Resources

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.

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. But applying this in the real world can be tricky.

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.

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.

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

How to do resource management

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.

1. Understand your resource supply

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 or team.

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

2. Figure out the resources your projects need

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 estimate to record the demand. Figuring out which resource actually gets allocated to the project comes as part of resource planning.

resource management estimate

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.

3. Check your capacity to take on projects

Capacity planning is where you work out which projects you can do with the resources you have. In this guide we take you through the main steps involved in capacity planning. Or take a deeper dive into this topic in our Ultimate Guide to Resource Capacity Planning.

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.

Capacity planning helps you make tough decisions

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.

capacity problems

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.

  • 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.
  • 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.

select a scenario

4. Allocate resources 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 is sometimes called resource allocation.

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.

How to handle 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:

  • Have all your work in one place so you get a true picture of resource utilization.
  • When you make changes to projects you need instant feedback so you can see the impact on your portfolio and resources.
  • Try to limit the number of parallel projects by prioritizing your work.
  • 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.

heatmap

4. 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.

This is called scenario modelling.

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.

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.

Because the truth is.

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.

select a scenario

5. Track and 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.

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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.

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.
  • Focus on resource capacity rather than utilization.
  • Assign teams to projects not resources.
  • 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.

overallocated resources

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.

capacity shortfall

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.

capacity shortfall

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.

Select scenario

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.

overallocated resources

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:

  1. Understanding current resource capacities, the resources they have to hand and their skills.
  2. Focusing on project priorities. A prioritized list of projects is required to ensure that resources are being allocated to the right projects.
  3. Transparency into current resource allocations and which resources are currently working on which projects.
  4. 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.