Resources are one of the most high-priced investments for a firm. With market volatility causing constraints of skilled-resources, it’s imperative to manage and utilize the workforce to their maximum potential.
Efficient resource management includes smart resource planning, appropriate scheduling, and ensuring employee’s engagement and satisfaction levels for a healthy business environment.
When resource managers follow the best resource management and planning practices, it will enhance productivity, project performance, and profitability. However, if they take a short-cut and do not make a timely decision, it will adversely affect the organization’s business objective.
In this article, we explain the basic concepts of resource planning and its importance in resource management in detail. Let’s deep dive into it.
#1. Resource Planning Definition
Resource Planning is a process of identifying, forecasting, and allocating various types of business resources to the projects at the right time and cost. It also ensures the efficient and effective utilization of resources across the enterprise. These business resources can be human resources, equipment, assets, facilities, and more.
In other words, it’s the process of strategic planning to make the best use of resources depending on their capacity and availability by following a systematic process.
So, how do you achieve this?
Let’s take an example, your firm is an IT company and you got a software development project which is 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 either hiring new workforce from the market or juggling resources that are available within the organization.
The ability to forecast requirements and develop a strategy to plan, allocate, and utilize the resources and their competencies effectively is termed as resource planning.
Keeping this definition of resource planning in mind, let’s understand its benefits in detail.
#2. Why is resource planning important?
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 resource planning benefits and how it makes a difference in the project management landscape:
Allows project resource planning for pipeline projects
Bridge the capacity gap proactively
Demand forecasting, one of the major 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
CASE II: Shortfall of resources
When the resource demand is less than the available capacity it results in excess of resources. This excess capacity can be mitigated by bringing future project work ahead, adjusting timelines, redeployment of resource capacity in other projects, etc.
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 Channels:
- External Channels:
Internal recruitment focuses on the employees who are already on the payroll of a firm such as, selecting an employee from the bench based on the skills and qualifications or transfer of resources from different projects.
In case the required skill is absent in the internal network of the organization 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.
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. Project resource planning and timely forecasting help managers predict all resource needs for pipeline projects in advance.
Resource managers can either allocate a cost-effective global resource or hire an on-demand/permanent workforce with the right skillset. It eliminates last-minute hiring costs incurred by the firm.
Minimize project resource costs significantly
Resource planning helps managers to make data-driven decisions and implement the right resourcing measures at the right time. For one, they can allocate a cost-effective global/local resource or a benched resource to a task.
For two, they 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.
Maximize profitable resource utilization
Resource scheduler lets managers view the resource’s present and future allocations on one single platform. They can also have a periodic check on forecast vs actual resource utilization report and optimize under and over usage of resources.
Moreover, managers can mobilize them from non-billable to billable and strategic projects based on their skillset.
Ensures Competent resource allocation across a matrix organization
The resource scheduler provides a centralized view of all resource-related information such as skill sets, cost rate, location, resource capacity, among others. Through this visibility, managers can filter and load the appropriate resource to the project’s task.
The systematic resource requesting process helps managers to leverage the shared service model of a matrix organization. This ascertains competent resource allocation in projects and also allow resources to work on different assignments
Deliver project on time and within budget
The benchmark for successful delivery is meeting project deadlines and avoiding budget overruns. Resource planning helps managers to periodically review project performance using forecast vs actual reports, resource utilization heatmap, and more.
Regular monitoring will ultimately lead to the accomplishment of the most important project metrics such as client-satisfaction, higher retention, enhanced work-rate, and increased brand loyalty.
#3. Resource Planning Process for Business Efficiency
Achieving project goals within the constraints of time and budget is one of the biggest challenges for project managers. It is expected to make the best use of resources without causing budget overruns.
Here are four distinct steps by which resource planning can be achieved in an efficient manner:
Step 1: Fulfill the project demand by identifying the gap
The project manager requests resources from the resource managers to fulfill the demand of the project. Resource managers then assess the demand and capacity gap.
Based on the analysis they identify the shortage or excess of resources from multiple perspectives i.e., role, skills, etc ahead of time.
