Wednesday, July 27, 2011

Resource Management in Projects

Resource management is one of the key corner stones of project management. If a project manager excels in resource management, then I'd say he has 50% of project management challenges solved, and the project manager needs to concentrate on the remaining 50% to get the project completed on time & on budget.

Why am I placing so much importance on resource management? The answer is simple. Resources cost money, and not having the right resources at the right time upsets the schedule. In complex projects - especially non-IT projects, there are several types of resources that needs to be managed: Equipment, supplies, machinery, people, land, clearances etc. These resources cost money to procure. If the lead times are too short, it costs more money to get the resources. So it pays to look ahead in the project planning stage and make proper plans to procure the required resources in a timely manner for the lowest cost. Changes to the cost of the resources has a big impact on the viability of the project, therefore resource management also impacts cost management.

In my extensive experience, I have seen that resource management is the key for successful project completion. Based on this experience, I writing this article on resource management.

Resource management has several components:

1. Effort Estimation
2. Resource Identification
3. Lead time to get required resources
4. Resource Utilization
5. Resource Tracking

Effort Estimation

Effort Estimation is the first step in project planning. Essentially the project has to be broken into smallest possible work packages and a project plan is made based to meet the delivery date.

Project manager needs to know the type of efforts involved & the resources needed for that to start the estimation process. Next step is to prepare the estimates. The best way to get the estimate is to talk to the actual persons who will be doing the work. Talk to the people and ask for three estimates: average, pessimistic & optimistic. An experienced project manager will have a good feel for how reliable these estimates are, and then modify/enter the estimates to the actual project plan. It is essential to add some buffers into the initial estimates - for contingencies such as vacations, unexpected sickness etc.

It is very important to know the accuracy of the estimates in project planning. For example, if you are working on a fixed price project, or if your project is in a critical path of a bigger program, then you need to have a high level of accuracy.

From experience, people know how much actual effort is involved, so taking a review of the estimates from an expert will be useful in determining the accuracy of the estimates.

I would strongly recommend using a software tools to capture the initial estimate for the task - i.e, for each work package, and then comparing with the actual effort/resources consumed for a similar task in the past. This comparison will help in determining the accuracy of the estimates. My suggestion would be to use tools such as Clear Quest or Remedy to create job orders for each work package - and with in each job order, capture the initial estimate, revised estimate and the actual effort taken. If such a system is implemented organization wide, then even a new project manager can query the system and get a comparative data for analyzing the estimates.
Only after finalizing on the accuracy of the estimate, share the upper limit value with customers or any people external to the project team. For the internal project team the aggressive estimate should be used as bench mark. This allows for flexibility within the project execution and helps a great deal in customer satisfaction.

Never reveal the lower end of the estimate to customer or even reveal the ball park figures to the customer before the completing the estimation exercise. Customers often tend to seize the lower end of the estimate and treat that as the final figure. A good project manager takes effort and time to hammer all the caveats and assumptions into customer's mind along with the upper limit of the project estimate.

Summarizing this, the exercise of resource estimation is as follows:

1. Break the project down into smallest possible set of tasks - also called work packages.
2. Talk to the persons who will be doing the work to get a range of estimates
3. Validate the estimate with experts & historical data
4. Determine the way the estimates are recorded and presented to customers & stake holders
5. Roll up all the estimates and present the pessimistic estimate to customers
6. Hammer all the caveats and assumptions into customer's mind along with the estimates

Top Estimating Mistakes to Avoid

1. Bowing to pressure and changing the carefully computed estimates with numbers given by someone senior or from upper management.

2. Not having the estimates for all work packages worked out, and relying on the gut feel for the missing estimates

3. Taking the words of experts as final estimate. An expert will be able to do the work in hours - which for a fresher will take days.

4. Taking the estimates from team as final - without factoring in caution or optimism. Depending on the overall experience of the team, the accuracy of the estimates changes. The estimates given by the team is driven by several of their internal political factors - and the estimates may not reflect reality. So as a good practice, all estimates must be validated.

Resource Identification
Every single work package in the project should have resources identified with. In the initial stage of the project, if resources for each work package is not identified and assigned for that, then that's a major gap in project planning, and the project plan is not complete nor it should be shared outside to customers.

It is the role of the project manager to work with the stake holders to get resources for each work package. In most cases, not all the resources are identified and allocated at the start of project, so from planning perspective this denotes a risk & hence a contingency resource identification must also be done during the planning stage.

