Capacity utilization

Capacity utilization is the share of a team's total available capacity that is actually used, whether the work was billable or not. It is read at team or company level, where the question is whether the capacity that exists is being used at all, not whether it earned anything.

How is capacity utilization calculated?

Hours worked divided by available hours, for a team and a period. A team of eight with 1,280 available hours in a month that records 1,088 hours sits at 85 per cent. Unlike utilization rate, non-billable work counts here, because the question is whether the capacity was used.

What is the difference between capacity utilization and utilization rate?

Utilization rate counts only billable hours and is usually read per person. Capacity utilization counts all worked hours and is usually read per team. A team can sit at 95 per cent capacity utilization and 60 per cent utilization rate, which means it is busy with work nobody is paying for.

What is a healthy level?

Below 100, with room left over. A team at full capacity has no slack for illness, rework or a client who moves a deadline, so the first disruption is paid for in overtime. Where the ceiling sits depends on how predictable the work is.

What does low capacity utilization indicate?

Either not enough work, or work that exists but has not been assigned. The two have opposite remedies, and telling them apart means looking at committed work next to the figure rather than at the figure alone. Because the figure counts billable and non-billable hours alike, a low value means existing capacity is not being used at all.

Related terms

• Utilization rate
• Capacity planning
• Billability

troi shows utilization per person and period. See resource planning.