There are many reasons why projects fail. One that many organizations underestimate is resourcing. So, in this article, we examine the way effective resource planning and optimization can make your project a success.
Lots of organizations will produce data for the rate of failure of projects. Some, like the Project Management Institute, have studies that set a high number against this. Michal Rączka cites a Standish report claiming that:
‘More than 70% of projects either fail or experience serious challenges.’
I am skeptical of this figure. It all depends on what we define as ‘a project’. However, this statistic highlights a significant challenge for businesses, as many projects deviate from their plans and ultimately fail, impacting their financial health.
The Reasons for Failure
Many factors contribute to project setbacks, including insufficient stakeholder involvement, inadequate project planning, ineffective risk management, and reliance on outdated technology. Additionally, resource-related challenges such as skill shortages, high labor costs, employee burnout, and mismatched allocations can also jeopardize project success.
While resourcing issues are important contributors to project challenges, they are not the sole or predominant cause. Nevertheless, many organizations underestimate the impact of resource-related problems on project outcomes. So, it is a no-brainer that businesses must develop and implement robust resource planning and optimization strategies to drive favorable project outcomes.
How Effective Resource Planning and Optimization can Reduce these Failures
This is why I invited Mahendra Gupta to write this article. Mahendra is a PMP-certified. But, more important, he leads Saviom Software’s technical research and development wing. Saviom’s software reduces overall workforce costs with forecasting that allows real-time resource optimization.
This article explains how effective resource planning and optimization strategies can help organizations combat resourcing complexities and drive every project to success. Mahendra covers how:
- Resourcing Challenges Lead to Project Failure
- Resource Planning and Optimization Enhance Project Success
- Resource Management Software Helps with Successful Delivery
He ends with:
Let’s get started. Over to Mahendra…
How Do Resourcing Challenges Lead to Project Failure?
Resource-related issues can significantly derail a project. Common challenges, that effective resource planning can address, include the following:
- Project budget overruns due to costlier resources
- Last-minute firefighting and project delays due to improper planning
- Incompetent allocation of resources due to mismatches in skills
- Sub-optimal utilization resulting in lower productivity
- Employee burnout from over-allocation
Let’s look at each of them.
Project budget overruns due to costlier resources
When managers lack visibility into the enterprise-wide workforce, they may allocate expensive resources instead of cost-effective ones, leading to budget overshoot. Additionally, inadequate estimation of future resource requirements prompts last-minute measures such as costly hiring, further increasing the project budget.
Last-minute firefighting and project delays due to improper planning
Lack of foresight regarding the pipeline of project demands can prevent managers from identifying skill gaps, workforce availability, or establishing an appropriate talent pool. As a result, they resort to last-minute hiring activities to drive the project back on schedule. This rush can result in the recruitment of under-skilled resources, compromising project quality and leading to client dissatisfaction.
Incompetent allocation of resources due to mismatches in skills
Managers often fail to predict resource requirements in advance. This leads them to initiate the resource requisition process at the last minute. They end up firefighting to secure the right resources at the eleventh hour, delaying the project’s start and causing schedule overruns. As a result, they may hastily assign over- or under-skilled resources, resulting in skill mismatches and compromised project deliverables.
Sub-optimal utilization resulting in lower productivity
When managers cannot gain insight into project resource utilization levels, it can result in an over- or underwhelmed resource pool. Further, in services firms, resources may end up working on non-billable tasks such as business as usual (BAU) or administrative activities for extended periods, reducing their productivity and profitable utilization. This ultimately reduces the firm’s profitability since these tasks don’t directly contribute to client billing, decreasing the overall ROI.
Employee burnout from over-allocation
If Project Managers don’t know the available capacity and utilization of their resources, they may over-commit them. Consequently, people experience work-related stress, leading to decreased morale, lowered productivity, and eventually burnout. Another factor contributing to burnout is siloed data, which leads to double bookings. This negatively impacts project progress and causes client dissatisfaction.
Now that we know the resourcing challenges that lead to project failure, let’s understand how resource planning & optimization can help mitigate them.
How can Resource Planning and Optimization Enhance Project Success?
Let’s start with some definitions.
Resource Planning
Resource planning is a systematic process of identifying, forecasting, allocating, and utilizing human and non-human resources based on availability. It helps assign the right resources to suitable projects at the right time and cost and ensures successful delivery.
