Ultimate Guide to Resource Management
Resource management can be a tricky puzzle to crack but that is no reason to ignore it. I have spent many years working with different organizations over a range of industries to help them work it out.
Now I am sharing with you a host of tactics, best practice and tips to help you make the most of your resources.
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I think you will agree, a solid resource management process is essential for any resource or project based organization.
But some people struggle to build a resource management process that works. Or they build something in spreadsheets, only to find it doesn’t give them what they need.
The thing is, it doesn’t need to be this way.
In this guide we share tips, tricks and best practice we have learnt working with hundreds of organizations helping them with their resource management.
Whether you are new to resource management or want to refresh your skills, there is something for everyone in this guide.
Click here if you want to jump straight into the details of how to do resource management. With worked examples, screenshots and more.
Before we start..
We know setting up a resource management process can seem overwhelming… so take baby steps.
Start with the basics and build your capability over time. You don’t need to do everything in this guide now. Little changes to how you work make a big difference to your projects and your people.
As you probably know, resources are the largest cost in most organizations. So small improvements in how you run your resource management can have big benefits.
What is resource management?
At its heart, resource management is a simple concept. You need to make sure you have enough people with the right skills and get them working on the right projects.
Resource management is how you organize and allocate your resources so you can successfully deliver your projects.
Why is resource management important?
All organizations are resource constrained. Meaning they have a limited supply of resources to use on projects.
So to be successful, you need to ensure you are making the best use of your resources. This means taking steps to ensure:
- Your resources are working on the right projects.
- Resources neither have too much or too little work to do.
- You have the right mix of skills across your teams.
- You understand the headcount you need over the coming months.
- Organizational priorities drive which projects you choose to do.
Who should do resource management?
Most organizations need to do resource management. What changes is the level of rigor and detail involved.
Smaller organizations with a handful of resources might be able to handle resource management using an informal process. Or it may be part of the project managers job.
However, as resource headcount increases and the number of projects grows the resource management puzzle becomes increasingly complex.
And things don’t need to grow that much before resource management becomes an essential part of the organizations toolkit alongside project management.
Kelloo's resource management tools
Resource planning, forecasting and reporting in one place. We help you get the most from your projects and people.
Ultimate Guide to Resource Management
Chapter 2
Resource management process
Resource management boils down to one thing – making sure you have the right people working on the right projects at the right time.
The trick to setting up a resource management process is to start simple and get some basics in place then grow your capability overtime. Even small improvements in how you manage your resources can shift the dial on your ability to deliver projects and make better use of your resources.
At its heart, resource management involves the following six components and techniques. We will tackle each of these in turn and point you to more detailed resources.
In this section
Resource Supply – creating an inventory of your resources and skills
Resource Demand – understand the labour needs of your projects
Capacity Planning and Forecasting – a long term view of what resources you need
Resource Planning – allocate the right people onto the right projects
What If Planning – evaluate different project timings or hiring plans
Track and manage resource utilization – check people do not have too much work
Resource supply
Creating an inventory of your resources and skills
The starting point for resource management is to get to know your resources. This involves building an inventory of your resources, their role (i.e. project manager, software developer etc.) and how much labor time they provide you – this is knows as resource supply.
The resource inventory is normally called a resource pool. It is quite common to also tag on additional pieces of information for each resource such as skills, team, location, grade etc. to help you filter and report on resources.
You can summarize the amount of labor in the resource pool by days or FTE (full time equivalent). Once you have figured out the supply of your resources, summarize this by role.
Getting this step right is essential as most organizations overstate the resource capacity they have available for work. Read more about understanding your resource supply.
Here is how the resource pool looks in Kelloo.
Resource demand
Understand the labour needs of your projects
Resource supply is one side of the resource management equation, the other is resource demand. Resource demand is simply the total amount of work you need your resources to do.
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.
When doing this step, people often only focus on projects. But don't forget all the other things people have to do - meetings, support etc. These all consume people's time. One approach to handling this is to just create a demand item called "Business as usual work".
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.
