Realisation captures the gap between what the timesheet says and what the invoice says. If a team logs 1,000 billable hours but the client is invoiced for 880 (the rest written off as scope creep, goodwill, or admin), realisation is 88%. The other 12% is unpaid agency time — pure margin loss.
For agencies, realisation is where unprofitable accounts hide. Two clients with identical retainer values can have wildly different realisation, and the lower one is silently funding the higher one. Reviewing realisation by client every quarter is one of the highest-leverage management practices an agency can adopt.
Realisation below 90% is usually a scoping problem rather than a delivery one — work is being done that the contract never priced. Tighten statements of work, formalise change orders, and stop treating "we will just absorb it" as a customer-service move.