How to do resource management

Ultimate Guide to Resource Management – Chapter 2

Organizations are constantly being forced to deliver more with less.

Ineffective resource management leads to project failures, cost overruns and dissatisfied people.

So what are the must have components of a resource management process?

Read on to discover the pieces of the jigsaw you need to assemble to get started with effective resource management.

We will explain the resource management process using screenshots from our resource management solution to better help you understand the concepts involved.

Know your resources

First you need to get to know your resources.

This means calculating your supply of resources. This is also sometimes called resource capacity.

The supply of your resources is the number of people you have multiplied by the amount of labor time they provide.

This is normally expressed in terms of FTE (full time equivalent) but you can also record it in days.

Getting this step right is essential as most organizations overstate the resource capacity they have available for work.

Once you have figured out the supply of your resources, summarize this by role.

Roles are the skills each person provides your organization for example project manager, engineer etc.

You should now have a clear view of the capacity of your resource pool.

When calculating labor supply there are different approaches to handling non project work.
One approach is to calculate labor supply based on contracted hours then include both project and non project work in the resource plan.
Alternatively, calculate your labor supply based on how much time your resources typically have for projects after accounting for non project work. Then only include project work in your resource plan.

Here is how the resource pool looks in Kelloo once we have added our named resources and teams into their roles.

Resource pool

Know your project demand

The next step is to work out the types of resources needed for all the projects and work you want to do. This is called demand.

So start by pulling together a list of all the work you are being asked to do. 

This could be projects, programs or even business as usual activities. 

Then record the type of resource needed (using roles) and how much time is required for the work (again in days or FTE). 

Record your demand on a period by period basis so you can see how demand fluctuates over time.

Ideally you should set up an ongoing process to capture demand. This is often called demand management.

Try to avoid listing specific resources against your projects. It is more flexible to just record the type of resource.
As you can see below, in Kelloo you just need to enter the project, role and work to record the demand. Figuring out which resource actually gets allocated to the project comes as part of resource planning.

Enter demand

Ultimately you are going to want to filter your demand so you can focus your resource management efforts on the things that are most important to your organization.

So it can be helpful to also record things like:

– Status (approved, requested etc).

– Who requested the work.

– Rough timings for when it needs to happen.

– Any dependencies to other work.

Capacity planning - what work can you realistically take on

Capacity planning is where you work out which projects you can do with the resources you have.

To help you understand what capacity planning is, let us use a simple example. You are going on a vacation and need to pack your cases. Your capacity is limited. Your capacity is the size of your cases.

Your demand in unlimited. You obviously want to look your best on vacation, but you have laid out too many clothes to take. Capacity planning is working out which clothes you can fit in your case and which you can't.

It involves prioritization and trade-offs. Will it be cold? Do I need more sweatshirts? I could take less shoes and more t-shirts.

Capacity planning is high level

When capacity planning, you are not concerned with individual resources. 

You are comparing the labor demand for resource roles with the labor supply of roles. 

Capacity planning is about understanding your organizations capacity to take on work.

When undertaking capacity planning you are not attempting to match resources to projects.

If you have a shortfall of resources, capacity planning helps you make decisions about your resources and work:

– Should you hire more resources?

– If so what type of resource and when?

– Can you re-deploy resources from lower priority work to higher priority work?

– Would it help to delay working on some projects?

Capacity planning identifies gaps between your resource capability and your demands. 

This is important so that you can demonstrate to your organization the amount of work your resources can realistically be expected to do.

Capacity planning forms one of the main processes in portfolio management. It involves tough decisions about what projects and work is going to be approved.

Capacity planning helps you work out what resources you need to deliver on your projects. It is a high level strategic process.

Here is how the capacity plan looks in Kelloo and we can clearly see which projects have resource capacity issues and when.

Overallocated projects

The importance of prioritization when capacity planning

To perform effective capacity planning, your projects and work need to be prioritized. 

There are two key reasons for this.

a) You will always be asked to do more work than you have capacity to do. So prioritization acts as a budgeting tool helping you to approve enough projects without exceeding your capacity.

b) Prioritization allows you to ensure you are working on the right projects. 

