“How many and what resources do I need for the coming weeks, months, quarters, or years”? “Should I hire more people to meet future demands or leverage sales efforts to keep everyone occupied with work”? “How can I avoid billing loss and control project costs before it’s too late?”
These are the pertinent questions that stakeholders ask themselves on an everyday basis. To get the correct answers, we need efficient resource planning.
Without implementing the proper process and technique, making any decision will be like throwing darts in the air.
Resource planning can address these challenges in today’s dynamic business conditions. It helps plan resources intelligently from the ground up and continuously optimize your workforce. However, taking a shortcut and failing to make a timely decision will adversely affect the organization’s business objective.
This guide is curated for enterprises to gain a detailed understanding of resource planning in project management.
Let’s dive deep into it.
Resource planning definition
Resource planning is the process of identifying, forecasting, and allocating best-fit resources, i.e., human resources, equipment, assets, facilities, and more, to the projects at the right time and cost.
It also ensures the efficient and effective utilization of resources across the organization. In other words, it’s the strategic planning process to make the best use of resources depending on their capacity/availability and deliver every project within time and budget.
Let’s take an example: your firm is an IT company, and you have a software development project in the pipeline received from a global client for a long-term horizon.
Here, project managers will look after the client’s requirements, assess the scope of the project, and will also predict and evaluate the resource demand. As a part of the process, they will request resources from resource managers to fulfill this demand.
The resource managers will now assess the new requirement, find out the gap between the demand and the available workforce, and look for different ways to fill this gap. This will include hiring a new workforce from the market or juggling resources available within the organization. Thus, the ability to forecast requirements and develop a strategy to plan, allocate, schedule, and utilize the resources and their competencies effectively is termed resource planning.
Once you know what resource planning is, let’s understand its importance in project management.
Importance of resource planning in project management
According to a PMI survey, “26% of companies with a dedicated resource planning solution can estimate and allocate resources to deliver projects on time.”
Thus, resource planning is a crucial part of the project management process as it plays a key role in a project’s success.
Here is a list of the benefits and how planning resources makes a difference in the project management landscape:
Allows resource planning for pipeline projects
Creating more projects in the pipeline is desirable, but not having enough resources to execute them causes project bottlenecks, delays in meeting deadlines, and impacts the quality. An intelligent resource plan and timely forecasting help managers predict all pipeline project requirements in advance.
Thereby, resource managers can either allocate a cost-effective global resource or hire an on-demand or permanent workforce with a suitable skill set. This helps reduce last-minute hiring activities, which can lead to cost escalation and compromise quality.
Bridges the capacity gap proactively
Demand forecasting, one of the significant pillars of resource planning, identifies the excess or shortage of resources by comparing the resource demand against the existing capacity. Based on this data, managers can implement the right resourcing treatments to bridge the capacity and demand gap.
CASE I: Excess of resources
When the resource demand decreases vis-a-vis available capacity, it results in excess resources. This excess capacity can be mitigated by bringing future project work ahead, adjusting timelines, redeploying resource capacity in other projects, etc.
CASE II: Shortfall of resources
When the resource demand is higher than the capacity, there is a shortage of resources. It can be resolved by exploring two different resourcing channels.
Internal recruitment focuses on the employees already on a firm’s payroll. This includes selecting an employee from the bench based on their skills and qualifications or transferring resources from different projects.
If the required skill is absent in the organization’s internal network, then the resource managers hire the resources from external sources. It includes hiring resources through recommendations/networks and recruiting freelance/contingent workforce from partner vendors.
Minimize project resource costs significantly
According to the Deloitte Global Cost Survey 2020: “Reducing project resource cost takes precedence over other business initiatives.”
Allocating the right resources to the right project ensures the timely delivery of the project within the budget. If resources are underqualified, a delay in project timelines is inevitable, and if overqualified, it can spike project costs. However, with an effective resource planner, managers can make data-driven decisions to eliminate the deployment of over/under-skilled resources on project tasks.
