How consultancies, agencies and other project-based firms measure utilisation, plan their people across projects and run retainers that stay profitable.
This guide is part of our main guide to project-based businesses, covering every step from winning work to measuring margin.
Project-based businesses guideFor a firm that sells its people's time, three questions decide profit: how much of that time is billable, whether the right people are on the right work, and whether clients pay for everything they receive. Utilisation, resource planning and retainer billing answer those questions.
They also depend on each other. Resource plans set the hours people should work on each client, time records show what really happened, and retainers turn those hours into income. When all three sit in separate spreadsheets, gaps open up between them, and that is usually where margin is lost.
Utilisation tells you how much of your team's available time is spent on billable client work. It is the clearest early sign of whether a firm is over-stretched or carrying spare capacity.
Utilisation = billable hours ÷ available hours × 100
Available hours are the hours someone is contracted to work, less holidays and planned absence. Billable hours are the hours spent on client work that can be charged for.
A consultant contracted for 37.5 hours a week takes one day of holiday, leaving 30 available hours. They record 24 hours on client projects and 6 hours on internal meetings and a proposal.
Their utilisation for the week is 24 ÷ 30 × 100 = 80%. If 3 of those 24 hours are later written off, their billed utilisation is 21 ÷ 30 × 100 = 70%.
Start from contracted hours, then take off holidays, bank holidays and planned absence. Leave internal meetings and training in, so they show up as non-billable time rather than vanishing.
A consultant, a project manager and a director spend their weeks very differently. One firm-wide target pushes senior people to book time to clients and hides where capacity really sits.
Hours written off before invoicing are still worked but never paid for. Comparing billable hours with billed hours shows how much work is being given away, and on which clients.
High utilisation on underpriced work still loses money. Look at utilisation, effective hourly rate and project margin together so you can see whether busy people are also profitable.
Resource planning matches the people you have to the work you've won and the work you expect to win. Done well, it keeps utilisation steady and shows early when you need to hire.
Use likely deals in your CRM, with expected start dates and roles, to see which skills you'll need over the next few months, not just next week.
Record each person's working pattern, skills, grade and planned absence in one place, so capacity reflects who is actually available.
Raise a request for the role a project needs, then match it to the people who have the skills and the time, instead of always asking the same few names.
Pencil people in against likely work, then confirm the booking when the client signs. Soft bookings show pressure coming without blocking anyone's diary too early.
Compare planned hours with time actually recorded, spot people who are overbooked or underused, and move work before deadlines or margins slip.
Retainers give a firm predictable income and give clients steady access to its people. They only stay profitable if the time spent is tracked against what the client is paying.
The client pays the same amount each month for an agreed scope, such as ongoing support or a set of monthly deliverables. Simple to invoice, but scope needs watching so the fee still covers the work.
The client buys a bank of hours or a monetary amount, and work is drawn down against it. Clients see exactly what they've used, and you need accurate time recording to report the balance.
A sum paid before work starts and set against later invoices. Common in legal and consultancy work, it protects cash flow and needs a clear record of what has been applied.
Decide up front whether unused hours roll over to next month, expire or are capped. Writing the rule into the contract avoids disputes and makes month-end reporting straightforward.
Record every hour worked against the retainer, not just the hours you plan to bill. Comparing hours used with hours paid for each month shows which retainers are over-serviced and which have room to spare, well before renewal.
Money received in advance usually counts as income only once the work is done, so retainers paid ahead of delivery are often held as deferred income at month end. Your accountant can confirm the right treatment for your contracts.
Utilisation, resourcing and retainers all depend on the same data: who is available, what they worked on and what the client agreed to pay. Keeping it in one connected system means the numbers agree.
Resources with capacity and costs, time sheets, project budgets and billing, plus recurring invoices for retainers, all alongside the full accounts. Suits most small and mid-sized firms.
Find out more about Microsoft Dynamics 365 Business CentralA schedule board, resource requests matched by skill and availability, and project contracts that support retainer and advance billing. Suits larger teams and more complex resourcing.
Find out more about Dynamics 365 Project OperationsYour pipeline of likely work, with expected start dates and values, so resource planning starts before the contract is signed.
Find out more about Dynamics 365 CRMWhat PSA software does, the features to look for and how Microsoft's options compare.
Find out more about Professional services automationHow to protect project margin at every step, from the first estimate to the final bill.
Read more about Margin control from estimate to invoiceHow AI in Project Operations helps people record time and expenses, which utilisation depends on.
Read more about What the Time and Expense Agent doesFrom agreeing terms to getting paid, including invoicing and credit control.
Read more about Order to cash process guideMargin, break-even and the other numbers that sit alongside utilisation.
Read more about Finance metrics and accounting basicsTell us how your firm plans people, records time and bills retainers today, and we'll show you where Microsoft Dynamics 365 could help.
Utilisation is the share of a person's available working hours spent on billable client work. It is usually worked out as billable hours divided by available hours, shown as a percentage.
It depends on the role. Someone who spends most of their week on client delivery should have a much higher target than a director who also sells, manages people and runs the business. Set targets by role, agree them with your teams and review them alongside margin, not on their own.
Firms use the terms differently. A common split is that billable hours are client hours that could be invoiced, while chargeable or billed hours are the ones actually invoiced after write-offs. Tracking both shows how much work is being given away.
Resource planning is matching the people you have, with their skills and availability, to the work you have won and the work you expect to win. Good resource planning keeps people busy on the right projects and shows early when you need to hire or bring in contractors.
The client pays an agreed amount on a regular schedule, usually monthly, in return for a set amount of work or access to your team. Some retainers are a fixed fee for an agreed scope; others buy a bank of hours that is drawn down as work is done.
Yes. Business Central covers resources, capacity, time sheets, project budgets and recurring invoices for most small and mid-sized firms. Dynamics 365 Project Operations adds detailed resource scheduling, resource requests and project contracts with retainer schedules for firms with larger or more complex teams.