Two.

On the official reports we usually come very close to 75%. But I suspect that in real life the rate is much higher. Like most American firms, we pretend that nobody works overtime. Now that we have MS project tracking time separately from the payroll system, that is expected to change.

Where did the phrase "human resource utilization" come from??? That is so ugly!!! I never liked being called a "resource," it makes me sound like a roll of toilet paper, something interchangeable. I much preferred "personnel" to "human resources." "Utilization" adds to the feeling of depersonalization. You "utilize" electricity and ink, not people.

If you want to improve the performance of your staff, try thinking of them as people rather than commodities!

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by bittoo_m In reply to

Thanks for sharing your experience.
I personally do not use the phrase 'HR' for reasons very similar to yours, but cannot get the dept. to change their name! And the management always wants people to 'stretch' just as they want the equipment to have a higher 'uptime'.
We may not like it, but we do end up working in the same environment...!

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by bittoo_m In reply to Human Resource Utilizatio ...

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