What is resource planning? A must-know for project managers
A project doesn’t complete itself. It takes resources: time, finances, materials, and, most of all, labor. Resource planning helps project managers assess the availability of company assets and optimally deploy them to maximize efficiency and return on investment.
Resource planning may seem daunting to those newly assigned to a project management role, but it doesn’t have to be. Resource management is a systematic process; once you learn the steps, you’ll be on the path to managing your projects’ vital resources effectively and improving their outcomes.
What is resource planning?
Resource planning in project management is the process of identifying, forecasting, and allocating a company’s assets to efficiently deliver the desired outcomes. Here are several types of resources:
Money
Equipment
Technology
Materials
Time
Staff
The resource planning process is strategic. It determines the best use of assets based on capacity and availability to deliver the project on schedule and under budget.
During the estimation phase, the resource planner assesses the quantities of storable resources, such as money, and nonstorable assets, like machinery and labor. In addition, they must identify:
Staff with the proper skill set to complete the job
The employees available to work on the project
The best use of each team member’s time
Compromises between competing priorities
The accuracy of the evaluation is crucial for project scheduling and budgeting.
Why is resource planning important?
Respondents to a Project Management Institute (PMI) study reported that 23% of project failures were caused primarily by “inadequate resource forecasting,” with similar numbers for “issues with resource dependency” and “limited/taxed resources.”
A resource planning protocol mitigates these risks and improves project success while providing additional benefits, such as the following:
Facilitates long-term planning
Although queuing up multiple simultaneous projects sounds productive, it can be frustrating if a lack of resources causes bottlenecks and delays. With resource planning, project managers can review requirements for all projects in the pipeline and optimize deployment and scheduling to minimize lag time.
2. Proactively addresses the capacity gap
By comparing resource demand against a company’s existing capacity, resource planners identify shortages or excesses, allowing them to take measures to bridge the gap. Project managers address excess capacity during a surplus by adjusting timelines, redeploying resources to other projects, or moving up future tasks. During a shortfall, they practice resource leveling – redeploying assets based on project priority. Should the shortage affect the workforce, planners can also hire additional staff on a contract or full-time basis.
3. Reduces project costs
Asset unavailability leads to delays, and poorly estimated requirements increase costs. A project manager ensures timely and on-budget delivery by evaluating and prioritizing resource allocation using real-time data and a strategic approach. Teams can research historical asset utilization to inform and improve the accuracy of resource estimates during project planning.
4. Predicts and optimizes resource use
The resource planning process provides foresight into project asset utilization. It allows the project manager to reallocate resources from low- to high-value projects, increasing return on investment. The practice also prevents the overutilization of assets, improves productivity, and boosts employee satisfaction and engagement.
5. Centralizes resource pool
Resource planning gathers all related information into a single location, including:
Skill sets
Location
Rates
Costs
Capacity
This streamlines the sourcing process. Project managers can quickly locate and engage lower-cost or global resources and direct them toward the appropriate initiative while maintaining budget control. They can also review allocations to see if they impact other projects.
6. Delivers projects without cost overruns
While identifying and fulfilling all project requirements, the resource planner targets the benchmarks of a successful project: on-time and on-budget delivery.
But this is more than a one-and-done activity. Management must continue to monitor resource deployment and use throughout the project lifecycle to keep up with demand. Techniques like forecast vs. actual reports, resource utilization heatmaps, and Gantt charts ensure the team has the assets to deliver the most critical project requirements.
Key components of resource planning
Planners can use spreadsheets to prepare their resource plans, but project management software streamlines the process. A planning tool helps manage resources and keeps the team updated on usage.
Whether developed by hand or with the help of planning software, a resource plan should include the following:
1. Project pipeline plan
With a project queue, the resource manager must designate a probability stage that triggers the resource estimation and requisition process. Once launched, they estimate the required assets and compare the forecast against internal resource levels from multiple perspectives.
The evaluation will identify shortages and excesses, allowing the manager to apply techniques like resource leveling and smoothing. Alternatively, they may adjust project timelines to maximize the available assets. If the resource manager can’t address shortages internally, they begin sourcing from external vendors.
2. Utilization forecast
The resource utilization forecast compares estimates from the project planning phase with actual consumption. Resource management can control the project budget by optimizing billable and strategic deployment. The process is also a proactive measure that detects and mitigates under- and over-utilized resources.
If the project team consumes resources faster than the estimate, project management can again apply resource smoothing or leveling techniques to prioritize high-value tasks and projects.
