Utilizing and managing resources intelligently is imperative for every organization as they are the most high-priced investments of any business. Moreover, organizations spend a lot of time and money in creating the right talent pool. Therefore, when their skills and competencies are tapped to their maximum potential, it enhances overall efficiency and profitability.
Resource management has become an integral part of any business today. It emerged as an independent discipline after organizations became complex with matrix structures and expanded in multiple geographies.
Efficient project resource management software provides centralized data into a single repository and provides a single version of the truth.
Its components include resource scheduling, resource forecasting & planning, capacity planning, business intelligence/reporting, integration with other related applications, and more.
This blog explains all its necessary concepts and aims to steer you through a successful journey as a resource manager.
Let’s begin with its formal resource management definition.
1. What is Resource Management?
Resource Management is the process of planning, scheduling, forecasting, and optimizing the entire resource lifecycle for successful project delivery. It involves managing resources such as people, equipment, materials, facilities, etc., to ensure they are utilized optimally and in alignment with organizational objectives.
The main aim of resource management is to fulfill the project requirements and ensure productive utilization of every resource across the organization. In addition, it helps build a future ready workforce, improve business profitability, and beat market volatility.
2. Importance of resource management
Managing resources effectively plays a significant role in improving a business’s profitability and sustainability. It ensures that the right resources are available at the right time and cost for successful project completion. Let’s understand why resource management is important for business profitability and sustainability.
A. Minimize project resource costs significantly
According to Deloitte, “Cost reduction takes precedence over other business initiatives.”
With enterprise-wide visibility, resource managers can utilize cost-effective global resources from low-cost locations. Having the right mix of local and global resources helps in reducing project resource costs. Allocating the right resource for the right project enables them to complete the delivery within time and on budget. They can control costs by distributing key resources uniformly across all projects instead of a high-priority project.
B. Improving effective/billable resource utilization
Resource management solutions help resource managers forecast workforce utilization in advance. Accordingly, organizational resources can be mobilized from non-billable to billable and strategic work. Sometimes when resources are rolled off from projects, there isn’t any suitable work to engage them. So, eventually, those resources end up on the bench. Resource managers can initially engage these resources in non-billable work before quickly assigning them to suitable billable/strategic projects.
C. Bridge the capacity vs. demand gap proactively
Demand forecasting, a function of resource management, allows managers to foresee the resource demand ahead of time. It enables them to assess and analyze the skills gap within the existing capacity. After identifying the shortages and excesses, they can formulate an action plan to proactively bridge the capacity vs. demand gap proactively.
D. Use scarce resources effectively in a matrix organization
The resource management process brings transparency in communication and facilitates the effective sharing of highly skilled resources in a matrix organization. The scarce resources can be utilized across different projects rather than one high-priority project. The shared services model will also form teams cutting across multiple geographies for 24 * 7 support operations.
E. Monitor and improve the organization’s health index
Employees look up to their leaders for their professional development. Failing to motivate and provide career development opportunities will predominantly lead to reduced engagement, productivity, and unplanned attrition. Regular monitoring of their skills and performances is beneficial to help them improve and add more value to the organization.
Now that we know the significance of effectively managing resources, let’s dive deep into its major resource management components.
3. What are the components of resource management?
Here are the main components of resource management in project management:
A. Resource scheduling
Resource scheduling involves identifying and allocating resources for a specific period to different project tasks. These tasks can be anything from billable, non-billable, or BAU work.
With a centralized Gantt chart view of the enterprise, resource scheduling eliminates silos of spreadsheets. It also facilitates you to deploy competent resources to the right job to finish the project within budget and time.
B. Resource utilization
Resource utilization measures the amount of time spent by the employees on different project tasks against their availability. It is a key performance indicator in the modern business landscape as it directly influences the firm’s bottom line.