Mike has a video that looks at the first part of this in more detail, How to Deduce Project Resource Requirements:
Resource Optimization
Resource optimization is the process of implementing key techniques (resource leveling & resource smoothing) to utilize the resources most efficiently and intelligently and achieve overall business goals. This helps make the right resource available at the right time, prevent over- or under-utilization of employees, boost productivity, and ensure project success. It ensures that experienced senior resources are not assigned to mundane, trivial tasks, and inexperienced resources are not given the responsibility of critical tasks.
Mike has a video that looks at this in more detail, Resource Optimization: What’s the Difference between Resource Leveling and Resource Smoothing?
How then can Resource Planning and Optimization Enhance Project Success? Let’s look at five typical examples.
Global Consulting Firm Establishes a Single Version of Truth for All Resources
Consider a global consulting firm with a diverse workforce across multiple countries, that faces challenges in managing consultants’ availability, skillsets, and project assignments scattered across different departments and locations. By implementing an effective resource plan, the firm can consolidate all resource-related data in one place, such as their expertise areas, certifications, billing rates, locations, and project schedules.
This establishes a ‘single version of the truth’, eliminating information silos and ensuring seamless collaboration across teams and offices. With this centralized visibility, resource managers can easily view which consultants are currently engaged in what projects, their upcoming availability, and any potential scheduling conflicts due to public holidays or time zone differences. This enables them to improve decision-making, align workforce capacity with project demand, and avoid scheduling conflicts.
A Large Construction Company Forward Plans its Pipeline of Project Resource Requirements
Consider a large construction company that undertakes multiple infrastructure projects simultaneously across regions. Effective resource planning becomes crucial to forecast resource requirements (skilled labor, equipment, and materials) for each project in the pipeline and ensure the right talent is available for project execution. This proactive approach provides lead time to analyze demand vs. capacity gaps and identify resource shortages or excesses.
In case of shortfalls, managers can deploy resources from other departments, implement training, or conduct planned hiring. Conversely, for excess, they can reallocate resources to other projects. By forward-planning resource needs for the project pipeline, companies can minimize delays, optimize utilization, and ultimately enhance project execution and profitability.
A Resource Plan Ensures Competent Resource Allocation for Every Project
A resource plan gives managers a high-level overview of project resource demand. This enables them to identify and allocate the best-fit resources with matching competencies to projects at the right time and cost. In addition, it prevents the allocation of under or over-skilled resources, minimizing the risk of disengagement or burnout. Besides, it allows firms to leverage cost-effective global and local resources to meet project requirements without compromising quality.
For instance, a software project requires skilled JavaScript developers to complete the front-end development for a new web application. With complete visibility into the resource-related data, managers can understand the developer’s expertise in JavaScript frameworks like React or Angular, their availability, and past performance. This way, they can choose the right resource for the project, ensuring project completion within the stipulated time and cost.
A Resource Plan Enables Monitoring and Controlling of Project Financials
Comprehensive resource planning enables monitoring and tracking critical financial indicators like cost, revenue, profit margins, and overheads. By leveraging it, organizations can forecast total project costs based on required skillsets, experience levels, and resource locations. If the forecasted project costs start to exceed the approved budget, resource managers can take corrective actions ahead of time.
They may consider forming a more cost-effective resource mix by strategically allocating tasks to resources with lower cost rates or leveraging offshore resources. By consistently monitoring project financials through effective resource planning, organizations can proactively identify potential budget overruns. This also helps ensure the project is completed within the stipulated budget and meets its financial objectives.
A Robust Resource Plan Optimizes Project Team Utilization and Prevent Burnout
With robust resource planning, managers can set optimal utilization benchmarks for different resources, such as full-time/part-time employees, contractors, and temporary gig workers, and track them in real time. This way, they can identify and address under or overutilization with corrective optimization techniques. In cases of over-utilization, where team members are overburdened with excessive workloads, managers can apply resource smoothing or leveling techniques.
Resource smoothing involves redistributing tasks or bringing in additional resources to ease the workload on overloaded team members. Alternatively, resource leveling allows managers to adjust specific projects’ start and end dates based on resource availability. It not only safeguards employee well-being but also promotes productivity, quality of work, and overall project success.
