What is Capacity Utilisation? Definition and meaning
Capacity utilisation defines the use of resources in relation to a specific period of time or project phase. Capacity utilisation, or the utilisation rate, is a percentage value that expresses actual usage in relation to the maximum possible usage.
The subject of capacity utilisation is usually operating resources, such as machines or tools, but also human labour in the form of person-days, for example. The metric is therefore an important indicator in resource management.
Goals of Capacity Utilisation
Determining utilisation rates for project-relevant resources is important for project scheduling. Since a large number of resources typically need to be taken into account in projects, suitable software for capacity planning is of decisive advantage. Capacity utilisation can be displayed, for example, in the form of a bar chart or histogram. Depending on the time period under consideration, the corresponding bars will vary in width.
The goal of project planning is to schedule the capacity of available resources from the outset so that overloads are avoided as far as possible. To achieve this goal, work packages can be flexibly distributed across different resources or shifted within buffer periods. If neither measure can ensure that the available capacities are sufficient, either the planned end date of the project must be moved back or additional resources must be made available.
In general, a utilisation rate of 100 percent is the target. This is because high resource utilisation leads to lower productivity costs and thereby, as a rule, to a higher company profit. However, deviations are often sensible or even necessary. For machines, for example, additional cooling or changeover times often need to be taken into account. For project team members, a utilisation rate of 80 percent is sometimes regarded as desirable. In some cases, temporary overloads (greater than 100 percent) are also considered acceptable, provided that utilisation remains below this level on average over a certain period.