You see and hear it all the time, but what does it really mean?
Billable Utilization
Hours Billed to Clients / Person's Capacity = Billable Utilization
If your People bill 32 hours of a 40-hour work week, their billable utilization rate is 80%. Most agencies will segment utilization rates by worker type because individual contributors will typically bill more to clients than managers or leaders who spend more non-billable time on people development and managing the business.
In Parallax
Billable Utilization can be found in Insights > Utilization > Overview
Productive Utilization
% of time billed to clients + budgeted non-billable value-add initiatives = Productive Utilization
Building a new service offering or other intellectual property, doing pro bono work for a client, or deploying new internal tools (like Parallax to improve your services’ KPIs) are all examples of work that is “productive.” Filling out timesheets, attending internal meetings, and admin activities are examples of true non-billable, non-value-added time that tend to bloat services firms as they start to grow, but are usually still necessary to get done.
Why am I seeing different calculations and results between the Utilization Overview report and the Utilization Breakdown report?
They sound interchangeable, but in Parallax they are fundamentally different metrics.
- The Breakdown Report is for assessing your organization's planning--billable vs. nonbillable vs. internal.
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The Overview Report is for assessing how well your organization is executing that plan--are your people working what they were scheduled to.
Projected Utilization shows what we planned to use based on allocations, while Billable Utilization shows what we actually billed based on time entries. Even with identical filters, the calculations are based on different data sources and denominators, so they are not expected to match—and in some cases, actual billable utilization can be higher than projected.
Looking for more on Billable and Productive Utilization? See where this Glossary article originated from, Why digital agencies should strive for 100% productive utilization