Balancing Skills Capacity With Demand Across Your Portfolio of Projects
Managing a portfolio of projects with a limited pool of resources can be an exciting ride. No sooner do you have the skills demand nicely matching your capacity when an unexpected change arrives, throwing it out of balance. The challenge is to maintain high levels of resource utilization, when each project has its own priority, timeline and skills requirements.
Figuring out the right balance is not straightforward. There must be some spare resources on hand so that key project dates will be met, yet too many just hanging around will erode utilization levels and can rapidly reduce operational profits.
The financial rewards for getting it right are significant. The UK Association of Consulting Engineers (members benchmark survey, 2011) found that a 2% increase in staff billing would increase their members’ profitability by around a third. This is a rich reward for a relatively modest increase in resource utilization.
In more than 25 years’ experience of working with multi-project organizations, I have seen a common approach to how the successful ones tackle this. It boils down to having the right management information and an effective demand management process. This article focuses on these two aspects.
There are a number of key reports that give the required visibility:
1. Forward Loading across the organization
The table is a heatmap that highlights periods of overload in red and underuse in green. Amber shows where the target utilization is being achieved. Clicking on the Department hyperlink drills progressively down into each corner of the organization, to identify the cause of any bottleneck.
Working down the Pipeline leg we see a demand of up to 10 Engineer Grade 1’s per month from new projects on a team of just 5, and only 1 of those is free.
2. Tracking resource utilization.
This report shows the utilization history for each department or team. It shows how close they are to meeting targets and if the trend is positive or not.
It looks as if the anticipated upturn in demand on the Mechanical department did not materialize.
3. Tracking outstanding request for resource.
Reports for the requesters (project managers) and resource suppliers (team leaders) highlight unfulfilled requests that could delay the start of project tasks.
Management places high reliance on these reports for making those important decisions on hiring, firing or retraining staff. For the reports to be credible, the underlying data must be current, complete and accurate. This means that the demand management process must be well defined and adhered too.
Managing changes in demand
Many multi-project organizations face high volatility in demand, because change can arise from such a variety of sources. These range from new projects or service request arriving unexpectedly, through clients deciding to postpone the next project phase, or key resources leaving at short notice. Project schedules and resource capacity levels need to be kept up to date, so that the forward loading report will show new bottlenecks and periods of under use as they arise.
There could well be a need to rebalance the workload, to see if new bottlenecks can be reduced without jeopardizing key project dates. This is where ‘What If… analysis steps in.
What If scenarios
The previous section showed reports for the committed projects only. But how to see the impact of new projects arriving? With ‘What if …’ scenarios you can selectively layer potential projects on top of the committed workload, so that the resource implications of their award will stand out. If a new project of high priority causes a bottleneck, then lower priority ones may need to be delayed. This is most easily shown with a Video. These scenarios usually work on a copy of the live data, so only when there is a consensus on the way forward will the changes be applied. ‘What if…’ analysis is particularly useful in more volatile multi-project environments, where significant changes frequently occur.
So, when managing multiple projects, a few simple reports and an effective demand management process should see resource utilization levels start to rise. The financial rewards suggested by the Association of Consulting Engineers can then start to flow.