This will enable managers to implement suitable resourcing measures at the right time. For instance, they can allocate a cost-effective global/local resource or a benched resource to a task. Moreover, they will have enough lead time to conduct planned hiring in place of last-minute activities and create the right resource mix that suits the project budget.
Forecast and maximize profitable resource utilization
Resource planning and forecasting provide foresight into utilization within a project. A structured resource plan includes mobilizing resources from non-billable to strategic/billable projects for increased revenue based on their skill set. This prevents under or overutilization of resources and helps improve productivity and employee satisfaction.
Furthermore, an efficient resource scheduler allows managers to view the resource’s present and future allocations on one platform. They can also have a periodic check on forecast vs. actual resource utilization report and accordingly, optimize the utilization levels of the resources.
Ensures competent resource allocation across a matrix organization
Resource planning in project management helps managers gain a centralized view into all resource-related information, such as skill sets, cost rate, location, resource capacity, among others. This visibility and a systematic resource-requesting process help managers leverage the shared service model of a matrix organization. Thus, they can filter and load the appropriate resources to the project/tasks across departments.
Further, it empowers managers to allocate global resources from low-cost locations and control project costs. Moreover, the advanced resource scheduler ensures that strategic resources are not assigned to only high-priority projects but are uniformly distributed across the enterprise. This ascertains competent resource allocation in projects and allows resources to work on different assignments and improve their portfolios.
Delivers project on time and within budget
PwC Project Management Insights states that “30% of projects fail due to a lack of resources.”
The benchmark for successful delivery is meeting project deadlines and avoiding budget overruns. Efficient resource planning ensures that all project resourcing requirements are identified and fulfilled. This also involves periodically reviewing project performance throughout their lifecycle as resource demand fluctuates occasionally.
However, by using forecast vs. actual reports, resource utilization heatmap, etc., managers can monitor and control project budgets. Regular monitoring will ultimately lead to accomplishing the most critical project metrics, such as client satisfaction, higher retention, enhanced work rate, and increased brand loyalty.
Let’s gain insight into the critical elements of resource planning.
Essential components of resource planning template
A robust resource planning software will enable managers to effectively manage resources, mitigate risks, and drive projects to success. Here are some salient features that are foundational to efficient resource planning.
Multi-dimensional resource planner
Identifying the project’s resource requirements is a fundamental aspect of resource planning. This involves analyzing the quantity and type of resources required, i.e., human or non-human. Moreover, it also includes a thorough evaluation of the skills, competencies, and subsequent proficiency levels needed for accomplishing projects and subsequent tasks.
With a multidimensional resource planner, managers have visibility into resource profiles across multipe dimesions such as as team, departments, location, etc. It empowers them to allocate appropriate resources in real time to the projects. In other words, it allows managers assign the best-available-best-fit instead of the first-visible-first-fit resource, enabling competent allocation for all projects.
Project pipeline planning
Once a pipeline project reaches a certain probability stage, the manager estimates the resource requirements and initiates the requisition process. The corresponding resource manager then begins the fulfillment of the request. But first, they must analyze if the organization possesses adequate internal resources to start the project. Therefore, the resource manager compares the existing resource capacity against the project demand from multiple perspectives such as role, department, team, skills, etc.
This meticulous evaluation helps firms identify the shortages or excesses ahead of time. Accordingly, managers can apply appropriate resourcing strategies such as training/upskilling, out-rotation and backfill strategy, or staggered hiring for niche resources. This approach minimizes wasteful hiring/firing cycles to ensure that the right resources are available for projects at the right time and cost.
Resource utilization forecasting
Resource forecasting techniques enable firms to optimize billable and strategic utilization. It allows mobilizing resources from non-billable to billable or strategic work. Resource planner helps to control project financials by comparing forecasted with actual utilization. It also detects and proactively mitigates under and over-resource utilization.