At this point, don't try to assign specific resources against your projects. It is more flexible to just record the type of resource by assigning a role. I.e. Project Acme needs 5 software developers for 2 months starting July. Figuring out which resource actually gets allocated to the project comes as part of resource planning.
You can read more about calculating resource demand.
In Kelloo you just need to enter the project, role and work estimate (or number of people required) to record the demand.
Capacity planning
Check your capacity to take on projects
Capacity planning is where you work out which projects you can do with the resources you have.
Capacity planning often looks many months ahead in time, perhaps as far as 12 months. This is because there is a lead time to hire new staff and organizations also need to make commitments about what projects they intend to do. Capacity planning can also be called resource forecasting.
The chances are, like most organizations you will be asked to do more projects than you have resources for. So capacity planning is used to help you answer questions such as:
- Do we have enough resources available to approve a new project?
- What happens if we delay lower priority projects – will that help solve resource shortages?
- Should we re-allocate resources between projects?
- Do we need to hire more people and if so when and what skills do they need?
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 months have resource capacity issues.
The importance of prioritization when capacity planning
To perform effective capacity planning, your projects and work need to be prioritized so you can ensure you are targeting resources to the right projects.
Resource planning
Allocate resources to projects
Resource planning is where the rubber really hits the road in resource management. To confuse matters a little, this process is sometimes called resource allocation.
Whereas capacity planning is a 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. Confused? then take a look at our article difference between resource planning and capacity planning.
Capacity planning operates at the role level and compares the supply of resource to the resource requirements of your different projects. To ensure you have enough resources overall as people can be re-deployed between projects.
Whereas resource planning is the process of working out which specific resources will be allocated to projects and when.
Resource planning involves assigning actual people to work based on their skills match and availability. This is normally done using a visual resource planner showing resources availability and the ability to search and filter resources by skills, location, role etc. Whatever resource planning tool is used, it is critical that is supports planning in a multi-project environment.
What if planning
Compare different plan options
There is never one correct answer to the question “Which projects should we be doing when?”. Rather there will be competing project selections and timelines that need to be evaluated against each other. Each alternative may have different sequencing of projects, different resource hiring plans etc.
Trying to work out which option works best for you is variously called scenario planning, scenario modelling or what-if analysis.
Scenario planning lets you adjust your resource plan to model changes. This lets you seek the best outcome for your organization in terms of resources, priorities and timeframes.
Scenarios in Kelloo are like versions of the resource plan that you can compare against each other.
Manage utilization
Track and manage resource utilization
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. Optimal resource utilization would be having every resource allocated at 100% of their time. This is 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).
To solve resource utilization issues, you need to re-allocate resource or level resources to smooth the allocations. You can take a deeper dive into calculating and tracking resource utilization.
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Ultimate Guide to Resource Management
Chapter 3
Resource management best practice
Organizations are under increasing pressure to deliver more products and projects with scare resources. Which means resources must be optimally utilized and focused on the right projects.
Poor resource management leads to poor productivity, delays, decreased quality, increased costs and missed opportunities. These common resource management problems are not unique to you.
But how can you improve your resource management?
When we work with customers, we tell them to focus on these key resource management best practices:
- Recognize that high levels of resource utilization are not a good measure of resource management effectiveness.
- Prioritize your work so your resources are working on the most valuable projects.
- Don’t try to plan too far into the future or in too much detail.
- Understand the difference between a resource plan and a forecast.
- Avoid becoming reliant on spreadsheets.
- Find a strategy to manage resources who are shared across projects.
- Remember than agile needs resource management also.
Resource management best practices, tips and strategies is a great resource if you are ready to take a deeper dive into resource management best practices. And if you are looking for resource management software to help with the heavy lifting, take a look at our choosing resource management software guide.
Effective resource management means ensuring you have the right people on the right projects at the right time.
Ultimate Guide to Resource Management
Chapter 4
What are the benefits of resource management?
The strength of your organization rests in your human resources and people are probably the greatest cost to you. So it goes without saying that effective resource management can bring immense benefits to your organization, your projects and resources if done right.
