Engineering and architecture
Utilization rate for architecture and engineering firms: how to calculate it
By SourceX Editorial · Updated
Short answer
Utilization rate for an architecture or engineering firm is chargeable hours divided by base hours for the same person and period, where the base is total hours recorded, standard hours or available hours. Pick one base, define chargeable once, and apply both consistently, because a rate is only comparable across people and months when the definitions match.
Key takeaways
- Utilization equals chargeable hours divided by base hours, and the same timesheet can produce three different rates depending on the base.
- Chargeable time needs a written definition covering proposals, fixed-fee overruns, rework and unsigned additional services.
- Targets should differ by role and come from the firm's own history, since principals and designers carry very different non-chargeable duties.
- Utilization is only as reliable as the project, phase and activity codes in the timekeeping system behind it.
- Time entries with narratives describe how design work actually happens, which gives them uses beyond the utilization report.
What does utilization rate measure in an A/E firm?#
Utilization rate in an A/E firm measures the share of a person's time charged to client projects. Many firms call it chargeability. In a fee-based practice it is the main link between staff cost and revenue, and buyers, lenders and boards commonly ask about it.
Utilization is not the same as realization. Utilization measures how much time went to chargeable work; realization measures how much of the value of that time was actually billed and collected. A firm can run high utilization and still lose money on projects that overrun their fixed fees, so the two belong side by side on the same report.
The utilization formula and its three bases#
The utilization formula is chargeable hours divided by base hours, for the same person or group and the same period. The numerator rarely causes arguments. The base does, and firms use three versions.
| Version | Formula | Use it when | Watch out for |
|---|---|---|---|
| Total hours base | Chargeable hours divided by all hours recorded, including overtime and paid leave | You want to see how recorded time was split | Cannot exceed 1.0, so it hides overload |
| Standard hours base | Chargeable hours divided by the standard hours for the role and period | You plan capacity and want to spot overtime on projects | Can exceed 1.0 when people work long weeks |
| Available hours base | Chargeable hours divided by standard hours minus holidays and paid leave | You compare people whose leave differs | Hides low total output in months with heavy leave |
- 01Your work records
- 02Personal details removed
- 03You approve the release
- 04Licensed to AI developers
Which hours count as chargeable?#
Chargeable hours are time recorded to client project codes that the firm bills or counts against a fee. The edge cases need a written rule, because each one moves the rate and invites disputes in performance reviews.
- Proposal and marketing time: usually not chargeable, and tracked under its own code.
- Fixed-fee work after the fee is spent: usually still chargeable, with overruns flagged separately.
- Rework on the firm's own errors: firms differ, so decide whether it stays chargeable and tag it either way.
- Additional services not yet signed: chargeable only once the client agrees, unless policy says otherwise.
- Internal research, training and standards work: not chargeable.
- Paid leave and holidays: never chargeable, and in or out of the base according to the version chosen.
Illustrative: one engineer, one month, three rates#
Illustrative: a fictional civil engineering firm calculates monthly utilization for one project engineer. In the month, the engineer records 180 hours: 138 on client project codes, 14 on a proposal, 12 on internal training and 16 on paid holidays. The firm's standard month for the role is 168 hours.
Same person, same month, three rates between 0.77 and 0.91. Reports usually show these as percentages, but whichever format the firm uses, the base should be named on every report. A rate that quietly switches base from one month to the next is worse than no rate at all.
| Version | Calculation | Rate |
|---|---|---|
| Total hours base | 138 divided by 180 | 0.77 |
| Standard hours base | 138 divided by 168 | 0.82 |
| Available hours base | 138 divided by 152 (168 minus 16 holiday hours) | 0.91 |
How should utilization targets differ by role?#
Utilization targets should differ by role because each role carries different non-chargeable duties. Set them from the firm's own history: pull several recent years of rates by role, remove months distorted by long leave or project gaps, and leave room for the business development and mentoring each role is expected to do.