Further, managers can refer to comprehensive utilization reports, color-coded heatmaps, etc., to identify under/overutilization of resources. Consequently, they can implement resource optimization techniques such as levelling and smoothing to ensure optimal profitable utilization and productivity.
Resource capacity planning
Forward planning resource demand for current and pipeline projects is essential to avoid last-minute scuffles for competent professionals. With robust resource capacity planning, organizations can analyze the enterprise’s resource capacity vs. project demand gap. This foresight helps identify resource excess or shortage and implement corrective steps to bridge the gap.
In the case of a resource shortage, managers can facilitate proactive strategies such as re-training employees or hiring a contingent workforce. Conversely, when there is a resource excess, they can bring forward the project dates. Simultaneously, capacity resource planning helps minimize bench time by adjusting timelines or selling excess capacity at discounted rates and building an optimized project team that is future-ready.
With a resource planner, managers can gain early foresight into the workforce that will land on the bench due sudden ramp-down activities. For instance, when a project finishes and the next one begins, managers are prepared well in advance and can proactively allocate these resources to suitable project vacancies on time.
Resource managers can look into project vacancy reports and plan work for resources before they hit the bench. This will reduce bench time between projects for most resources and improve the organization’s bottom line. Additionally, with efficient bench management, managers can provide training or shadowing opportunities to selected employees to enhance their billability.
Reporting using real-time business intelligence
Modern resource planners provide real-time business intelligence reporting and analytics to fast-track decision-making in a rapidly changing business environment. These configurable dashboards and custom reports empower end-users to slice and dice relevant information effortlessly and present insights through visually intuitive graphs and reports.
Moreover, intelligent BI uses a combination of security rights, portal designs, and filters, allowing the end-user to view relevant data and prevent information overload. Additionally, it will enable managers to tailor reports to gain visibility into data matching their specific requirements. This streamlined accessibility empowers managers to make faster decisions and improves the overall resource health index.
What-if analysis for resource simulation
What-if analysis within a resource planner allows firms to build and simulate different resource scenarios in a multi-project environment. This helps managers to compare different scenarios and their potential outcomes. Accordingly, the manager can form different resource mixes, with the revenues earned, to find the most profitable project.
Thus, after deriving the best scenario, managers can apply it to the resource plan. Moreover, what-if analysis also helps prioritize profitable projects based on criteria like budget and timeline. As a result, it enables organizations to manage multiple projects’ demands with limited resources.
Creating an efficient resource plan is essential as it optimizes resource utilization, minimizes wastage, and ensures financial stability throughout the project. Here is a detailed step-by-step breakdown of the same.
How to create an efficient resource plan in 7 steps?
Here are seven distinct steps by which managers can create an efficient project resource plan:
Step 1: Understand client and resource requirements
At the outset, managers kickstart the resource planning process by thoroughly understanding both the project requirements and the resources available within the organization. This includes assessing the project scope, objectives, timelines, and budget.
Based on that, project managers can gauge the resource requirements in terms of skills, types, and number. This initial evaluation helps managers determine whether the existing skills and competency of the workforce align with the overall project goals and take appropriate corrective measures. Therefore, it helps avoid any last-minute firefighting, ensuring successful project delivery.
Step 2: Fulfill the project demand by identifying the gap
After a project manager determines the project requirements, the next step involves requesting the necessary resources from resource managers to fulfill the project demand. Resource managers play a pivotal role in assessing the capacity versus demand gap.
They meticulously analyze shortages or excesses of resources from multiple perspectives, i.e., role, skills, competency, etc. This proactive approach enables organizations to foresee resource challenges, allowing for strategic planning and resource allocation.
Step 3: Implement appropriate resource strategies to bridge the gap
After identifying the shortage and excess of resources, managers must take proactive measures to bridge resource gaps in the short or long term. This visibility into resource gaps allows sufficient lead time for the managers to initiate forward planning and take appropriate resourcing measures to bridge the gap.
