Building stronger projects: the power of resource management

This introduction blog will talk about the different purpose levels of resource management in managing (a portfolio of) projects. In the next blogs, we will discuss the practical role of resource management throughout the general project life cycle while providing simple and effective steps to get started on improving your resource management practices.

Level 1: Enterprise capacity planning

In today's competitive economic landscape, creating value is crucial, and effective planning and forecasting are key components in achieving this. Effective resource management can greatly benefit the outcome of these processes, and enterprise capacity planning is a vital starting point.

• What does enterprise capacity planning entail, and what are its benefits?

Enterprise capacity planning is a strategic and continuous process that helps determine if an organization has enough capacity (including skill sets) to meet the (future) work demand. The overarching goal is to align organizational resources to achieve strategic objectives and maximize value for the organization.

By analyzing the capabilities, limitations, and opportunities within the capacity, this process can help prioritize demand among a portfolio of investment options. It can assist in monitoring and steering the whole set of current projects and help in decision-making for portfolio management. As a result, important hire/fire or make/buy decisions can be made on time to have the right resources at the right time.

Level 2: Project budgeting

Once we’ve assessed that the available capacity meets the work demand of an organization, we can go down a level deeper to budgeting the individual projects within the portfolio.

• What is the purpose of project budgeting?
• What does the project baseline entail?

The project budget plan will distribute the authorized resources over work packages and over time. It is used to steer the execution, and more importantly as a baseline to control performance. Since key resource requirements (should) have already been researched and addressed in the high-level (enterprise) capacity planning, the project manager can fully focus on determining when to use the required resources during the project.

The project baseline is a result of effective scope, time, cost/resource and risk management and should give the project manager a clear understanding of the resources required to complete the project. It is now possible to identify potential bottlenecks early on and adjust the baseline where needed.

Level 3: Work distribution & authorization

Once we’ve assessed that the available capacity meets the work demand of an organization, we can go down a level deeper to budgeting the individual projects within the portfolio.

Now that the various work packages have been distributed over time, the project manager needs to ensure that each work package can be monitored and controlled efficiently.

• How can we ensure efficient monitoring and control of all work packages in big and complex projects?

When managing big and complex projects, it is necessary that the project manager directs the subdivided project scope, time and budget down to the various owners of the work packages. This delegation of the project is done on a work package level, or through the creation of control accounts. The owners of these work packages, the work package managers, then become accountable and responsible for the successful execution of their work packages.

This level of resource management plays a crucial role in maintaining control over project progress, budget adherence and resource allocation.

Level 4: Project monitoring & control

After establishing the baseline and assigning responsible and accountable work package managers for the individual project, the execution can proceed. Here, the goal is to deliver on commitments within budget and time.

• What is the purpose of project monitoring and control?
• Should a baseline always be blindly pursued?

Project monitoring and control involves tracking the progress of the work packages within a project, forecasting new estimates for these work packages and making necessary decisions to ensure that the project stays on track in terms of time, resource utilization, and cost.

One of the most fundamental measures of project success is whether the project achieved its goals within the established baseline. However, it is important to note that this baseline should not always simply be seen as the perfect objective. Unrealistically low budgets and short schedules rarely lead to superhuman performance. This is why project monitoring and control should allow for continuous evaluation of this baseline to provide a realistic view (of the future) of the project.

Common forecasting methods include performance-based estimating and Earned Value analysis, each with its advantages and disadvantages.

Level 5: Steering of daily work

Assuming that the above levels are implemented well within an organization and its projects, we can make several conclusions for projects in execution:

• The resource demand does not exceed the capacity within the organization.
• The project manager has a good idea of the required resources needed to deliver on commitments within budget and on time.
• The project progress is frequently being monitored by the responsible work package managers to make informed decisions on controlling the project through forecasting.

These conclusions are all a result of the analysis of what should be done (future) or what has been done (past). However, it doesn’t say anything about the planned work being done (present). This is where resource management on a day-to-day basis comes into play. Steering of daily work is done through the lens of LEAN principles, where the specific resources have the freedom and responsibility to plan their own work and committing to it. This ensures that there is no over- or underutilization of a specific resource.