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Resource Management is always difficult – right? But it doesn’t have to be like that...
As more businesses grow to realise the strategic impact their PMO can have if it's set up well and used properly, they are looking under the bonnet (or hood if you’re in America) to see where they can make improvements. Recognising that the PMO can be so much more than just a project execution cost centre and understanding the impact it can have on moving strategy forward is a great start; and introducing an effective project prioritisation process gives the executive leadership team some of the visibility and control they so desperately want. But what’s next?
One of the biggest challenges we keep hearing about from PMOs is in Resource Management. The intended plan of what projects to do looks fine, and the executive team believe they’ve done everything to set things on the right course, but then reality hits. Too many projects are dependent on some critical resource pools that just can’t keep up. So, the poor old PMO leader spends an awful lot of time firefighting to solve resource conflicts and bottlenecks, and the hard-working people in the critical teams are always task switching (which is inefficient and increases errors). The result is cost and time over-runs and unhappy executives who don’t understand why their plans aren’t working.
Many PMOs and their bosses have come to accept that this is just the way things are. It’s not possible to plan better, and it’s the way of the world that you must spend lots of time and effort juggling the impossible balance of demand and resources.
If that’s the way you see things, stop and think again!
It doesn’t have to be like that, and you don’t have to accept living in a world of chaos. As is so often the case, the solution to a problem in portfolio performance isn’t necessarily to be found in the execution area; it’s in the planning area.
We’re not saying that Resource Management is ever going to be easy. It will always be relatively complex, as it involves the detailed allocation of resources to tasks and reacting to day-to-day changes and disturbances. What we are saying is that good planning sets the PMO up to succeed, whereas bad planning sets it up to fail.
That much sounds fairly obvious (we hope), but how do executive teams and PMOs plan better to give Resource Management a fighting chance of succeeding? The two key activities are Capacity Planning and Scheduling. They’re closely related, but different concepts, that work together to create a plan that gets things off on the right foot.
Capacity Planning
Capacity Planning is the process of making sure that the selected set of projects to be commissioned is broadly matched to the resource capacity to deliver them. It starts with the estimated resource demands for each project, aggregated up to portfolio level, and the task is to select a set of projects that will be deliverable with your available resources.
Here’s big lesson number one for portfolio planners: don’t plan for 100% utilisation of your resources
We know that sounds wrong, because you should be trying to get the most out of your available resources to be efficient and productive, but the research says otherwise. If you back off a little and plan for 80-85% utilisation, you get more output. That’s because 100% utilisation causes the task-switching problem we mentioned earlier, and that can end up with up to 40% wasted effort through errors and rework. Which would you rather have: 60% of your theoretical maximum output or 85%?
If you want to understand a little more about how the theory stacks up, have a look at this short video to hear our CEO, Stuart Easton, explaining it through the analogy of a traffic jam.
Now theory is great, but putting it into practice is fiendishly complicated. With multiple resource pools and different levels of demand for each from all your projects, there are just too many variables for a mere mortal to handle. That’s why we have built an AI module into our software, that simulates thousands of options in a few seconds and produces a recommended portfolio that maximises the value you get from your resources. And if you don’t like it, just change the parameters a little and run it again. Why not book a place on our next demonstration webinar to see the magic at work?
Good Capacity Planning delivers a first cut of a portfolio plan without the usual baked-in overstretch. More than that, though, it means leadership teams can make informed decisions about how much resource to provide in which areas to support the plan, rather than muddling through with what they happen to have.
Scheduling
Capacity Planning gets you into the right ballpark for balancing resource supply and demand, but it doesn’t consider when each project will need to call on a particular resource pool, so some more detailed planning is needed. That’s where Scheduling comes in.
Big lesson number two: don’t fire the starting pistol for all projects at the same time.
A mistake we often see is that businesses kick off the newly designed portfolio at the start of the financial year, and the pressure to deliver means they start all the projects at once. The demand for critical resource pools is therefore dictated from the bottom up, as each project moves along. This is where the conflict and bottleneck problem come from, that means the PMO leader spends so much time trying to sort it out.
A far better approach is to plan from the top down and manage the demands on the most critical resource pools to smooth out the peaks and troughs, by staggering the start dates for projects. This means your people can finish the job they’ve started before being pulled off to work on the next project. (Dare we mention task-switching again?)
If you get the portfolio schedule right, not only do you smooth out the resource demand profile, but you get earlier delivery of value (because your highest priority projects get finished quicker), and you can fit more projects into the plan without any extra resources. Now, both of those are things your executive team are going to love. Stuart has explained this in another short video here.
The prize is attractive but getting there is another highly complex planning task and most PMOs can’t get close to getting it right first time. Time for AI to step up and help again. Our AI-enabled scheduling module can produce an optimised portfolio plan in seconds, that can be redone time and again as the world changes. Again, please book a place on our next demonstration webinar to see it in action.
Practical Application
Capacity Planning and Scheduling aren’t the same. Capacity Planning is a “T-shirt size” exercise to get a broad balance between supply and demand without taking project timelines into account. Scheduling goes to another level of detail in planning for resource usage over time.
The real magic happens when they are used together, iteratively. When the Scheduling process frees up extra capacity in the plan, going back through the Capacity Planning loop shows which are the next best projects to fit in, which then go into the Scheduling process again, etc. How many times you need to go around the planning cycle is up to you to decide, but it’s a capability that leadership teams just haven’t been able to do properly until now. Give it a go and you’ll see the results very quickly.
Summary
PMO leaders tend to be quite good at fighting fires – they get a lot of practice! But there is a different way to deal with Resource Management; get the planning right and the execution gets much easier.
Capacity Planning and Scheduling are different, but related, processes. Used well together, they can help you structure a portfolio plan that:
- Is designed to set up the detailed task of Resource Management to succeed.
- Maximises the return from the portfolio by fitting more projects in, increasing the number of projects completed successfully, and delivering the most important projects first.
This all sits right at the heart of Strategic Portfolio Management and is key to bridging the gap between executive teams (strategic planning) and PMOs (operational delivery). It gives executives visibility of some of the planning factors they have always only dreamt of, and control of some levers to give better direction and drive returns.
The potential prize is big, but making it happen is not something the PMO leader can do alone. It needs strong buy-in and leadership from the executive team to drive the business change. So, they need to understand the compelling reasons to get behind it.
Book a short consultation with us to explore some tailored strategies and persuasive arguments to win executive support.