For instance, in case of shortages, organizations may facilitate re-training/upskilling resources, juggling project priorities, or hiring a permanent/contingent workforce to avoid last-minute hiring/firing costs. Conversely, when the resources are in excess, managers can either bring forward project dates or sell excess capacity to optimize the utilization of every resource and ensure successful project delivery.
Step 4: Allocate the right resources to the right project
Effective resource allocation is a critical step in the planning process. By leveraging the centralized view and advanced filters, managers can strategically allocate resources based on availability, skills, competencies, and interests. This ensures that managers align the right skilled workforce with appropriate expertise to projects for optimal project success.
Managers can also create the right resource mix of senior/junior employees or contingent/permanent workforce, depending on the project requirements. It will help them control the project budget without compromising the quality of deliverables. This way, the company can consistently complete projects on time and within budget by allocating the most suitable resources.
Step 5: Consider factors that affect resourcing strategies
To effectively carry out the allocation of appropriately skilled resources to the project, managers need to consider the following factors:
- Long-term/short-term assignment
The foremost step to consider while recruiting resources is whether a firm is filling a position for a short-term or long-term assignment. For the short term, hiring a contingent workforce or freelancer is an ideal choice. However, for a long-term assignment, focusing on permanent hiring with lead time is essential. Therefore, considering the project length when hiring helps minimize wasteful hiring/firing cycles.
- Generic vs. niche skill
Generic skilled resources are relatively easy to plan for, as they are readily available within the organization. On the other hand, hiring resources with niche skills may require additional lead time due to their scarcity, which often results in higher costs. Additionally, once their assignment is completed, redeploying them within the organization can prove challenging.
- Cost of the resource
It is important that the resource managers hire the right resources with a defined skill set and experience for the project. They must look into the cost rate of the resource that fits the budget of projects. Furthermore, managers should also factor onsite, offshore, and near-shore options in the recruitment strategy to minimize the overall project resource costs.
- Attrition & succession planning
Managers need to ensure that the sudden resignation of critical resources does not jeopardize a project’s delivery. Therefore, they must implement robust succession plans to identify and train replacements for key positions within the organization. An intelligent resource planner provides a real-time competency matrix that helps managers select competent employees for leadership roles. Therefore, it not only addresses the resourcing needs of the organization but also helps monitor the resource health index.
Step 6: Monitor and control project resources
Once resources have been allocated to project tasks, it’s important to regularly track and monitor the utilization of each professional to prevent instances of under/overutilization. In case of underutilization, managers can bring forth project timelines. On the other hand, managers can implement optimization techniques like resource leveling and smoothing to mitigate overloading.
Further, project managers must anticipate and plan ahead for resource related risks such as unplanned absenteeism, turnover, lower productivity, etc. They must create risk mitigation strategies to control these bottlenecks adequately and prevent them from derailing the project’s progress. This will ensure timely project delivery within the pre-defined budget and quality standards.
Step 7: Conduct a post-project analysis
Upon project completion, it is crucial for managers to conduct a thorough post-project analysis to evaluate the effectiveness of the resource plans and identify areas of achievement and improvement. This will help scrutinize whether resources were allocated efficiently, if project deadlines were met as planned, and if any unexpected circumstances arose.
With these insights, firms can refine and enhance future resource planning efforts by identifying areas of success and potential improvement. They can develop robust and efficient resource plans that align resources with project needs, minimize discrepancies, and ultimately bolster project success rates.
Finally, these are the essential components in a typical resource planning template, which can help effectively plan your workforce. Given below are some of the common mistakes of resource planning in project management. Read on:
Common mistakes of resource planning in project management
The project resource cost can blow out of proportion, and project delivery is significantly impacted without a proper resourcing strategy. This section describes some of the common mistakes made in this area.
