By Ryan Kramer, founder of Wisegrid. Last updated November 2026.
Utilization rate is the share of a person’s available hours spent on billable project work. The formula is billable hours divided by available hours, times 100. An engineer who bills 30 of 40 available hours has a 75% utilization rate. Firms track it by person, role and month to see who is overbooked and whether fees are covering salaries.
The formula is simple. The problems start with what counts as “available,” and with a firm-wide average that hides the people who are burning out. This guide covers the formula, a worked team example, how to set targets by role, and the mistakes that make the number misleading.
Key takeaways
– Utilization = billable hours ÷ available hours × 100. Decide whether available hours include vacation and holidays, write it down, and never change it mid-year.
– Set targets by role, from your own fee math. A single firm-wide target is too high for principals and too low for production staff.
– Over 100% on the plan is overbooking, not productivity.
– Track planned utilization for the weeks ahead, not only actual utilization from last month’s timesheets.
What is utilization rate?
Billable utilization measures how much of a person’s time goes to work you can bill a client for. Some firms also track total utilization, which counts any project hours, billable or not, such as proposal writing or extra hours on a fixed-fee job.
For an engineering or architecture firm, billable utilization is the number that connects staffing to revenue. If it falls, fees stop covering salaries and overhead, even when everyone feels busy. It is closely linked to full-time equivalent planning; our guide what is FTE explains how to count capacity in the first place.
What is the utilization rate formula?
Utilization % = billable hours ÷ available hours × 100
The harder question is which hours count. Use this table and keep it at the top of your sheet:
| Type of hour | Billable | Available |
|---|---|---|
| Client work billed to a fee | Yes | Yes |
| Extra work on a fixed fee | No | Yes |
| Proposals and sales | No | Yes |
| Training and internal meetings | No | Yes |
| Vacation and holidays | No | Your choice |
That last row matters more than it looks. Take an engineer with 2,080 paid hours a year, 160 hours of vacation and holidays, and 1,500 billable hours. Measured against all paid hours, utilization is 72%. Measured against hours actually available to work, it is 78%. Same person, same year. Pick one definition and write it down.
Utilization example: a six-person team
One four-week period for a small civil engineering group, in hours. Available hours are 160 per person, minus vacation. The targets are examples, not industry benchmarks. Bold rows are more than 5 points away from target.
| Person and role | Available | Billable | Utilization | Target |
|---|---|---|---|---|
| A. Patel, principal | 160 | 64 | 40% | 45% |
| M. Chen, senior engineer | 160 | 120 | 75% | 75% |
| J. Ortiz, project engineer | 152 | 136 | 89% | 85% |
| R. Brooks, project engineer | 160 | 104 | 65% | 85% |
| S. Kim, drafter | 160 | 148 | 93% | 85% |
| L. Novak, coordinator | 160 | 48 | 30% | 40% |
| Team total | 952 | 620 | 65% |
What this table tells the firm:
- The team average of 65% hides the real story. One person is overbooked and another has spare time in the same month.
- Kim is 8 points over target at 93%, and Brooks is 20 points under at 65%. Before anyone talks about hiring, find out why Brooks has spare time and whether some work waiting on Kim can move.
- The principal is under target because of proposal work. That is a business development choice, not a utilization problem.
How to set utilization targets by role
A target should come from what each role must bill to cover its cost. The break-even formula:
Break-even utilization = yearly cost (salary × overhead factor) ÷ (billing rate × available hours)
| Step | Example |
|---|---|
| Salary | $95,000 |
| Yearly cost (salary × 1.6 overhead) | $152,000 |
| Billing rate × available hours | $135 × 1,920 = $259,200 |
| Break-even utilization | 59% ($152,000 ÷ $259,200) |
| With a 15% profit target | 67% ($174,800 ÷ $259,200) |
Run the same math for each role. Principals have higher billing rates but spend more time selling, so their targets are lower. Production roles have lower rates and need higher utilization to cover their cost.
Planned vs actual utilization
Actual utilization, from timesheets, tells you what happened last month. Planned utilization, from the resource plan, tells you who is overbooked next month while there is still time to fix it. Track both side by side, week by week.
Our resource planning template and capacity planning guide cover the planning side. The timesheet template captures actual hours, and the free utilization rate calculator does the quick math for one person.
Common utilization mistakes
- Only reporting the firm-wide average. It hides both burnout and idle time.
- Changing the definition of available hours. Your trend line stops meaning anything.
- Looking only at last month. By the time a timesheet shows 110%, the deadline has already slipped.
- Rewarding numbers over 100%. Long periods of overbooking show up later as people leaving and work being redone.
- Counting written-off hours as billable. Utilization looks healthy while the fee is being lost. Track how much of the billable time you actually invoice next to it.
From spreadsheet to live utilization
Utilization in a spreadsheet usually means timesheets in one file, the resource plan in another, and a monthly report built by hand from both. By the time it is done, the month is over.
In Wisegrid, timesheet rows and the resource plan live in the same workspace. Utilization per person and per week updates on its own, anyone over target turns amber, and project managers can view the summary for free. The same sheet feeds a project status report, so the weekly update shows staffing next to deadlines.
FAQ
What is a good utilization rate for engineers?
It depends on the role and how you charge fees. Work out the break-even utilization for each role with the formula above, then add your profit target. Production roles usually need a much higher rate than principals.
What is the difference between utilization and billable utilization?
Billable utilization counts only hours you can bill. Total utilization counts any project hours, billable or not. When firms say “utilization,” they usually mean billable.
Can utilization be over 100%?
On a plan, yes. It means someone is booked for more hours than they have. On actual timesheets, it means overtime. Either way it is a warning, not a goal.
How often should utilization be measured?
Check planned utilization every week and actual utilization every month. The weekly check is where you can still change the result.
What is the difference between utilization and realization?
Utilization measures how much time is billable. Realization measures how much of that billable value you actually invoice or collect. High utilization with low realization means work is being written off.
See who is overbooked before the deadline does
Put timesheets and the resource plan in one Wisegrid workspace and let project managers view it for free. Start with the resource planning template, the capacity planning template and the free utilization rate calculator.
Start free → · Resource planning template → · Capacity planning guide →
About the author Ryan Kramer is the founder of Wisegrid, a higher-capacity work management grid built around a 1,000,000-cell-per-sheet limit, date-triggered automHow engineering and architecture firms calculate utilization rate: the formula, a team example, break-even targets by role, and mistakes to avoid.tions with run history, and cross-sheet reporting. He writes about the project management documents teams actually keep updated. More from Ryan →