Report each person against the target for their role, not against the firm average. A principal running below the staff rate may be doing exactly what the firm needs, such as winning next year's work. Review targets when roles change, for example when a senior engineer starts leading a studio.
| Role | Non-chargeable work the target must allow for |
|---|---|
| Principal or owner | Business development, client relationships, firm management, quality oversight |
| Project manager | Proposals, staffing coordination, internal reviews, invoicing support |
| Project engineer or architect | Mentoring, standards work, some proposal support |
| Designer, drafter or technician | Training, standards and software updates |
| Administrative and IT staff | Usually no chargeable target, unless they bill directly to projects |
Pulling utilization data from Deltek and other timekeeping systems#
Utilization data comes from timesheets, so the report is only as reliable as the codes behind it. Most A/E firms keep time in a practice management or ERP system, such as Deltek Vantagepoint, Deltek Ajera or BQE CORE, with project, phase, task and activity codes that should already carry the chargeable flag.
Deltek's help says Vantagepoint can export a list view's grid data to a CSV or Excel file. In the cloud product, exports are scheduled and you are notified in the Notification Center when the file is ready, and exports of more than 500 records from apps such as Projects and Employees run on the process server, which requires your user ID to be mapped to an employee record. Check your own release's documentation before planning a large extract.
Before trusting any utilization report, confirm that every project and activity code is flagged chargeable or not, that leave is coded the same way across offices, and that late or missing timesheets for the period have been resolved.
What else your time records show#
Time records show how work actually happens, not only how much of it was billed. A timesheet line with a project, a phase, a task code and a narrative such as "revised storm sewer profile after county review comments" describes a real step in a technical workflow.
Linked to the project record, those narratives trace how design effort shifts between phases, where agency reviews trigger rework, and how coordination load differs between project types. That is useful for estimating fees and staffing the next pursuit, and it is the kind of operational record AI developers look for, provided employee names, rates and personal details are removed and the firm's rights are confirmed.
How SourceX views time and project records#
SourceX rates time records with the SourceX Enterprise Data Value Framework: descriptive, linked entries score higher on human-generated signal and domain expertise than bare hour totals, while employee details add privacy burden that lowers net value. Utilization percentages on their own carry little licensing value.
When a firm decides to explore licensing, any package moves through the SourceX five-step transaction, from Supply and Rights to Preparation, Approval and Delivery. The firm approves each step, and nothing is shared during the initial assessment.
Frequently asked questions
Should salaried overtime count in utilization?
It depends on the base. On a total hours base, overtime enters both sides of the ratio. On a standard hours base, chargeable overtime raises the rate and can push it above 1.0, which helps spot overload. Decide which question you are answering, workload or mix of time, and choose the base to match.
How often should utilization be reported?
Monthly reporting by person and role is common, alongside a year-to-date view that smooths out leave and project gaps. Weekly views help project managers with staffing but are too noisy for performance conversations. Whatever cadence you choose, close timesheets for the period before running the report.
Does utilization affect what a buyer pays for an A/E firm?
Buyers commonly review chargeability by role and over time during diligence, because it ties staff cost to revenue. How it affects price depends on the buyer, the firm and the rest of the financial picture, so discuss specifics with your M&A and accounting advisers.
Can we compare our rate with published industry surveys?
Use surveys as context only. Published figures rest on their own definitions of chargeable time and base hours, which may not match yours. Restate your rate on the survey's definitions before comparing, or compare against your own history, where you control the definitions.
Should contract staff be included in firm utilization?
Report them on a separate line. Contract staff are usually brought in for chargeable work, so mixing them in can raise the firm-wide rate without any change in how employees spend their time. Decide which line drives targets and keep the two apart in every report.
Sources
- Deltek's Vantagepoint help says the Export List View dialog exports grid data from a list view to a comma-separated values (.csv) file or an Excel file. Source
- Deltek's help says a cloud Vantagepoint list-view export is scheduled and you are notified in the Notification Center when the .csv is ready. Exports of more than 500 records from apps such as Projects, Employees, Firms, Contacts and Activities run on the process server, and your user ID must be mapped to an employee record. Source
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