Using silos of spreadsheets for resource planning
Despite its limitations, many organizations still use spreadsheets to plan their resources because they are easily accessible. While this software comes at a cost, it offers significant benefits over spreadsheets. Excel resource planner causes improper allocation, double booking, and creates additional work. This system is very limiting and a nightmare to maintain.
Marketwatch states that “88% of spreadsheets are prone to errors.”
Planning resources without overall visibility
Many managers continue to allocate resources without having complete visibility of their skills, competencies, and existing bookings. As a result, it becomes difficult to allocate the right resources to suitable projects at the right time. Restricted visibility also hinders identifying and leveraging quality resources from low-cost locations.
Lack of resource forecasting for pipeline projects
Resource planning for future projects is often taken up at the eleventh hour. The resource managers make the mistake of only taking up the planning activities when the deal is signed. Ideally, it should start after the opportunity reaches a certain probability of closure so there is sufficient lead time to address resource requirements. This results in last-minute activities that create an unbalanced pool as the quality of the resources is compromised.
Not maintaining the right mix of permanent and contingent workforce
Businesses try to fulfill project requirements using full-time employees as it is perceived to be a more cost-effective solution. However, if a niche resource is hired for a shorter duration, it becomes challenging to redeploy him after the assignment is complete. Therefore, a resource plan should maintain a judicious blend of permanent and contingent resources. For short-term assignments, a contingent workforce will be less expensive than hiring full-time resources.
Allocating under or over-skilled resources to the projects
One of the common mistakes of resource planning in project management is assigning under or overqualified resources to tasks. When resources are under-skilled for the job, it causes project delays. On the other hand, over-skilled resources spike project costs. Not assigning tasks per skills and interests leads to decreased employee engagement and loss of productivity.
Unplanned hiring without analyzing project demands
Resource managers often resort to last-minute hiring activities to fulfill project resource requirements. This unplanned hiring compromises quality and leads to a large bench of mismatched skill sets. So, analyzing project demands with matching skill sets is a prerequisite for informed hiring decisions.
Knowing the common mistakes of project resource planning, let’s understand the responsibilities of resource and project managers.
Responsibilities of project managers and resource managers
Project managers operate on a project level with projects of different sizes and complexities. A project manager can manage single or multiple projects and ensure they are completed within a stipulated time and budget. However, resource managers operate at the organizational level and oversee allocating resources to several projects.
The project manager initiates the resource request for an open position within his project, and the resource manager’s job is to fulfill the same. Once a resource is allocated to a project for a particular period, the resource manager’s responsibility ends. However, the project manager’s job only begins to ensure that the resource carries out the delivery responsibilities.
Role of resource manager
In summary, a resource manager is responsible for the following:
- Planning and allocation based on resource skills, previous experience, and availability.
- Conducts capacity planning to address issues of shortfall and excesses of resources.
- Support project managers with the project resource management plan and related activities.
- Address resource concerns by reallocating resources, negotiating, or assigning additional staff.
- Collate new project requirements from the business and provide them to the hiring team.
- Certain limited HR-related functions.
- Collaboration with other departments, e.g., HR, PMO, Sales, Learning & Development.
- Generating reports and analytics for senior management.
Role of a project manager
The corresponding roles of a project manager are:
- Create a project management plan and define the scope and delivery objectives of the project.
- Capture resource requirements and request for fulfillment.
- Streamline communications with stakeholders/ team members and customers.
- Carry out operational reviews as per project KPIs.
- Estimate time and cost and monitor the budget.
- Report the project’s progress, analyze potential risks, and provide a mitigation strategy.
- Document the project and set the expectations for various team members.
- Work with the empaneled vendors for contingent resources.
Read More: Project Management vs. Resource Management
These are some of the significant responsibilities of resource and project managers. Now, let’s learn about some benefits of resource planning across industries.
How resource planning benefits different industries?
