Billability (often termed ‘utilization rate’) is the percentage of time in a given period during which employees are working in a revenue-producing capacity. You must configure your timesheet system to track whether or not work is considered billable to the customer. Once you have this information, utilization for any period, group or person is found by the formula B divided by T, where:

B = billable hours for the employee/group in the period

T = all hours worked for the employee/group in the period
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Utilization rate is the percentage of time a person spends doing billable work. The utilization rate is not the billing rate. Billable hours are the number of working hours you can charge to your client, while the utilization rate is the percentage of total working hours that can be billed.
Various industries have target utilization rates. For example, in engineering, a utilization rate of 67% is considered optimal, which independent design consultants aim for a utilization rate of 75%. Utilization rates are not only used in billing but can help organizations to gain a sense of how the business is operating and where improvements can be made.
For example, one small consulting firm looks at four key metrics: utilization rate, margin per project, time usage and cash flow. The firm uses these metrics in preparing proposals and when completing projects. The firm has a utilization rate of 80% overall. They have determined that a lower utilization rate would damage their practice. Thus 80% of their time is spent on billable work and the other 20% is spent on necessary but non-billable business tasks such as business development, accounting, training, etc.
http://glossary.tenrox.com/Utililization-Rate.htm