Engineering firm profitability is not driven by revenue alone. It is driven by how effectively your team’s time is used. That is why utilization rate is one of the most important performance metrics for engineering and consulting firms.
Yet many firms either track utilization inaccurately or look at it in isolation, without connecting it to time tracking, project budgets, billing, and forecasting.
In this guide, you will learn:
What utilization rate means for engineering firms
How to calculate utilization accurately
Target utilization benchmarks by role
The most common causes of low utilization
Proven ways to improve utilization without burning out your team
How modern software like Aldoa helps firms increase utilization and margins
Utilization rate measures how much of an employee’s available time is spent on billable, revenue-generating work.
For engineering and consulting firms, utilization is typically expressed as a percentage:
Utilization Rate = Billable Hours ÷ Available Work Hours
For example, if an engineer works 40 hours in a week and 30 of those hours are billable to projects, their utilization rate is 75 percent.
Utilization helps firm leaders answer critical questions:
Are we staffing projects efficiently?
Are we underutilizing high-cost engineers?
Are projects scoped and estimated accurately?
Is our revenue potential being fully realized?
Utilization is one of the strongest predictors of profitability in professional services.
When utilization is low:
Billable hours are lost, fixed labor costs remain the same, project margins shrink, and revenue forecasts become unreliable.
When utilization is high and well-managed:
Revenue per employee increases, project budgets are easier to control, staffing decisions improve, and cash flow becomes more predictable.
High-performing engineering firms treat utilization as a leading indicator, not a lagging report reviewed after the damage is done.
Example of real-time labor utilization tracking across an engineering project.
Not all work contributes equally to utilization.
Design and analysis work billed to a client
Field inspections tied to a project
Lab testing billed under a scope of work
Project management billed to the client
Internal meetings
Business development
Training and onboarding
Proposal writing (unless reimbursed)
Administrative tasks
Tracking this distinction accurately is essential. Firms that rely on high-level or delayed time entry often misclassify hours, leading to distorted utilization data.
Target utilization varies by role and firm type, but common benchmarks include:
Staff engineers and consultants: 70 to 80 percent
Senior engineers and project managers: 60 to 70 percent
Principals and firm leadership: 40 to 60 percent
Pushing utilization too high can cause burnout and quality issues. The goal is sustainable utilization that supports profitability without sacrificing long-term performance.
Low utilization is rarely caused by employee performance alone. More often, it is a systems and process issue.
Common causes include:
When engineers enter time days or weeks later, billable work is forgotten or misallocated.
Under-scoped projects create confusion about what work is billable and lead to write-offs.
Without dashboards showing utilization and budget burn, issues are discovered too late.
Engineers spending hours on manual reporting, spreadsheets, or duplicate systems reduces billable capacity.
Utilization is only as accurate as the time data behind it.
Modern engineering firms improve utilization by:
Logging hours daily, not weekly
This level of detail allows leaders to see where time is actually going and adjust staffing or scope before profitability is impacted.
Logging billable time directly against project tasks improves utilization accuracy.
Utilization does not exist in a vacuum. It is tightly connected to project budgets and scope management.
When budgets are unclear or not visible to project managers:
Engineers hesitate to bill time
PMs delay approvals
Billable work becomes non-billable by default
Firms that tie time tracking directly to project budgets and approved scope maintain higher, more consistent utilization rates.
Labor cost visibility by role helps engineering firms align utilization with project budgets.
High-performing firms rely on integrated systems rather than disconnected tools.
Effective utilization improvement requires:
Time tracking linked to tasks and phases
Real-time utilization dashboards
Budget vs actual visibility
Automated billing workflows
This is where modern platforms replace spreadsheets and legacy systems.
Aldoa is a modern project, time tracking, and billing platform built specifically for engineering and consulting firms.
With Aldoa, firms can:
Track time by task and project phase
Monitor utilization and budget burn in real time
Reduce missed billable hours
Improve forecasting and staffing decisions
Automate billing from approved time entries
One Aldoa customer summarized the impact this way:
“Before Aldoa, we didn’t trust our utilization numbers. Now we can see exactly where time is going and address issues before projects go off track.”
By reducing administrative friction and increasing visibility, Aldoa helps firms improve utilization without asking engineers to work longer hours.