Resources are fundamentally the greatest asset of any organization. It means the profitability of any company is mainly reliant on intelligent resource planning. A key aspect while planning for resources is that it helps to efficiently use workforce potential to get the best possible outcome.
Let us discuss some of the specific industries where efficient resource planning could benefit significantly:
Due to the rapid advancement in technology, computing, and automation, IT companies face widened tech skills gaps within their workforce. Technology is changing at a fast pace, and IT professionals are under constant pressure to acquire new skills throughout their professional careers. Timely forecasting and efficient resource planning will help managers predict the demand for niche skill sets well in advance. Then, managers can employ rotation/upskilling methods to gauge these gaps and create an augmented workforce.
Audit and accounting firm
Most of the audit and accounting firms are run by their partners. These firms consider billable utilization a critical KPI to ensure profitability and sustainability. So, depending on the accounting project’s needs, an effective resource planning solution helps to forecast resource requirements (Accountants, auditors, financial analysts, tax consultants, audit interns, etc.) and utilize them for productive activities. It also enables firms to hire interns regularly, give them on-the-job training, and make them billable.
Similar to audit and accounting firms, law firms are also run by their partners. Bringing in a client when the firm has inadequate staffing can be detrimental to its reputation and profitability. An effective forecasting and resource planning strategy helps assess future demands and find the right resource (lawyers, legal secretaries, etc.) at the right cost, age demographics, etc. It also enables partners to build an on-demand workforce, create a skill database, and define the total billable hours.
The increased demand in manufacturing has caused skill shortages in the core engineering industry, where competition is fierce for experienced workers (automobile engineers, machinists, designers, etc.). An engineering resource planning solution helps managers provide reskilling and on-the-job learning opportunities for the employees. Thus, it helps to replenish an aging workforce, fill critical positions, and match them to the best potential projects based on talents and interests.
Read More: What Is Engineering Resource Planning?
Construction and infrastructure projects possess highly volatile resource demands due to changing climatic conditions and sudden increases in maintenance activities. With resource planning solutions, managers gain visibility of all construction resources and recruit skilled labor, architects, civil engineers, etc., throughout the projects. Thus, it maximizes the workforce’s productive utilization and ensures minimal resource conflicts. Therefore, efficient resource planning is key to managing construction resources effectively and preventing hiring/firing costs.
Consulting & professional service industry
The professional service industry has a unique challenge to balance resource demands across various clients. With efficient resource planning, managers can keep track of resources and their specialized skills. Since the consultants are deployed at a premium rate, keeping them engaged in client billable activities and reducing idle time for maximum profitability is crucial. At the same time, they need to be provided enough opportunities to acquire new skills and ensure no employee burnout.
Video game industry
The game development industry requires a highly competent team of niche-skilled resources. Efficient resource planning enables managers to diversify their expertise to the maximum potential and fulfill the gaming project resource demand. It also helps to identify in-demand skills and cross-train them to build an optimized workforce of game designers, level artists, programmers, QA teams, etc. Thus, effective resource planning can become a game-changer in fast-tracking the development cycle.
Now that we have learned about the benefits, let’s discuss the best practices for effective resource planning.
Best practices for effective resource planning
Enlisted below are some best practices to consider when engaging in resource planning:
Define clear project goals and objectives
Effective resource planning begins with clearly defining project goals, objectives, and deliverables. This step is crucial as it provides a solid foundation for determining the necessary resources and their allocation across multiple projects.
When the project scope is well-defined, it becomes easier to identify the skills, expertise, and types of resources required to achieve those objectives. In addition, clarity in project goals enables efficient resource planning from the outset, ensuring that resources are aligned with the project’s strategic direction.
Conduct a comprehensive resource assessment
Before scheduling and allocating resources, conducting a thorough assessment is important to determine the specific resource requirements. It involves identifying the types and quantity of resources needed, considering factors such as skills, expertise, availability, and capacity.