Utilization can be measured in terms of:
- Overall resource utilization
- Billable utilization
- Strategic utilization
- Non-billable utilization
Resource Managers can proactively mobilize resources from non-billable to billable/ strategic tasks and maximize their billable utilization.
C. Resource forecasting
Resource forecasting helps managers predict resource utilization levels in advance and foresee the resources likely to end up on the bench. In addition to these, they can also stay forewarned of the required capacity for pipeline projects.
Leveraging this information, one can
- Mobilize the resources to billable tasks from non-billable or BAU activities.
- Ensure effective bench management
- Bridge the capacity and demand gap
D. Resource planning
Resource planning is the comprehensive process of planning, forecasting, allocating, and utilizing the workforce most efficiently and intelligently. Resource capacity planning is an undertaking to analyze and bridge the capacity and demand gap well ahead of the curve.
These two components are vital to ensure that none of the project vacancies go unfilled or excess capacity gets wasted. Simply put, resource and capacity planning maximize optimal utilization and timely project deliveries.
E. Business intelligence and reports
Business intelligence provides actionable insights by performing extensive data analysis. Using real-time data, individualized reports, and dashboards, critical resourcing metrics are analyzed for decision-making. These reports strengthen the managers’ decision-making abilities and allow them to monitor the overall resource health index.
Now that we are aware of the critical resource management concepts and components let’s understand what skills can help a manager ace this multi-layered process.
Now that we know the basic components, let’s learn about key resource management techniques.
4. What are resource management techniques?
Resource management techniques refer to the strategies and methods employed to effectively allocate and utilize various resources within an organization or project. These techniques are critical to solving resourcing conflicts such as overallocation and underutilization.
There are two types of resource management techniques:
A. Resource leveling
Resource leveling is a technique used in project management to adjust project start and end dates based on the availability and schedule of resources. It is applied to projects with flexible timelines to ensure an even workload for team members and prevent over/underutilization.
Example of resource leveling:
Let’s consider a software development project where a team of programmers is working on different modules of a software application. The project manager notices that two critical modules require the expertise of a senior programmer, but there’s only one senior programmer available.
Without resource leveling, the senior programmer might be overloaded with work, leading to burnout and potential delays. To avoid this scenario, the project manager can adjust the project schedule by changing the start and end dates of the two critical modules. This would allow the senior programmer to work on one module at a time without being overloaded.
B. Resource smoothing
The resource smoothing technique is applied to time-sensitive projects. It involves allocating additional resources, redistributing workload among existing team members, or adjusting float tasks of projects without changing the critical path. Resource smoothing focuses on resolving resource overutilization while keeping project schedules and timelines fixed.
Example of resource smoothing:
Let’s consider an audit and accounting firm with a limited pool of consultants. During the financial year-end, there’s typically a surge in client demand requiring tax filing assistance. In this period, the tax department is overwhelmed with work, leading to overloading and burnout.
To reduce the impact of overutilization on team productivity and project workflow, the firm can hire additional on-demand tax consultants during the peak season to redistribute the workload. This will allow the audit and accounting organization to meet tax deadlines and client expectations without overexerting the internal team.
In the next section, we’ll learn about the vital resource management skills that every manager must possess.
5. What are resource management skills that every manager should have?
Resource managers have multiple responsibilities to account for when managing the most significant investment of the firm. From understanding the talent pool to being the key link between PMOs and the workforce, they have a lot on their to-do list.
Here’s a list of resource management skills for a manager to streamline this complex process:
A. Communication skills
Resource managers are accountable for fulfilling resource requirements from project managers by assigning the job to the right resource. Since they act as mediators in this process, it’s imperative to have exemplary communication skills. It will enable them to explain the roles and responsibilities to the resources better while also making reasoning with the project managers seamless.
B. Conflict resolution
Often multiple project managers end up requesting similar-skilled resources. In this case, if the project prioritization criteria are not in place, it may lead to conflicts. Also, a lack of transparency in defining goals and objectives can lead to resources being clueless, which can also result in discrepancies. It’s the job of a resource manager to intervene, set the expectations right, and ensure that everyone is on the same page to keep the work going. This is why conflict resolution skill is a mandate.
