Your team is busy. Are your projects making money?
Ask the owner of a consultancy, design studio or engineering firm how things are going and you will often hear the same answer: “We’re flat out.”
The team is working hard. Diaries are full. There is plenty of work coming in.
Then comes the quieter part of the conversation: “I just thought we’d have more to show for it.”
That is worth investigating before you take on more work or hire another person.
I would start with three questions. How much time is going into client work? How much are you charging for that time? What is left after paying for the people doing it?
Utilisation helps answer the first question. It cannot answer all three.
What utilisation actually measures
Utilisation is the share of available working time spent on client work.
If someone has 1,600 available hours in a year and records 1,120 hours against client projects, their utilisation is 70%.
The calculation is straightforward. The definition needs more care.
Decide how you treat annual leave, bank holidays, training and other commitments, then apply the same rules consistently. Otherwise, you can spend a meeting discussing a change in the percentage that is really a change in how someone calculated it.
Used properly, utilisation helps you see who has room for more work and who is stretched.
It does not tell you whether the work pays enough.
A full timesheet can hide an expensive problem
Suppose you agree a fixed fee for a project you expect to take 200 hours.
It takes 300.
Those extra 100 hours still appear as client work. Utilisation may look excellent, even though you have no extra fee to cover the extra time.
The same problem can show up in other ways:
- A director spends days on work that a less expensive colleague could handle.
- A client keeps asking for small additions that nobody prices.
- The team repeats work because the brief was unclear.
- A quote leaves no room for the things that rarely go exactly to plan.
Everyone can be working hard while the project earns very little.
Before asking people to be more productive, check what is using their time.
How much of that time are you getting paid for?
Accountants often call this realisation. The name is less useful than the question behind it.
Compare the fee you charge with the value of the hours recorded at your usual charge-out rates.
If those hours would normally be worth £100,000 and you invoice £75,000, your realisation is 75%.
That gap needs an explanation. It might reflect an agreed discount, an overrun, extra work you did not charge for or rates that no longer fit the work.
Read it alongside utilisation:
| What you see | What to investigate |
|---|---|
| High utilisation and high realisation | Whether fees still leave enough after delivery costs |
| High utilisation and low realisation | Overruns, discounts and unpaid extras |
| Low utilisation and high realisation | Gaps in the workload or planned time away from delivery |
| Low utilisation and low realisation | Both the amount of work available and what you earn from it |
These are starting points for a conversation. You still need to understand what happened on the projects.
What 120 extra hours can cost
Take a project with an agreed fee of £30,000.
You budget for 400 hours. The average staff cost is £45 an hour.
Here is what happens if the project takes 520 hours instead:
| Original budget | Actual result | |
|---|---|---|
| Client fee | £30,000 | £30,000 |
| Hours worked | 400 | 520 |
| Staff cost | £18,000 | £23,400 |
| Amount left after staff cost | £12,000 | £6,600 |
| Share of fee left after staff cost | 40% | 22% |
The team worked another 120 hours. The business absorbed another £5,400 in staff costs.
That leaves £6,600 to contribute towards software, premises, insurance and other running costs, before any final profit.
Meanwhile, the utilisation report may suggest that the team had a very productive month.
This is why I would never look at that report on its own. Read it next to project profit margin.
Give different roles different expectations
A single utilisation target for everyone is easy to put in a spreadsheet. It is harder to justify in practice.
A junior colleague may spend most of their week delivering client work. A team leader also needs time to review it, coach people and plan what comes next.
A director may need to win work, manage relationships and make decisions that keep the business running.
Those responsibilities take time. Setting targets as though they do not exist will not make them disappear.
Start with what each role needs to achieve. Then work out a reasonable expectation for client hours.
Leave room for training, leave and the occasional difficult week. A plan that requires every available hour to go perfectly is already under pressure.
Check projects while you can still change the outcome
A report after the project finishes can explain where the money went. A short review during delivery gives you a chance to do something about it.
Each week, check four things:
- How many hours have we used against the allowance for this stage?
- Are the right people doing the work?
- How much of the fee has the work used up?
- How many hours do we now expect to need to finish?
That last question matters. Hours already spent tell you what happened. An honest estimate of the work remaining helps you decide what to do next.
You might need to clarify the brief, agree a fee for additional work, change who does a task or resolve a delay with the client.
The earlier you spot the problem, the more options you usually have.
Make it easy to record time honestly
Time records are useful only if people trust how you will use them.
If recording an overrun leads to blame, people have a reason to hide it. If every conversation is about hitting a utilisation target, the records may start reflecting the target rather than the work.
Make room for clear categories, including extra client requests, corrections and work outside the agreed scope.
Then use the information to improve decisions.
If the same type of project always takes longer than quoted, revisit the estimate. If senior people repeatedly step in, look at the brief, skills and review process.
The spreadsheet can show a pattern. You still need to ask why it is there.
Use what you learn on the next quote
Completed projects should make future estimates better.
Compare the hours you allowed with the hours you used. Look for patterns by project type, client and stage of work.
Perhaps revisions consistently take twice as long as expected. Perhaps client approvals create repeated stops and starts. Perhaps a service needs more senior input than the price allows.
Build those findings into the next proposal.
Otherwise, you risk getting very good at recording the same mistake.
Start with one project
Choose a recent project that kept everyone busy but left less money than expected.
Compare the agreed fee, planned hours, actual hours and staff costs. Talk to the people who delivered it. Find out what changed and when it became clear.
That is often a more useful first step than building another dashboard.
At Upscale Consultants, our Finance Review looks at utilisation, fees and project costs using your own figures. We help you understand where time and money are going, then agree three practical actions.
If your team is flat out but the results do not reflect the effort, get in touch.