However resource management can be a tricky problem to crack. A recent study found that 39% of projects fail due to poor resource management.
Here are 7 benefits of resource management.
1. Better forecast required resource levels and skills
Understand the gaps between what resources and skills you have now and what you need to hire to get your projects done.
2. The capacity of the organization is clear and transparent
Better understand the capacity of your organizations to deliver projects given the resources you have.
3. Ensure resources are working on the most valuable projects
Validate if resources are still working on the right projects and spot opportunities for moving resources onto higher value work.
4. Better utilized resources
Spot resources who are constantly in demand and roles that have high levels of utilization.
5. Reduce project costs
Resources will probably be the biggest cost to your organization. Resource management can help you by:
- Using the right resource on the right project can have a huge impact on a project’s ROI.
- Less last minute hiring of expensive contract or temporary staff.
- Spotting opportunities for using lower cost resources on projects.
6. React better to changes
Understand the impact of changes and how you can reallocate resources, adjust resource levels and shift project timelines to keep things on track.
7. Let project managers plan projects and resource managers plan resources
Often overlooked, but one of the biggest benefits to resource management is separating resource management from project management.
Ultimate Guide to Resource Management
Chapter 5
Agile resource management
Some agile teams say that resource management is no longer necessary in an agile environment.
However, this is too simplistic a view.
Agile teams rarely work in isolation and often work on projects alongside non agile teams.
Organizations still need to forecast what resources they need to recruit and make commitments to what projects they can deliver.
With agile resource management the focus shifts.
- The capability of teams become the focus rather than individual resources.
- Plan sprints within the capacity of the team.
- Focus on resource capacity rather than utilization to understand resource gaps.
- Assign teams to projects not resources.
- Use product roadmaps to help understand longer term resource needs.
- Restrict the number of projects being executed at one time by prioritizing and queuing projects.
Resource management in an agile environment is in many ways easier, but no less important.
With agile you still need to be sure you have the resource capacity to deliver on the organizations strategy.
8 best practice for agile resource management
1. Agile still needs a plan
There are competing tensions when doing resource management in an agile environment.
Agile teams have a near term view.
While resource management requires a longer term view.
And this leaves us with a problem.
It can take months to recruit people and teams.
You need an idea of how many people you will need to hire further down the line.
It’s a common misconception that agile does not require a plan.
It does, but a high level plan showing the gaps between your demand and your capacity.
With agile resource management the focus becomes understanding what level of resource capacity you need over the coming months to work on the projects and products you want to deliver.
2. Start with the vision of what you want to work on
The starting point is understanding what you want to be working on over the coming months.
What do you want to focus on over the next quarter, six months or even year?
This is a high level vision.
Not individual features, but describing the big ticket items.
Launch a new website in June, release a new version of your product in September – you get the idea.
Now for the really important thing:
Your work should also be prioritized.
You will not be able to do everything due to resource and cost constraints.
Then lay our your work visually with big blocks representing projects or initiatives.
Often this is called a product roadmap.
This gives executives some clarity as to what is happening when and also ties the agile team into the overall vision of what the organization wants to achieve.
It is important that the roadmap at this point is not talking about specific features. You don’t want to get locked into building a specific feature set.
The starting point for agile resource management is the product road map.
3. Estimate the resource needs of your teams or skills
The next step is to roughly estimate.
- The work involved.
- The types of resources needed to do the work.
When we talk about resources the focus is either on the skills or teams required. Not individuals.
You may not know the exact effort level for the work you’re considering.
But at this point the estimates are being used to get an idea about how much work you can consider taking on.
When you get round to doing the work, the teams can refine the estimates.
4. Balance your resource needs to your resource capacity
Your resource supply will be relatively fixed.
And the chances are your road map will be showing more work that you have resources to complete it.
You only have a few levers you can pull to fix this problem:
- Change the priority of work.
- Adjust the timing of work.
- Adjust the supply of resource (either by hiring or re-allocating from lower priority work).
