Optimizing Resource Utilization

Resource management & capacity planning in project management is essential to helping your organization maximize ROI

Resource Management has long been the thorn in the side of PPM that no tool or associated process has fully addressed. A mix of execution techniques and tools makes gaining visibility across all resources an even more daunting task. Mastering resource utilization requires the right top-down and bottom-up controls to provide each stakeholder with the tools they need.

Why is Resource Utilization Important to Optimize?

Project Managers and demand authors have varying levels of sophistication – some are experts while others may be “accidental” participants. Not all have the scheduling savvy to maintain and accurately generate resource estimates and forecasts from the detailed schedule. In fact, many spend more time wrestling with the schedule to generate accurate resource estimates than actually managing projects. With a variety of execution styles being used, it’s difficult to capture initial estimates, ongoing forecasts, and calculate resource utilization as the project changes.

What is Resource Utilization Rate?

Project managers measure resource utilization by calculating Rate. The basic formula is # of hours worked / # of hours available, defined in a percentage.

For example, if a team works 4500 hours on a project but has 5200 hours available, the resource utilization rate would be 85.5%.

At a high level it seems easy to calculate resource utilization rate, however the reality is much more complex due to the tri-modal reality.

Greater Accuracy in Resource Demand / Forecast Data Improves Resource Management

Since there's so many challenges associated with calculating resource utilization, many project managers elect to use spreadsheets or similar tools outside of the PPM system. This introduces even more uncertainty around the integrity of the data. Integrating the resource plan directly into the PPM system is critical to ensure that project managers of all skill levels can easily capture accurate resource estimates and forecasts.

Allocating the Right Resources to the Right Projects

Resource managers are ultimately responsible for ensuring the right people are working on the right projects. They need to know about each new resource request, quickly identify the available resources and number of hours, and communicate the resource commitment to the project manager.

Resources Allocation Methods

Allocation methods need to support the execution technique. There is no one size fits all approach to resource allocation. For Agile execution styles, resources are calculated based on teams. As a result, team utilization rates are calculated, which can differ greatly from individual utilization rates. For teams using the waterfall method, resources are allocated individually, either by associated skill or role.

Project Managers Need to Make Resource Utilization Transparent

Resource allocation also needs to be aligned with the right investment planning approach (project, program, capability or product). And of course, quickly and easily identifying and addressing resource over- and under-allocation is critical. Finally, for proactive capacity planning, all stakeholders must have a real-time view into resource supply and demand so they can maintain the skills inventory needed to find the right people and the best fit.

Model the Impact of Portfolio Decisions on Capacity

Historically, when asked to model the impact of portfolio decisions on resource utilization, Portfolio/Resource Managers and their teams had to stay late and crunch the numbers in a disconnected excel spreadsheet. They lacked a tool that could quickly and easily help them answer common questions, like “what’s the impact of adding, dropping or delaying projects?” or “what’s the immediate impact of this decision on the portfolio and resource utilization”. With the advent of drag-and-drop analytical capabilities, they can now model a wide variety of scenarios and assess the impact of any portfolio change on resource capacity. Those tools also address the logistical nightmare of capitalizing work, and make it easier for portfolio managers and financial analysts to generate estimates and forecasts.

Benefits to Resource Management Software

Resource management software can increase ROI, identify improvement areas, create a resource utilization plan, and provide a way to measure a program's success. Team members, projects, and productivity trends are all forecasted and reported on in real time. Portfolio managers can receive alerts when the workload shifts or availability changes. The resource utilization score is a metric that should be leveraged by all key stakeholders to ensure project success. Choosing the right resource management platform is critical to capacity planning and resource allocation efforts.