After assessing, managers can accurately gauge the resource demand for each project phase. This helps avoid scheduling conflicts such as staff shortages or double bookings, enabling optimal resource allocation and utilization throughout the project lifecycle.
Collaborate with stakeholders
Involving key stakeholders, such as project managers, team members, and department heads, in the resource planning process is crucial. That’s because collaborative discussions with stakeholders help understand project priorities, identify potential resource conflicts, and obtain valuable input.
Additionally, stakeholder involvement ensures that resource planning aligns with project goals and organizational objectives. Organizations can leverage stakeholders’ collective expertise and insights by fostering a collaborative approach, resulting in more informed resource-planning decisions.
Monitor and track resource utilization
Continuous monitoring and tracking of resource utilization throughout the project lifecycle are essential to facilitate effective resource planning. By regularly assessing resource allocation against actual utilization, project managers can identify potential bottlenecks, such as workload imbalances or under/overutilization of resources.
This monitoring process provides valuable insights into resource efficiency and enables timely adjustments. By having real-time visibility into resource utilization, supervisors can optimize resource assignment, ensure even work distribution, and mitigate risks associated with resource constraints.
Foster flexibility and adaptability
Resource planning should incorporate flexibility to accommodate changes that may arise during the different stages of the project. It’s essential to anticipate the need for resource adjustments and establish a process for reshuffling staff when necessary. This flexibility allows for agile resource planning, ensuring that resources can be allocated or reassigned based on evolving project requirements.
By fostering flexibility and adaptability, organizations can respond more effectively to unexpected changes or shifts in project priorities, resulting in improved project execution and better client satisfaction.
Organizations can optimize resource planning efforts and ensure successful project delivery by following these best practices. Now, let’s understand operational and strategic resource planning in project management.
Operational and strategic resource planning in project management
Planning implies thinking in advance about what we need to do to realize the business objectives. Strategic planning aims to attain long-term goals, while operational planning helps achieve the short-term objectives of an organization. Let’s understand in detail:
What is strategic resource planning?
Strategic planning is usually undertaken by top-level management to decide the future direction. It is not limited to projects within a particular department or unit but covers the entire organization. Strategic resource planning looks into the overall long-term resourcing strategy.
It can change drastically based on individual priorities. For example, If an IT firm plans to outsource a temporary requirement, i.e., the resourcing strategy will shift from FTE to contingent staff for IT infrastructure improvements. Similarly, a niche skilled resource’s out-rotation from an existing project to start a new initiative will come under strategic resource planning.
What is operational resource planning?
Operational planning addresses the day-to-day activities of a business. It also supports strategic planning to accomplish the overall organizational goals. First, we decide on the short-term objectives and then determine how to achieve them.
Operational resource planning includes regular business activities and operations as per organizational guidelines. For example, it covers pipeline project management, management of FTE and contingency resources, forecasting billable and total utilization, and more.
Factors that can influence operational and strategic resource planning
Strategic and operational resource planning parameters are linked with an organization’s mission, vision, strategies, goals, and objectives. In addition, the following can influence strategic and operational resource planning decisions.
It defines an organization’s hiring policy for full-time resources and directly influences decisions made on a resource plan. It also covers compensation and benefits, an essential consideration for regular employees.
The project team is created using a combination of in-house and vendor resources. An in-house workforce performs the critical positions requiring specific domain knowledge. One-time activities such as software development are accomplished using vendor resources.
Outsourcing vs. in-sourcing
Due to globalization, many businesses outsource certain functions to other organizations. Some organizations also have stricter policies that their confidential data cannot leave the company’s boundary.
Due to the cost pressure, many projects are being executed from different locations. Therefore, project costs can be minimized using generic resources from a low-cost area. In addition, the high-skilled resources can be located based on their availability, who can take up leadership roles related to delivery.
