One of the biggest struggles in construction workforce planning is keeping teams working at capacity. When team members sit underutilized, they create overhead costs that hit your bottom line. When they’re overworked, you risk burnout and safety incidents. Utilization rate is the metric that helps you find the balance.
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What is utilization rate in construction?
Your workforce utilization rate measures the percentage of time your team spends working on projects versus the total time they’re available to work. It’s a billing efficiency metric: how much of your labor cost translates directly into project work?
To calculate it, divide billable hours by total available hours. If someone works 40 hours per week but only logs 30 hours against projects, their utilization rate is 75%.
The challenge in construction is accurate tracking. Many contractors rely on estimates and assumptions rather than actual data. Construction workforce planning tools like 91¶¶Òõ track utilization by title, division, and region, using project allocation percentages rather than hours logged against a timesheet.
Once you’re accurately tracking time, you can see what percentage is spent on billable project work versus non-billable activities like administrative tasks, training, or unassigned bench time.
How do you calculate labor utilization rate?
Labor utilization rate is billable hours divided by total available hours, expressed as a percentage. A project engineer who is available for 40 hours in a week and charges 30 of them to projects has a utilization rate of 75%.
The labor utilization formula:
Utilization rate = (billable hours ÷ total available hours) × 100
Run it over a year rather than a week and the arithmetic gets more useful. Start a project manager at a 2,080-hour year. Take out 120 hours of vacation, 80 hours of holidays and 40 hours of sick time and you are left with 1,840 available hours. If 1,300 of those hours are charged to projects, utilization is 1,300 ÷ 1,840, or 70.7%.
Before you compare that number to anyone else’s, know which denominator produced it. Two are in common use in construction and they do not return the same figure.
| Denominator | What it measures | How to read it |
|---|---|---|
| Total available hours billable hours ÷ available hours | The share of the time you pay for that gets charged to projects. The finance definition, and the one behind published benchmarks. | Always well under 100%, because vacation, training and admin sit in the denominator. |
| Total planned capacity project allocation ÷ full allocation | The share of a person’s planned capacity committed to projects. The planning definition, and what most workforce planning software reports. | Someone fully assigned reads at or near 100%, and above it when they are covering gaps. |
The rest of this article uses the first definition unless it says otherwise. Mixing the two is how contractors end up chasing a target that the math will never produce.
Is 100% utilization the goal?
Technically, anything under 100% means your team is costing you money that isn’t directly billable. But 100% utilization isn’t realistic or healthy.
Full utilization means zero investment in training, career development, or mentorship. It also means your team is spread thin with no capacity buffer for emergencies or new opportunities.
“Company morale goes down, employees are burnt out because they’re going to do whatever it takes to get the job done,” says Shawn Gallant, COO at Columbia Construction (ENR 301). “It affects your employee retention and increases safety incidents on a project.”
Running at sustained 100% utilization creates problems that cost more than the bench time you’re trying to avoid.
What is a good labor utilization rate?
On a billable-hours denominator, a good labor utilization rate for salaried project staff runs around 60%, not 90%. The American Institute of Architects of total labor dollars. The 47th Annual Deltek Clarity A&E Industry Study reports a , down from 61.1% the year before, with the top quarter of firms at 67.0%.
Two things to hold alongside those numbers. Both are measured in labor dollars rather than hours, so read them as the same ratio weighted by pay rate. And both come from the design side of the industry, which is where published utilization data lives — but they cover the same kind of salaried project staff a general contractor’s utilization report covers.
The AIA guidance is blunt about the ceiling: utilization rates “should be optimized but can never be maximized (i.e., achieve 100%).” That is the same point the section above makes from the other direction. If your own reporting shows people in the nineties, check the denominator before you celebrate — you are almost certainly looking at project allocation, not billable hours, and the benchmarks here do not apply to it. In construction, with seasonal work and project variability, either number fluctuates.
The exact number depends on your business model. Some contractors maintain lower utilization during slow seasons to invest in development. Others staff lean and accept higher turnover.
What matters is knowing your number and tracking trends. If you don’t measure utilization, you can’t manage it.
What are the warning signs?
Utilization dipping below your normal baseline when your project pipeline is full signals a problem. Either you have too many people waiting on the bench, or work isn’t being distributed evenly across your team.
High utilization can also be a warning sign. If certain roles consistently run above 100% allocation, you’re burning out your best people. They might be covering for gaps elsewhere in the organization.
“With 91¶¶Òõ Bench, our meetings are less about getting the information into the system and more about strategy,” says Jeremy Moe, Operations Manager at The Boldt Company (ENR 77). “We strategize how to fill vacant roles on a project or where there might be pockets in our business where someone isn’t fully utilized. We can grab onto them and avoid hiring another person since we can see that someone can take on more work.”
The data helps you spot both underutilization (bench cost) and overutilization (burnout risk) before they become problems.
How can I improve workforce utilization?
Improving utilization starts with visibility. You can’t fix what you can’t see, and at most contractors that visibility belongs to the operations and workforce directors who own staffing across the whole portfolio.
Staff lean when possible. Avoid the temptation to overstaff projects that present challenges. Extra staff should have a specific purpose beyond throwing more hands at the problem. Idle hands create confusion and dilute accountability.
Create a depth chart. Map team members’ skills, strengths, and experience so you can quickly identify who can step into different roles. When someone needs to be replaced on a project, you shouldn’t be starting from scratch.
Match people to projects. When possible, allocate team members to projects that fit their skills and experience. This improves productivity and reduces supervision overhead.