Projects should not just be prioritized on a simple high, medium and low scale. Rather they should be priotitized on things like return on investment, risk and strategic alignment.

In a recent PMI Pulse of the Profession report, it was clear that the very best organizations have far higher project success rates than everyone else. 

The top performers deliver 7x more projects on time than poor performers. 

One thing these organizations do differently to “the rest” is that they have a real focus on strategically managing their portfolio and their resources. 

They ensure that projects are aligned to strategy and that their resources are deployed to support the most important projects.

The output of the capacity planning process should be an agreed list of the projects you are going to do and approximate dates when you think you can fit them in.

Capacity planning and scenario modelling

When capacity planning there is never one correct answer to the question “Which projects should we be doing when?”

Rather there will be competing project selections that need to be evaluated against each other.

Each alternative may have different sequencing of projects, different resource hiring plans etc.

This is called scenario planning.

Scenario planning lets you adjust your capacity plan to model changes. This lets you seek the best outcome for your organization in terms of resources, priorities and timeframes.

It is not untypical to have four or five options that each fit the bill in terms of resources, budget and alignment to your organization goals.

The trick is to work out which plays out the best for your organization.

Ideally you want to be using a resource management tool that has a scenario planning feature built in. 

Trying to do this in a spreadsheet is near impossible.

Scenarios in Kelloo are like versions of the resource plan that you can compare against each other.

Scenario planning

Resource planning - resource allocation to projects

Whereas capacity planning is a strategic high level technique used to help you figure out what projects you can do and the resources you need, resource planning is used to work out who will be working on which projects.

Capacity planning operates at the role level and compares the supply of resource to the resource requirements of your different projects.

Whereas resource planning is the process of working out which resources will be allocated to projects and when.

This is where the rubber really hits the road in resource management.

To confuse matters a little, this process it variously called resource allocation or resource planning.

A resource allocation is like a contract between the resource manager and the project manager. It confirms to the project manager which resources they have available for their project and when.

Resource planning happens after resource capacity planning

Before getting into resource planning, organizations need to have worked out which projects they want to do using capacity planning. 

The output of the capacity planning process is a prioritized list of projects and the types of resources they need.

Organizations with smaller resource pools or limited projects can sometimes skip a formal capacity planning process and move straight into resource planning. 

Resource planning involves looking at the resource demand for each project and allocating a named resource to the project for a period of time. 

Again resource allocations should be based on project priorities.

Multi project resource planning

Often resources will be allocated to more than one project at the same time, which means their time must shared across projects.

This poses a particular challenge when resource planning as a delay or change to one project can have a ripple effect across other projects.

To resource plan effectively in a multi project environment there are some critical success factors:

(1) Have all your work in one place so you get a true picture of resource utilization.

(2) When you make changes to projects you need instant feedback so you can see the impact on your portfolio and resources.

(3) Try to limit the number of parallel projects by prioritizing your work.

(4) Have appropriate tools to allow you to easily model the effect of swapping resources into alternative allocations.

When resource planning in Kelloo cross project resource allocations are taken into account when calculating availability and utilization.

resource plan

Manage resource utilization

Resource planning is an ongoing process and you need to keep a constant eye on resource utilization.

Projects slip and things change so the resource plan needs to be kept current with up to date resource estimates.

Inevitably resource utilization issues will happen.

Resource utilization is a metric that tracks whether your resources are under or over utilized.

It is normally calculated as:

Allocated time / Available time and expressed as a percentage.

So 100% would be fully busy, 0% would be fully available.

Resource utilization measures how effectively your resources are allocated.

Optimal resource utilization would be having every resource allocated at 100% of their time.

This an ideal and never realized in reality.

A well optimized resource plan should not have peaks of over allocation (resources with too much work) or under allocation (too little work). 

Re-allocate resource or level resources to smooth the allocations.

It is essential that you can view your resource plan both in terms of skill utilization and individual resource utilization. This helps you spot opportunities for re-allocating work to different resources with the same skill.