Training and development
Full-time resources must learn new skills for their self-development and compete in a dynamically changing environment. Therefore, it may not always be practical to hire new resources. However, a new skill can be acquired by cross-training an existing employee.
Resource leveling and smoothing
The essential function of resource leveling is to optimize workforce allocation by adjusting the project schedule to resolve conflicts caused by resources’ over-allocation. On the other hand, resource smoothing optimizes distribution by adding new resources without affecting the critical path and timeline. Both of these techniques influence decisions toward a resource plan.
How to address market volatility using operational and strategic resource planning?
Effective resource planning is a critical success factor for an organization’s growth and sustainability. Unfortunately, the outbreak of the COVID-19 virus upset the world’s business model at the beginning of 2020.
Many organizations try to stay afloat in these volatile market conditions with a shrinking budget. Acute cost pressure and skill shortages have also become routine activities. Following strategies can help an organization sustain its profitability while planning for project resources.
- Effective capacity planning and identifying the gaps between capacity and demand
- Address the shortage of resources using a combination of FTE and contingent resources
- Either re-train existing employees or go for new hires depending on the requirements
- Identify new projects, adjust the project timelines, and sell services for excess capacity
- Mobilize employees from non-billable or low-priority work to billable or high-priority projects as a routine activity.
- Revisit our rotation/backfill policy for starting new projects with niche skills
- Decide non-critical functions that can be outsourced
- Identify at least two to three vendors who can work as strategic partners for outsourcing
- Decide on a multi-locational policy to take advantage of resources from low-cost location
- Adapt a hybrid delivery model for cost efficiency
This is how operational and strategic resource plan helps firms achieve their business goals. Listed below are some of the critical trends of resource planning in project management.
Emerging trends of resource planning in project management
Over the years, the project management landscape has undergone several changes due to technological advancements, management paradigms, etc. Therefore, organizations must embrace newer ways to manage projects successfully to keep pace with these changes. Listed below are some of the emerging trends of resource planning in project management:
Replace silos of spreadsheets with an enterprise resource plan
Silos of spreadsheets and home-grown tools are inadequate for efficient resource planning, adversely impacting business performance. Hence, companies are shifting towards enterprise-level software that centralizes resource-related information and maintains a single source of truth.
Taking resource scheduling to the next level
Today, resource scheduling is not just a simple process of allocating resources against projects. It has evolved into a full-fledged enterprise-level process that ensures maximum efficiency and utilization of resources.
Resource capacity planning for business efficiency
Resource capacity planning is not a luxury for businesses any more. It has become an essential part of the resource planner. It future-proofs your workforce against market volatility by analyzing the demand capacity gap and bridging it proactively.
Resource forecasting to maximize effective utilization
Billable and strategic utilization of the workforce is a crucial indicator of business profitability. Therefore, getting a real-time view of future utilization has become critical while planning for resources. Resource forecasting helps in taking proactive measures to improve future allocations.
Integrating resource management processes with other applications
Traditional resource plans include inefficient and time-consuming processes. Enterprise-level resource planner streamlines them using efficient workflows, alerts, and analytics. It also integrates effortlessly with multiple business applications to maintain a single source of truth across the enterprise.
Monitoring and controlling project resource cost
Enterprise-level resource planner offers various capabilities to monitor and effectively reduce project costs. Some of them are forecasting, capacity planning, resource modeling, pipeline management, bench management, etc.
These are some of the evolving trends of resource planning in project management.
An efficient resource plan fosters you to accomplish more in the same amount of time from the most valuable resources- the people.
Therefore, it is imperative to implement effective resource planning to utilize the workforce to its maximum potential. When resources are planned efficiently, it helps a business to manage risks, reduce delays, optimize resource utilization, etc.
Moreover, implementing the above-mentioned processes with the right resource management software will help you manage your resources intelligently and enhance profitability while maintaining a competitive edge.
Unlock Your Business’s Full Potential Through Strategic Resource Planning Today!
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