How to Measure Resource Utilization when Planning for Software Development

Usually when people think about software development planning, they envision things like estimates and timelines. Although this data is 100% essential for planning, there are also a few other metrics that you can track to increase the quality of your schedules and thus improve the delivery outcomes and use of your teams’ resources. Let’s review some of those metrics associated with measuring resource efficiency.

First of all, I’m talking about project efficiency and team efficiency. These metrics essentially measure how effectively your teams’ resources are used for a particular project, or, from a different angle, how well a particular team is occupied when working on multiple projects. Let’s look at definitions:

    Project Efficiency is a metric that represents the ratio of all teams' inputs to a particular project relative to the teams' overall available velocity.

    Team Efficiency is a metric that represents the ratio of an individual team’s input to a project or all projects they are working on relative to the team’s overall available velocity.

In simple words, Project Efficiency is used to measure resource use from the perspective of a particular project. Team Efficiency is looking from the perspective of resource use effectiveness for a particular team, which can be especially relevant if they are working on multiple projects at the same time.

Let’s review an example. Let’s say for instance we hired a development team for a quarter of the year. We assign them a project that lasts only one month. Let’s calculate efficiency. In order to do that, I will be using a tool called Deep Planner that allows me to do that in an automated way.

In order to calculate project efficiency, we need to decompose the project into system components with their effort values and enter those deliverables into the system. Luckily we already did all of that prep work, so the only thing left for us to do is  entering the deliverables into a schedule to generate reports. To learn more about how to decompose a project in Deep Planner, please refer to our article, “Creating a Response for Software RFP with AI and Deep Planner App”. 

OK, let’s add the project deliverable into the quarterly schedule.

Alright, we can confirm that the deliverable was entered into the timeline.

Now let’s look at the numbers on the Deliverables tab.

In the Consumed Effort block we can see the number of man-days each team dedicates to the project relative to the team overall velocity. To calculate Project Efficiency, we need to sum together all teams’ efforts and divide them to sum of velocities. The calculated value for the project would be around 5%, and for individual team such as Developers, the Team Efficiency would be 4%.

Let’s add one more deliverable to the schedule.

Let’s look at the numbers after that change.

OK, now we can see that Developers team efficiency has increased to 35%, and the Project Efficiency has also increased to 20% since the teams are now less idle and have more work to do.

Now let’s limit team capacity. Let’s remove 2 man-days from Testers team velocity for a calendar day. Now let’s look at the numbers.

We can see that Testers Team efficiency has increased, and Project Efficiency has also increased because we now have less resources without changing the amount of work. Keep in mind that although decreasing the team output has increased the efficiency of resource use, it now places the rest of the team under higher pressure. Balanced efficiency percentage shouldn’t be very high but ideally in the range of 20-30% per the measured timebox. 

Measuring efficiency is a very effective instrument to control and ensure optimized use of resources in your company and the projects you are working on. If used correctly, it enables for great improvements and cost-effective planning of your development. Make sure to include those metrics into your toolbox.

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