C. Domain knowledge
To allocate the right resource to the right job, it’s important that managers understand the skillset very well. If a resource manager with no engineering knowledge is working for an engineering firm, it will put forth resource planning challenges in the long run. For this, they must have domain expertise to get more clarity.
D. Proactive planning
Every project manager aims to complete the project within time and budget, which makes forward planning a critical aspect. Since success highly relies on the workforce, resource managers need to be extremely proactive to fulfill the demand. They should be quick-witted to make calculated decisions about implementing the right resourcing treatments to ensure resource availability for projects.
E. Negotiation skills
Resource planning is a complex job and brings forward a myriad of challenges for the resource manager. For example, a project manager has requested an employee with advanced-level technical skills. If one skill is missing and it’s expensive to hire another resource, managers have to convince the project owners. In such cases, managers must be able to negotiate well and get the job done.
F. Risk management
What if a resource takes prolonged unplanned leaves? What happens if there is unplanned attrition? A running project can come to a halt. How would a resource manager tackle this situation? If they have a backup plan in place, these situations will seem easy to deal with. Risks are inevitable in the project landscape. Thus, resource managers should hone their risk management skills with forward planning to keep the project going
These are some of the imperative resource management requirements and skills for a resource manager. Let’s now understand which businesses can reap the benefits of managing resources efficiently.
6. Types of businesses that require enterprise resource management
Organizations with a matrix-based set-up, cross-functional teams, and a shared-services model require enterprise resource management. The level of complexity to which they adapt the business processes depends on their size and functions. Yet, today it is part of every organization’s DNA.
Industries such as IT services, construction & engineering, audit & accounting, and professional services organizations, etc., have implemented robust resource management processes.
Other crucial factors that affect the better management of resources are firms working on multiple projects in ad-hoc environments. It means that they are exposed to several changing variables like project priorities, resource availabilities, and budget constraints.
These complexities demand enterprise-wide visibility and real-time updates to help managers stay informed at all times. They need to manage their resources diligently and finish the projects within budget and time. Therefore, organizations need to invest in enterprise-grade solutions to effectively utilize their resources irrespective of the industry type.
Formulating a project resource management framework is only half the battle won. It is equally important to implement this strategy using an appropriate tool to meet specific organizational needs. Otherwise, it will have an adverse effect on the entire resource pool and the firm’s reputation.
Now, let’s learn about some of the consequences of poor resource management framework.
7. Consequences of poor resource management strategy
When organizations adopt inefficient resource management processes and techniques, it can drastically affect project delivery and overall profitability.
Here are some of the negative impacts of poor resource management strategy.
A. Increased project costs
Incompetent allocation or booking of high-cost resources instead of the low-cost but similarly skilled workforce spikes project budget. Since the resources’ skills and competencies are not leveraged most effectively, project costs will increase, causing unnecessary budget overruns.
B. Reduced employee performance
Poor employee performance is the first and foremost indicator of sub-optimal resource management. Unrealistic expectations, over-allocations, or bookings without considering employee interests and skills can contribute to reduced engagement and productivity. It will adversely affect the project’s quality and lower employee morale.
C. Delays in meeting project deadlines
Without visibility of team members and their skill sets, organizational resources may get allocated to projects that do not match their competencies. It can result in delivery delays as significant time will be spent learning on the job before becoming productive. Delays in meeting deadlines also blow-up project costs.
D. High employee turnover
Employees feel disengaged and dissatisfied when their strengths and skills are not exploited at their best. Over-allocating resources due to unrealistic deadlines can lead to employee burnout. These circumstances can compel your valued talent pool to look for opportunities elsewhere, which will gradually increase employee turnover.