Lead Time for Resources

Resources are always scarce and must be carefully used. In most cases, resources will be committed to the project at the beginning of the project, but it is the duty of the project manager to know the lead time needed to get the required resources and plan things accordingly.

With agile projects, resources are not made available to the project till the time it is really needed. In such cases, project managers will have to set timelines and do an early check if the resources are indeed available for the forthcoming iterations, identify the timelines as to when the resources will be made available, who is responsible for the resources, what is the escalation path/plan needed to get the resources, and what is the contingency plan in case the needed resources are not available.

A good project manger should have forward thinking to ensure resources are available when needed. This involves making early bookings, and reconfirming the availability on periodic basis, - particularly reconfirming the availability as the planned state date approaches.

Having a resource schedule as part of the project plan is a good practice. The resource schedule should list the following:

1. Resources needed
2. Duration of the need
3. Lead time for procuring/booking the resources
4. Remainders/reconfirmations schedule for ensuring that resources to be made available.
5. Cost of resources & cost variations of resources.
6. Ramp-up time for the resources - i.e, time needed for the resource to be fully effective

Resource Utilization

Resource utilization refers to the plan on how the allocated/available resources are utilized in the project. Often times people succumb to the pressure and get into over utilization of resources: i.e, make people work overtime to complete the tasks, overload/overuse machinery etc.
Over utilization of a given resource is not a standard plan. No project manger should plan for overloading of resources in the initial project plan. The project plan must account for normal usage of the resource.

A good project manager will not make a plan in with all resources are utilized at full capacity - especially people. This is because resources cannot operate at their full capacity all the time. With people resources, one also needs to account for other overheads such as meetings, training and also plan for holidays, sickness, & vacations. This implies that a 32 man hour task should be planned as a 1 man week task. Ideally 60% of person resource utilization must be factored for project planning.

With equipment or machinery resources, overloading must never be considered in the project plan & in practice it must be followed on ground. If overloading is permitted, then the inevitable happens: the machine breaks down, causing your project schedule go haywire. To eliminate the schedule variance due to breakdowns, resource utilization must be planned at 80% of the machine capacity. This means that on the ground, if a machine breaks down, the other machines can then be loaded at 100% and the project schedule is still unaffected.

Resource Tracking

Once the resource planning, resource schedule is done and the project is under way, the project manager must track the actual usage/consumption of the resources and compare against the plan. The actual usage must be captured into the system and this helps in refinement of future project plans.

During the project estimation time, people have a tendency to tell things which their managers like to hear - thus giving an overtly aggressive estimate or a conservative estimate. But when the actual efforts are tracked against the initial estimate and the variances are discussed openly in the project meetings, people tend to become more realistic in the future projects.

In my experience, I have used tools such as Rational or Remedy to track the actual utilization and then build that into the knowledge base for future use. Also having a centralized tool to track the actual resource utilization will help in project analysis & progress tracking. If the actual resource utilization is much greater than the initial estimate/plan, then it is an indication that the project is likely behind schedule and people are over working to cover up.

Also under utilization of resource is not a good thing. This implies that the initial estimates were over blown or the project is falling behind schedule and things are not starting on time. From my experience a 10% variation from the planned resource utilization is acceptable, anything higher is a leading indicator that something is going wrong in the project.

Note on Completion Tracking

Tracking Resource utilization is not everything for a project manager. One also needs to know how much of work has been completed on the ground. Often times people report that their work is 90% complete - and then it remains at 90% for a long time, with 10% pending and consuming resources. The percentage(%) of resource utilization should be an indicator for the completeness. Of 100% of the allocated resources are consumed then the work should be 100% complete, else the project is said to be behind schedule/plan.

Contingency Planning

Resources are always scarce & hence there is always a possibility of required resources not being available to the project. It is therefore a good practive to add resource contegency into the resource estimates to guard agaist resource scarcity.

Resource contingency is something that's added to the initial estimates to guard against things requiring more work than expected or simply to reflect the fact that the estimate is not reliable. It is good practive to add contingency to individual work packages. In some cases, contingency is added en bloc in form of additional work packages.

In large complex projects, It's common to incorporate contingency at both levels. Understanding how much is already built into individual, detailed estimates is part of deciding how much additional contingency you should allow for the project as a whole.

Closing Thoughts

Project managers are measured primarily on the delivery of projects. To deliver projects on time and on budget, one needs to have a very tight control on the resources and time scales. From experience I know that resource management is the key for successful projects delivery and resource utilization tracking is a key metric in measuring the quality of the project plan, monitoring the project status and this helps in taking any corrective steps.


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