So using your work priorities as a guide pull the levels until you get a balance between the resource demand (coming from the work) and the resource supply.
To do this you need a portfolio style view of your projects and resources, as project priorities will come into play when making these decisions.
Let’s use an example to explain this
Take a look at the screenshot of the resource planner in Kelloo shown below (note the work is prioritized top down in the view).
1. The purple bars show us when the work is scheduled for.
2. The planner compares the demand (from the projects) to the capacity of the skills, teams and resources.
3. Below the bars are numbers showing us the amount of work allocated per week to the work.
With me so far?
4. The red numbers below the bars tell us which projects will run out of resource and when.
This helps us decide which projects we may need to re-schedule or re-prioritize.
5. And the heatmap at the bottom tells us which resources and skills we are running short of.
This helps us decide which resources we need to re-allocate or hire.
Now..
This is the trick to resource planning that most people miss.
You need to look at the status of both resources AND projects when resource planning. Most times, people only focus on resources – often because the tools they use only show resource utilization information.
So we can see straight away that unless we make some changes, the CRM Project cannot happen and we need to look at the resource levels in the Development Team.
5. Resource management is an on going process
What is important on the road map today may not be important in six months’ time.
Some work may get done faster, other work will take longer.
Resource management in an agile environment should be a continuous exercise.
As the road map changes and work is completed so the resource plan should be re-visited.
6. Resource management and agile work together
By combining longer range high level planning with agile we get the best of both worlds.
But this does require meeting in the middle.
Stakeholders need to accept that the high level vision driving the resource management plans will change.
While agile teams need to raise their sights and recognize that organizations do need some form of planning.
The trick is finding the sweet spot.
7. Use agile resource management tools
Agile resource management requires tools that raise the focus above the day to day working of the agile team.
Tools like Kelloo blend resource management, capacity planning and agile into an integrated toolset and provides the higher level portfolio and resource view of work necessary to scale agile.
Ultimate Guide to Resource Management
Chapter 6
Resource management software
Quite simply, resource management software helps you streamline, manage and optimize how your resources are scheduled to work on projects.
Most organizations start by using spreadsheets for resource management but quickly hit limitations that makes them unusable for resource management.
So instead they look for dedicated resource management software.
What does resource management software do?
With resource management software you can:
- See the resource capacity of your organization.
- Understand the available skills mix.
- Compare this to the resource demand coming from your projects.
- Make better informed resourcing decisions.
This allows you to identify resource shortfalls, make decisions about which projects you can do and how best to allocate your resources to projects.
Resource management software can sometimes be called resource planning software.
What are the features of resource management software?
Below you will find listed some of the features you should look for when comparing resource management software. And if you are ready to start evaluating solutions take a look at our comparison of resource management tools.
1. Role, team and resource based planning
Being able to plan by role / skill, team or individual resource is essential. Don’t choose resource management software that forces you to do your planning at the named resource level. Often you need to plan at the team or role level if you don’t yet know who will be doing the work.
2. Support for agile, waterfall and BAU work
Resource management software needs to support the way you plan and organize your work. And this point is really important. Look for resource management software that supports both agile and waterfall planning.
Secondly, not all work an organization does is projects. So ensure the software can also be used to plan the other non-project work your resources do.
In Kelloo a resource plan can contain a mix of agile and traditionally planned work alongside general business activities meaning your resource management picture is complete.
3. Scenario planning
There is no right answer when doing resource management. Instead, there are competing project and resources options that must be evaluated against each other to strike the best balance.
Often this is called scenario planning or what if modelling. This lets you see how approving a new project, hiring more resource or cancelling a project would impact your current schedule and resource utilization.
So ensure any resource management software you select allows you to create different planning scenarios.
4. Utilization reporting
Utilization reporting is a metric that shows you how busy resources are. So conversely, it can also show you how available your resources are.
Resource utilization reporting is an essential component of resource management software which shows you which resources are in short supply or have capacity to take on more work.
Look for resource management software that lets you view resource utilization at the individual resource level as well as the role (skill) level.