3. Capacity plan
Resource managers will conduct forward planning for current and pipeline projects based on their work breakdown structures (WBS) to avoid double-booking. They will analyze the company’s resource capacity against the project demand gap to identify surpluses or shortcomings and implement corrective measures to ensure sufficient resources for all ongoing projects.
4. Resource allocation
A resource allocation plan outlines when and where project managers will deploy resources within a project’s timeline. The plan considers the project scope, critical path, and budget – among other factors – to determine resource scheduling and assignments. It also includes details about ongoing monitoring and stakeholder reports.
5. Bench management plan
Bench management helps resource planners avoid upsizing or downsizing the project team due to a shift in activity levels. It allows project managers to reallocate staff to new projects upon an initiative’s conclusion to maintain productivity.
Upgrading opportunities and job shadowing provide alternative solutions. By reducing bench time between projects, resource managers can improve the organization’s bottom line and diversify team member’s skills.
6. Real-time updates
Using resource planning software, project managers can access real-time business intelligence reporting and insights to improve decision-making speed and accuracy. The software can tailor their reports to provide visibility into specific levels and boost the overall resource health index.
7. What-if analysis
Projects rarely go according to plan. A what-if analysis allows resource managers to simulate different allocation scenarios in a multi-project environment. These insights enable them to compare potential circumstances and outcomes, fine-tune their resource mix, identify the most profitable project, and maximize returns – even with limited assets.
Create a resource plan in 6 steps
Much like the project management process, resource planning follows a lifecycle. Before launch, the resource manager estimates the resources needed to produce the deliverables and return a profit. Then, they acquire those assets, utilize them, and finally dispose of them once the project is complete. Here’s a step-by-step breakdown:
1. Review client and resource requirements
Launch the resource planning process by consulting with the client and other stakeholders. The management team should understand
Project scope
Objectives
Timelines
Budget
Once these factors are established, the project manager should review internal resources to assess workforce skills, competencies, resource types, and levels. If these fail to align with the desired goals, resource management must implement corrective measures to avoid scheduling conflicts and ensure the delivery of all initiatives within the project portfolio.
2. Identify resources
Once project management understands what they need, they identify organizational resources. They can do it independently or consult with available resource managers.
They begin by assessing the capacity versus demand gap from multiple perspectives to determine any excess or shortage. The analysis allows the project team to foresee and establish strategies to plan and allocate resources.
3. Bridge resource gaps
Once capacity is analyzed against demand, the project manager secures resources and gets sign-off from stakeholders. Depending on the project and budget, these can be long-term or short-term measures, but they should bridge the gap while allowing the resource manager time to conduct forward planning.
4. Allocate resources
The resource manager leverages the centralized view from a resource management tool to strategically allocate materials, equipment, team members, and other assets based on project scheduling and requirements. These insights help control the budget and ensure deliverable production according to established timelines.
Resource management should also plan to mitigate resource-related risks or bottlenecks that could derail the project.
5. Track project resources
Project management software lets leadership monitor resource utilization and create reports to update stakeholders. By tracking levels, the project manager can avoid depleting critical resources or overwhelming staff. If a risk manifests, the resource manager should have enough warning to address it before it impacts project timelines.
6. Close project
According to protocol, project assets are released or disposed of after deliverables are completed. The project team must also participate in a post-mortem meeting wherein they evaluate the resource plan, identifying what worked and what didn’t. They determine whether resource allocation was efficient, whether the team met deadlines, and the impact of any unforeseen events.
With these insights, planners can refine resource management processes, minimize discrepancies, and improve project success rates.
Resource planning with Tempo
Learning how to do resource planning is easier with the proper tools. Thankfully, Tempo provides a resource management software solution to meet your needs. Capacity Planner improves resource planning with tools to allocate resources, monitor staff availability, and automate team capacity planning:
Resource managers can optimize available resources and find the resources needed for current and future projects, even from other teams.
Executives can look at where resources have time available to understand where business opportunities lie or determine whether more staffing is needed.
Managers can make more effective decisions based on comprehensive real-time data rather than static calendars.
Teams can get organized with simple and efficient communication of priorities.
Capacity Planner invaluable as a visualization tool, allowing you to see all your resources along with their time allocation. At a glance, you see who has available hours and who is overbooked for the designated time period.
Ready to transform the way you track productivity? Start allocating your team members with confidence.
Try Capacity Planner today
Get Started
