Spreading resources from the top of the enterprise can help protect your bottom line.
Capacity planning is a key task for project managers. This is how you maximize your resources. In the past, many organizations have had difficulty planning capacity effectively. This was due to numerous spreadsheets and a lot guesswork. This has resulted in more projects being approved than can be delivered. If you don’t have clear visibility into the capacity of your team and a control over this aspect, it can lead to overtime, poor hiring, and financial ruin.
You can be successful while not limiting your talent, and still planning for resource demand. These are five ways to create capacity planning processes that produce sound finances.
1. Realistic utilization formulas are a great way to connect your people with the costs.
It is impossible for skilled resources to finish one project and then start another tomorrow at the exact same speed of productivity and efficiency. It takes time to adapt, to drop one piece of work and start a new one. For team members working on multiple projects simultaneously, switching gears can be costly. If you know the correct utilization percentages, your plans will be more realistic. This will allow you to see the real gaps and constraints. It may seem obvious to manage your financial resources in relation to your resource planning, but many companies don’t have enough visibility.
2. Analyze the project mix
To achieve your strategic goals and get the best results, it is important to do your research. You will be able to assign resources to multiple projects. A resource that is flexible enough and able to be a project leader, or an implementation consultant, will also retain more value. To meet your budget, it is important to identify the projects that have the highest ROI.
3. Effectively manage your resources
There will always be a need to manage resources. Make sure you have cost profiles for rent, buy, and build. Compare the costs of hiring employees, contracting for that skill, and outsourcing it. You need to know the numbers if you want to manage gaps. You will end up spending too much and losing margins. Or you could spend too much and lose sponsors’ trust.
4. View from the enterprise level
Even if you meet all three objectives, you can still lose money if only one department or service delivery silo is managed. To determine the true cost of each action, it is important to start at the top. You will be shocked at the hidden costs of the left and right hands not knowing each other. The dreaded “opportunity cost” is when valuable resources aren’t used or are being used on non-business critical projects. Strategic projects are starving for any potential value they might bring.
5. Benefits for your business model
How can you determine the value proposition of your projects to ensure they meet their financial and strategic goals? How can you measure your resource usage against these winners? How can you avoid wasting resources on projects that aren’t profitable. Resource usage does not have a cost per job. We know that capacity planning comes with a cost. These costs can be identified and managed so that the benefits outweigh any financial strain on short-term and long term investments.