5. Capacity planning
Most organizations have a finite capacity of resources.
So look for resource management software that allows you to compare the overall capacity of your resources to the projects you are being asked to do.
This is an important process when deciding which projects you can approve. Too many resource management solutions focus on utilization reporting and ignore capacity planning.
Kelloo shows a cut off line in the resource plan to indicate projects with sufficient resource vs. those that cannot be approved due to lack of resource.
6. Remember the money - finance tracking
While resource capacity and utilization levels are key metrics, resource management software also needs to focus on resource costs.
Decisions on allocating resources will often be constrained by financial considerations.
So look for resource management software that lets you allocate usage costs to resources and then shows you how your resource plans stack up in terms of money.
Spreadsheets for resource management
A spreadsheet is normally the first tool that organizations turn to when trying to move their resource management into a software based platform.
And why is that?
It is easy to use and most organizations have a copy of Excel, Google sheets or some other spreadsheet tool.
If you are planning a handful of resources and one or two projects you may just get away with using a spreadsheet.
However as the number of projects and resources increases you should look to implement dedicated resource management software.
Here are some of the reasons using a spreadsheet for resource management may not be the best way to plan and manage your resources.
1. Spreadsheets are cell based
So rescheduling a project in your resource plan will require editing lots of cells. Which is time consuming and error prone.
With a tool like Kelloo, rescheduling work is easily accomplished by just dragging bars and the schedule and utilization will automatically be re-calculated for you.
2. Lack of reporting
Spreadsheets do not include any standard reporting capability and reporting is a major need in resource management software.
3. Error prone
One big downside of using a spreadsheet for resource management is that it is too easy for errors and bugs to creep in.
Make a single error in a formulae and your resource plan could be way off track.
Errors often creep in when copying formulae forward – which is something you will need to do a lot to model timescales in a spreadsheet.
4. No resource management features out of the box
Using a spreadsheet will mean developing the solution from scratch and trying to implement features that are standard in resource management software.
Things like utilization reporting, scenario modelling, financial tracking and capacity vs demand management will have to be designed and built into the spreadsheet.
5. Require macros and programming
Spreadsheet formulae will never be enough to implement a workable solution. So inevitably you will have to use macros or program the spreadsheet to work like an application.
Ultimate Guide to Resource Management
Chapter 7
Resource management vs project management
Although different disciplines, project management and resource management are highly dependent.
While most organizations have reached a reasonable level of maturity in project management, many organizations struggle with resource management.
And the brunt of this failure is felt by the project managers.
Project managers ensure people know day to day what they are meant to be doing to help the project on its journey. So this involves low level scheduling of work, managing risks, managing costs etc.
A resource managers focus is people. Their responsibility is to ensure the organization has enough resources with the correct skills to work on projects it wants to run.
Project managers are highly reliant on resource managers and good resource management is a prerequisite for running successful projects.
Most organizations prioritize implementing project planning and management over resource management. They do this because resource management is often the harder puzzle to solve.
The question is – should you be doing resource management or project management? The chances are you should be doing both.
Ultimate Guide to Resource Management
Chapter 8
Portfolio resource management
Most organizations are resource constrained. Which means they are asked to do more work than they have people for.
When it comes to running projects, they can only do so much with the resources they have. Which means they need to make the best decisions about which projects they choose to work on.
The answer is portfolio resource management. This helps them by:
- Understanding current resource capacities, the resources they have to hand and their skills.
- Focusing on project priorities. A prioritized list of projects is required to ensure that resources are being allocated to the right projects.
- Transparency into current resource allocations and which resources are currently working on which projects.
- Create resource forecasts and get a handle on expected resource needs for projects in the pipeline.
Resource management is an integral part of the portfolio management process. It helps organizations make decisions about what they can achieve with the resources they have.
Sometimes this may mean delaying projects, cancelling projects or re-deploying resources to higher priority projects.
We have covered portfolio resource management in greater depth in this blog post. So this is a good place to start understanding how to get resource and portfolio management working together.