In the following section, we’ll learn how advanced resource management solutions help enhance project delivery.
How can Resource Management Software Help with Successful Delivery?
Robust resource management solutions have advanced features that help modern organizations optimize resource efficiency and enhance project execution. Let’s see how:
Resource Planning and Optimization Reduces Project Resource Costs Significantly
Modern resource management software can help organizations forward plan pipeline project resource requirements with powerful forecasting capabilities. It gives them sufficient lead to assess the internal pool and analyze whether they have the required skill sets to execute the project. Thus, it helps minimize costly last-minute recruitment activities and frequent hiring/firing cycles.
The tool also helps create a cost-effective resource mix for every project. Its 360-degree visibility enables managers to identify and assign best-fit project resources based on skills, location, cost, role, expertise level, etc. Moreover, the tool allows firms to utilize global resources from low-cost locations for projects. Therefore, it helps reduce project resourcing costs without compromising on quality.
Resource Planning and Optimization Helps Build an Optimized Project Workforce
The software’s forecasting and capacity planning feature provides a high-level overview of the project pipeline and resource pool. This granular insight allows organizations to determine future skill requirements and identify talent gaps. Thus, it helps firms to invest in training initiatives to upgrade the competencies of the project workforce, making them future-ready.
Additionally, the in-built competency matrix allows firms to track and maintain resource skills in real-time. It helps them identify high-potential employees for senior or leadership roles, facilitating succession planning. In conclusion, the software empowers firms to build a robust talent pipeline and capture emerging market opportunities.
Resource Planning and Optimization Improves Profitable Utilization of the Project Team
The tool’s color-coded heatmaps and utilization reports enable managers to track project teams’ billable, non-billable, and strategic utilization in real-time. It allows them to instantly recognize instances of under or overutilization and take remedial measures to rectify the workload imbalance.
Moreover, the powerful forecasting functionality empowers organizations to accurately predict the future utilization of resources. This foresight helps managers proactively mobilize project resources from non-billable, low-priority tasks to billable, high-priority work. As a result, it helps boost profitable resource utilization and minimize revenue loss.
Resource Planning and Optimization Manages Project Resource Constraints with Modelling & Simulation
The modeling and simulation features of the tool allow project managers to create the best-fit resource plans in a labor-constrained environment. It enables them to develop and compare multiple resource scenarios and evaluate the impact of workforce constraints from various angles, such as availability, capacity, costs, etc.
Based on the analysis, stakeholders can prioritize resource allocations for high-value projects first, followed by medium and low-value initiatives. This approach helps firms complete more projects with fewer resources. Thus, robust project resource management software allows firms to overcome workforce constraints and deliver every project successfully.
Resource Planning and Optimization Facilitates Data-driven Decision Making with Real-time BI
A modern resource management tool offers real-time Business Intelligence capabilities that help organizations gain in-depth insights into key project resource metrics such as demand, availability, capacity, utilization, financials, and location. It enables project managers to make data-driven resourcing decisions and ensure seamless execution.
In addition, the customizable dashboards and reports offer multi-dimensional views and access controls that enable various stakeholders to avoid information clutter and view relevant data as per their roles and requirements. This further simplifies and fast-tracks the decision-making process.
Saviom’s Resource Planning and Optimization Solution
SAVIOM is a global leader in Enterprise Project Resource Management Software. Our client-centric culture has enabled us to help several Fortune 500 companies across 50+ countries optimize their workforce and maximize business efficiency. Some notable clients include Siemens, Fujitsu, Global Wind Services, DHL, Honeywell, Alix Partners, and more.
Several years ahead of the market compared with our competitors, our tool’s advanced features allow businesses to reduce resource costs, improve project margin, enhance employee productivity, and increase client satisfaction. Moreover, its configurable architecture integrates seamlessly with your existing business ecosystem to cater to all your resource management requirements and ensure the successful delivery of every project.
Learn More about Resource Planning and Optimization
Saviom publishes a range of helpful articles in its resource library. Among them is their Comprehensive Guide to Resource Capacity Planning.
You may also like Mike’s video, Project Resource Management 101:
[This video will be available from 8 August 2024]
Have Your Say
Please do give us your thoughts and questions about Resource Planning and Optimization in the comments below. We will respond to every comment.
