Cautionary Tale of Project Management Resource Capacity Planning

In a recent survey, 94% of Enterprise IT project managers and PMO leaders and 77% of project and PMO managers working in the professional services industry reported that resource assignment capabilities were the number one reason they needed project management automation.

When reviewing vendors to meet that need, these PPM pros had better factor effective capacity planning processes into the mix. The Project Group recently offered a great working definition of capacity planning that clearly delineates the difference between resource planning and capacity planning for the enterprise:

“Tactical resource planning is the coordination between project and line managers. By contrast, strategic resource or capacity planning is concerned with: The predictive provision of employees with the necessary skills. Ensuring that appropriate employees can implement strategically relevant projects at the right time.”

And what capacity planning, though it has an input of resource management, really means and what I believe it really means is it's the output of all available resources that have the right skill, that have the right time, under the auspice of right opportunity.”

I recently helped facilitate a webinar discussion on this topic. During The Five Pillars to Project Success, with Chris Ryba, Virtual Hold Technology (VHT), Director of Professional Services. Here are some highlights from that presentation:

From the top down

Having a holistic top-down view of the portfolio of projects in your enterprise, and then being able to take the inputs of the new opportunities whether they’re urgent or important or simply the most pressing need of the loudest executive on the team, removes risk and creates true strategic business planning.

As a former PMO leader, I realize the practical need of keeping those executive folks happy. And, even more practical is possessing a clear skills inventory so that when you are parsing your opportunities, you can really analyze the skills of the individuals we have, and the impact of pulling them off one project and assigning them to another.

Often, the C-Suite has already decided which projects or programs are important to the organization. However, their priorities can shift rapidly and once you’ve laid your resource capacity out against all the potential opportunities - capacity planning functionality guides the most critical decisions with the greatest business impacts.

Quidditch, anyone?

I’ve sat in numerous meetings where executives redirected our priorities to a new “great idea or opportunity”. I understand the excitement of identifying what seems to be the best thing for the company that also happens to be innovative or interesting, and I wouldn’t want to sound dismissive. But as PMPs and PMO leaders, we understand doing more or “the next cool thing” isn’t as easy as it sounds. I used to call these topics, “the golden snitch” after the Harry Potter series, because they seemed so bright and shiny, we should all chase them. But when we try to do too much with the resources we have, then every time we add something on, something else fails.

When you catch the big fish

The Walmart opportunity was not just the “next cool thing” for my company – this was catching a very big fish. Walmart asked us (my previous company) to bid on a certain component of one of their product lines. From the largest national retailer, that’s a significant opportunity. But we couldn’t come around to giving up several projects already in play. When I tested all the portfolio’s current projects against the Walmart opportunity, it was clear we couldn’t handle the work unless a bunch of programs were put on hold or dropped. Luckily, I had a powerful enough capacity planning background to get the right data.

Out went my note to the executive leadership team: "No. We can't do this with all of these other things on our plate." Within hours, the CFO walked into my office and said, "I have the CEO on the phone. He'd like to talk to you."

He handed me the phone and the CEO said, "Are you telling me that we just brought your office to its knees?" I was extremely nervous, replying, "No. I think you brought your company to its knees. And it's time we decide what's most important. A decision needs to be made because here's our capacity..."

The CEO was very quiet for a few seconds. And then, he said, "Fine. We'll go with the measures that you have. Let's do this Walmart deal, and you tell me what we have to stop."

Using capacity planning, we were able to incontrovertibly prove what we needed to put on hold, and what capacity constraints we needed to break open. After we made room for the Walmart project, we went from $100 million in annual revenue to $135 million. We had the ability to say no, so we could confidently communicate the impact of any opportunity.

Five pillars to success

I’m not promising you’ll be able to improve your company’s revenue by $35 million, but here are five elements to work on today, so you can say no when you need to say no and yes when the opportunity has the most strategic heft: 

1. Skills Management: Make sure you have a skills management system working that uses actual data from assignments in the “field” in real time. 

2. Forecasting: Forecast from the project, resource, portfolio level and ensure you can measure and manage risk. 

3. Budget vs. Actual: Gain baseline for actual spend and examine it against budget. Ask yourself: Is the process working? Can we spend or stop projects to free up resources? Should we? Are these opportunities strategic enough for those losses? 

4. Resource Utilization: Maximize utilization so your people are working on the right thing at the right time. Allow for downtime and figure out when it’s permissible to have lower billable utilization with a higher billable resource and when it’s not. And it’s all on the enterprise level to support enterprise goals. 

5. Project Management Excellence: Invest in project management and your projects will perform. That means getting the right tool to contribute to best practices; governance rules; resource demand and utilization planning and other project management skills to move the needle for revenue growth.

Remember, PMI recently reported that only 58% of organizations fully understand the value of project management. Organizations that undervalue project management as a strategic competency for driving change report an average of 50% more of their projects failing outright.

Return to Mastering Resource Capacity Planning.