Coach through downtime. You can’t always set aside dedicated training time. Encourage project leaders to coach their teams through decision-making and problem-solving during normal work. Development happens in the field, not just in classrooms.
Keep training in your back pocket. Weather delays, material shortages, and client rescheduling create downtime. Have training modules ready to deploy when work slows unexpectedly.
The ROI of utilization improvements
Small improvements in utilization compound into significant savings. The math is straightforward: every percentage point of improved utilization means fewer unproductive hours across your entire workforce.
Contractors who track this see real results.
“We have total transparency in our metrics now,” says Ed McCauley, VP of Corporate Services at Wohlsen Construction (ENR 272). “Fast-forward from last year to this year, our utilization has exceeded our targets. The increased utilization rate contributes directly to higher than forecasted profits.”
The numbers are significant, and two 91¶¶Òõ customers have published theirs. At Texas salary averages, Skiles Group calculates a 1% utilization increase at $85,000 a year. At Pennsylvania averages, Wohlsen Construction puts the same 1% at $130,000. Those are two contractors’ actual figures rather than an industry rule of thumb — what a point of utilization is worth to you depends on your payroll and where you build.
Consider a 100-person project management team with an average fully-loaded cost of $150,000 per person. That’s $15 million in annual labor cost. If utilization sits at 85% instead of 90%, you’re losing 5% of that labor value. That’s $750,000 in productivity you’ve already paid for but aren’t capturing.
The math works in reverse too. Moving from 85% to 90% utilization doesn’t require hiring more people or working longer hours. It requires better visibility into who’s available and smarter allocation of the people you already have.
Reduce bench cost
What is bench cost? Think of it like a pro sports team. Players on the bench cost the team money but aren’t contributing to the game. In construction, team members without project assignments create overhead.
The difference from sports: players’ contracts reflect expected playing time. Construction teams pay full salaries regardless of utilization. Having people on the bench costs more than it should.
This is where forecasting helps. By tracking utilization months and years ahead, you identify underutilized team members before they accumulate bench costs. Many contractors using spreadsheets discover people who slipped through the cracks and sat unassigned for weeks or months.
Recruitment and skills demand
The supply side is structurally tight. Deloitte’s 2026 Engineering and Construction Industry Outlook projects that by 2031, , while only 10% of current workers are under 25. 91¶¶Òõ’s puts median workforce attrition just under 20% for 2025, which means a contractor who needs 100 net new people has to hire about 125 to stand still. This makes every hiring decision more critical.
Forecasting utilization helps you stay ahead of recruitment. When you can see project demand 6-12 months out, you know when you’ll need to bring on new team members. The key isn’t just identifying the need. It’s identifying it early.
Rushing the hiring process leads to poor hires, and a bad hire costs more than the salary line suggests. Recruiting, onboarding, the months before the mismatch is obvious, and then doing all of it again all land on the same team.
Filtering utilization by role also reveals skills demand. If your project engineers show 50% higher utilization than project coordinators, you know where to focus recruiting and development.
Develop your talent pipeline
Forecasting utilization into the future helps with employee engagement and retention. Zero bench cost all the time is impossible given the fluid nature of construction projects, and that’s not always bad.
Organizations should set time aside for training, mentorships, and certification updates. Identifying underutilized team members in coming months creates opportunities for career development rather than idle time.
LinkedIn’s found that 93% of employees would stay at their company longer if it invested in their careers. Utilization data helps you identify when that investment can happen without impacting project delivery.
Your utilization rates also reveal development issues. High performers and senior staff should be working on high-value projects, but they should also have time for mentoring junior team members. If junior staff are underutilized while senior staff are overloaded, you have a workforce development problem.
The pattern often looks like this: senior superintendents running at 110% allocation, covering for gaps across multiple projects. Meanwhile, assistant superintendents sit at 60% because no one has time to bring them up to speed. The senior people burn out. The junior people don’t develop. Both groups eventually leave.
Breaking this cycle requires visibility into who’s overloaded and who’s underutilized, plus the ability to redistribute work intentionally rather than reactively.
Making utilization actionable
Utilization data only matters if you act on it. The challenge with spreadsheets is they make calculation tedious and forecasting nearly impossible. Most contractors using spreadsheets simply don’t track utilization because keeping formulas current, accounting for unavailability like sick leave or vacation, and maintaining accuracy across the organization takes more effort than it’s worth.
Construction workforce planning tools change that equation. They automate calculation, provide filtering by title, division, or region, and enable forecasting up to 5 years out.
“91¶¶Òõ Bench gets down to understanding, organizing, and optimizing your workforce,” says Todd Wynne, Chief Innovation Officer at Rogers-O’Brien (ENR 144). “If you’re not using it, you might be leaving money on the table.”
Workforce utilization FAQ
What is the difference between labor utilization and efficiency?
Utilization focuses on the quantity of time spent working. Efficiency focuses on the quality of work done during that time. Both metrics matter for understanding workforce performance. High utilization with low efficiency means you’re paying for hours that don’t produce results.
Is labor utilization the same as labor productivity?
No. Utilization measures how much available time is allocated to tasks. Productivity measures the amount and quality of work accomplished. You can have high utilization (everyone is busy) with low productivity (not much is getting done).
How do I get started tracking utilization?
Start by documenting current project assignments and availability for your workforce. Calculate utilization manually for one month to establish a baseline. If the tracking burden is too high for spreadsheets, consider workforce planning software that automates calculation and provides forecasting capabilities.
The first step is often the most revealing. Many contractors discover their actual utilization is 10-15% lower than they assumed, simply because they never had accurate data. That gap represents both a problem and an opportunity.