E. Client dissatisfaction and loss of business
Inefficient resourcing practices lead to poor resource allocation, which causes teams to put in long hours to meet project goals. Tight deadlines and a heavy workload can put the allocated resources under pressure, thereby increasing the likelihood of errors. Delayed delivery, compromised quality, and budget spikes jeopardize project health, resulting in client dissatisfaction and, eventually, business loss
The decision-makers must therefore formulate an efficient resource management plan to avoid facing these consequences. Managers can formulate this plan using advanced software.
8. Resource management trends to look forward to
The emergence of innovative and advanced technology has created a paradigm shift in the ways resources are managed. Comprehensive resource management tools are developed using Business Intelligence that provides precise insights into resource metrics and promotes data-driven decisions.
Here is the list of trends you will witness in the near future:
A. Going beyond simple scheduling and planning tools
Most resource managers implement basic scheduling and planning tools to efficiently manage resources and allocate tasks to them. However, as mentioned earlier, it goes beyond these concepts and covers a lot more. Thus, firms will soon start investing in holistic resource management tools that maintain a single version of the truth across the enterprise and provide all features under one roof.
B. Replacing guesstimations with real-time forecasting to plan future projects
While managing resources, many managers still implement resourcing treatments based on mere assumptions and guesstimations. A modern tool will replace that with real-time forecasting. Managers will get precise foresight into project resource demands, resource availability, utilization, and more.
C. Using Business Intelligence to derive reports and maximize utilization
Modern resource management software is integrated with business intelligence that derives information from the data and provides intuitive reports in real time. Managers can use these reports to their advantage to assess and improve various metrics. For instance, they can maximize the productive utilization of the workforce, which will enhance their productivity.
D. Switching from emails to a well-formulated resource requisition workflow
Resource and project managers still send endless trails of emails to get the required resources. Advanced software will change this by helping you form a resource requisition workflow. The first-come, first-serve basis will become obsolete, and priority projects will take precedence. Moreover, it will form an audit trail that will give absolute transparency regarding resource requirements to all the stakeholders and management.
E. Implementing modeling & simulation to form the best-fit resource plan
Creating a resource plan involves a lot of analysis to eliminate potential bottlenecks in the future. An advanced tool brings a compelling feature, ‘what-if analysis,’ into the picture. Accordingly, managers can leverage it to simulate different variables, form the best-fit resource management plan and mitigate against potential risks.
F. Empowering employees to choose their areas of interest
Businesses have restructured to become employee-centric, which helps them grow professionally while the project needs are taken care of. To stay one step ahead, managers can now create an open seat for relevant project positions and allow employees to choose their areas of interest. It will enable them to diversify their portfolio, hone their skills, and increase productivity.
G. Introducing a well-defined out-rotation policy for employee retention
When a critical resource is working on one project, managers tend to deploy the same resource to similar projects in the future. It creates a limitation for the employees as they don’t get to work on multi-faceted projects. Thus, resource managers must formulate a well-defined out-rotation policy that will provide fair chances to every employee. This will help facilitate all-around resource development and improve organizational efficiency.
These are some of the latest trends in this space that will facilitate managers to unleash the maximum potential of their workforce and maintain a competitive edge.
9. Over to you
It is now evident that a complete resource management plan is crucial for the success of any business. It is not a ‘one size fits all’ process. Every organization operates differently and therefore needs a tailored project resource plan that suits its needs.
Therefore, it is imperative to use the right resource management system and processes to manage the most expensive investment of your organization, your workforce!
What process do you follow to ensure efficient management of resources?
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10. The Glossary
11. The SAVIOM Solution
SAVIOM is the market leader for more than 20 years in providing efficient and configurable solutions for managing the workforce. It has been deployed by many Fortune 500 companies across the globe. SAVIOM also provides tools for project portfolio management, professional service automation, and workforce planning software. Contact us for a free trial and we will provide a customized solution to solve all your project resource related challenges.