Step 2: Implement appropriate resource strategies to bridge the gap
After identifying the shortage and excess of resources, proactive implementation of resourcing measures bridges the skills and demand gap. Using the right scheduling tool, the resource manager can get a 360-degree view that can help in informed decision making.
Step 3: Allocate the right resources to the right project
Step 4: 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
- Generic vs niche skill
- Cost of the resource
- Attrition & succession planning
The foremost step to consider while recruiting resources is whether you are filling a position for a short-term or long-term assignment.
For the short-term, contingent workforce/freelancers are the ideal choices to avoid hiring/firing cycles. However, for a long-term assignment, focusing on permanent hiring with lead time is essential.
Hiring resources with a niche skill requires additional lead time. At the same time, it becomes difficult to redeploy them within the organization once their assignment finishes.
They also cost more depending on the scarcity of the skillset. On the contrary, it is relatively easy to plan for generic skilled resources.
It is important that the resource managers hire the right resources with a defined skill set and experience for the project. But it is also important to look into the cost rate of the resource that fits the budget of the company and projects.
Hence, managers should also factor Onsite, offshore, near-shore options in the recruitment strategy to minimize the overall project cost.
Resource planning not only addresses the resourcing needs for the organization but also helps you monitor the resource health index.
Resource managers also need to ensure that the sudden resignation of critical resources does not jeopardize a project delivery. Succession planning including a backup strategy is essential for the key positions within the organization.
#4.Consequences of Poor Resource Planning
Getting a new business is important for any enterprise. But the delivery organization must be in a position to complete the underlying projects using the existing workforce infrastructure.
A suboptimal resource planning process can adversely impact your project’s progress and eventually reduce profitability.
Here’s more information on the consequences of poor resource planning methods.
Improper resource allocations
Inability forward plan pipeline project
Lack of profitable resource utilization
Project failure due to improper allocation
Decreased productivity & business loss
The use of legacy tools or silos of spreadsheets results in poor visibility of resources.. Discrepancy and redundancy in spreadsheets caused by human error can lead to double bookings of resources. It will cause overutilization and eventually result in employee burnout and project failure.
Not being able to predict and plan resource capacity ahead of time to meet the future project demand can put projects at risk. Last-minute planning brings several roadblocks to pipeline projects.
It results in poor visibility of project demand resources, hiring of inferior quality of resources, improper allocation of workload, etc. All these factors will have a cascading effect on project costs and timeline.
Inability to use and mobilize resource pool into billable and strategic projects reduces profitable resource utilization. At the same time, employees will be disengaged when their skillset is not exploited for productive work and is instead being wasted on mundane admin tasks.
Suboptimal utilization of resources will lead to loss of revenue, project delay, and a decrease in employee satisfaction.
Incompetent resource allocation i.e. booking of high-cost resources in place of low-cost similar skilled resources results in budget spikes of project. At the same time, allocating a less-experienced resource to a highly-specialized task will prolong the timeline.
This financial escalation and schedule overruns if not controlled on time will gradually result in project failure.
Scheduling the resources against the employee interests and skills, unrealistic deadlines, overutilization all result in decreased productivity.
When employees are not performing at their best, it will reflect in the project’s performance which will fail to meet the client’s expectations. This will lead to loss of business.
#5. The Solution: Use an Efficient Resource Planner
Resource planning is a systematic process to utilize the resource skills to the maximum potential. The above-mentioned components and processes will help you acquire the right resource and ensure the quality of the project.
Equipping the right tool to plan the resource efficiently and intelligently will help you enhance profitability and maintain the competitive edge.
The resource planning solution fosters you to accomplish more in the same amount of time from the most valuable resources- the people.
Unlock the potential of your business using an efficient resource planning tool!
#6. The Glossary
#7. The Saviom Solution:
SAVIOM is the market leader in offering the most powerful and configurable solution for managing your enterprise resources effectively and efficiently. With over 20 years of experience, this Australian-based MNC has created its global presence across 50 countries and helped more than 100 customers achieve their business goals. SAVIOM also has products for project portfolio management, professional service automation, and workforce planning software that is customizable as per business requirements.
The Ultimate Guide to an Efficient Resource ManagementDownload
Somya Yesodharan & Anuradha Mansinghka