BUS605: Strategic Project Management

The most detailed schedules and budgets in the world are useless if you don't have the people, equipment, facilities, and other resources you need, when you need them. In reality, the schedule is only determined after the resources have been assigned. In other words, until you have assigned and committed resources, your project schedule and budget are not fully realized. They are based on assumptions, which are a huge source of uncertainty. This is especially true in the IT world, where productivity can vary so much from one person to another. You can't really have a clear idea of how fast your team can work until you know who's on the team.

Acquiring project resources usually involves looking outside the boundaries of the project itself to find what you need. In the early stages, that includes finding the right people for your project team. Inevitably, you will face restrictions on the resources available to you. And yet, to complete a project successfully, you have to figure out how to get the resources you need – people, office space, Internet bandwidth, computer, copper wire, shingles, 3-D modeling equipment, concrete, and so on – when you need them.

That's why understanding the principles of resource allocation is so essential to successful project management. Most definitions of "resource allocation" describe it as something that takes place on the organization level, as in the following: "Resource allocation is the process of assigning and managing assets in a manner that supports an organization's strategic goals". On the project level, resource allocation still involves making choices that support the organization's strategic goals, but you also have to factor in your project's more specific goals. In all cases, resource allocation (or resource management as it is sometimes called) includes "managing tangible assets such as hardware to make the best use of softer assets such as human capital. Resource allocation involves balancing competing needs and priorities and determining the most effective course of action in order to maximize the effective use of limited resources and gain the best return on investment".

Resource management is about making sure you have the resources you need at the right time, but it's also about avoiding stockpiling resources unnecessarily (and therefore wasting them) and about "making sure that people are assigned to tasks that will keep them busy and not have too much downtime".

The essence of resource allocation is resource loading, or the process of assigning resources (most often people) to each and every project activity. In resource loading, we look at the tasks involved in the project, and then, using past experience and some judgment, determine how much work (typically measured in person hours) to assign to each resource in order to achieve the desired schedule. In the early stages of a project, resource loading provides a quick check on resource demand and supply. Any indication that demand is tight for a particular resource should serve as a warning that you will have to carefully monitor that resource throughout the project. In any resource loading decision, you need to distinguish between fixed resources (which remain "unchanged as output increases") and variable resources (which change "in tandem with output").

The Screwdriver Rule

Investing in resources you might need, but don't necessarily need immediately, is similar to keeping screwdrivers of varying sizes available in your tool drawer at home. You would never want to have to go out and buy a screwdriver just to complete a quick task like tightening the legs on a chair. Most people would agree that the cost of buying and storing a set of screwdrivers is less than the inconvenience of not having them on hand when you need them. In the same vein, a project manager might make a similar value judgement about resource availability to ensure that the project as a whole progresses smoothly. But of course you don't ever want to unnecessarily stockpile resources that could be used elsewhere in your organization.

The geometric order approach to resource allocation presumes a systematic process, in which you know well in advance which resources you'll need at any one time and have a clear path to acquiring those resources. This is the ideal situation and is usually the result of years of experience that allow managers to foresee needs way down the road. For example, mature project management organizations know to hire staff in anticipation of upcoming project needs and provide developmental opportunities to challenge and retain their best employees. By contrast, less experienced project management organizations identify project teams on a "just in time" basis that can compromise a project from the beginning.

While having everything you want when you need it is the ideal, it's rarely the norm in the permanent whitewater of the living order. In a changeable environment, resource allocation is all about adaptation. You might start by planning the necessary resources in a geometric way. However, altering circumstances could mean you need to revise your plan day-to-day. In other words, in living order, you need to actively manage the resources required for your project tasks. You can't assume that because you've made a plan, every person and everything you need will show up on time, according to your plan.

For example, in manufacturing, when installing a new piece of automation, a company absolutely must have maintenance, manufacturing engineers, and control staff available to jump in when they are needed. The schedule might spell out detailed dates, but everyone still has to remain flexible because their piece of the work will affect the overall timeline. Adding to the complexity of the situation, the personnel working on your project may have to be available to staff the rest of the plant. They might suddenly need to postpone work on your automation project in order to work on a crisis affecting a particular customer order.

And keep in mind that from one project to the next, your control over day-to-day assignment of resources could vary considerably. In most situations, project managers need to coordinate, negotiate and contracting with others to get resources when they need them. What's more, there's often a time lag between identifying the need for a resource and getting it deployed. This is especially true for research-oriented tasks, in which resolving unknowns sets the pace of progress.

Getting Creative with Resource Management

Successful project managers aren't afraid to get creative in their approach to resource management. An interesting example of resource control in highway construction requires contractors to rent lanes per day until they finish working on them.

In some situations, you shouldn't even assume that you know what resources you will need in the first place. It can be hard to accept this fact, even in organizations that have fully embraced living order. In their article "Managing Resources in an Uncertain World," John Hagel, John Seely Brown, and Lang Davison argue that even the most well-conceived pull plan – a plan informed by the best precepts of Lean – can be limited by the assumption that the planners know exactly what resources they need in the first place. To overcome this challenge, they argue for an even more flexible version of pull planning: