Allocating and Managing Constrained Resources
This chapter provides a variety of techniques for monitoring the resources used within your project. The emphasis is on human resources, but the principles can be applied to any project resource.
Externalities and Looking to the Future
A project manager with a serious appreciation for living order understands that external factors may fluctuate during project execution, making previously widely available resources impossible to obtain. For example, there may be a run on certain materials, or a certain type of expertise might suddenly be consumed by an emergency somewhere in the world. Any development like this can force you to rethink your original expectations. You need to be prepared to adapt your budget, scope, and schedule to the realities that evolve during project execution.
Keep in mind that resources can become suddenly scarce. For example, right now materials engineers are a hot commodity, because more engineers are retiring than entering this field. Compounding the problem, new designs and manufacturing techniques have expanded the need for materials engineers. A 2018 check of Indeed.com turned up over 47,000 openings for materials engineers. As you might expect, new engineering students are responding to the call. At UW-Madison, enrollment in this area of engineering has grown dramatically. But it will still be a while until there is enough materials expertise to go around.
And keep in mind that a constraint on the availability of resources is not necessarily the worst thing that can happen to an organization or to an individual project. In fact, the origins of Lean and the Toyota Production System can be traced back to resource constraints in Japan at the end of World War II. In an article for MIT Sloan Management Review, Michael Gibbert, Martin Hoegl, and Liisa Välikangas argue that abundant resources can sometimes stifle innovation:
Resource constraints fuel innovation in two ways. In a 1990 article in Strategic Management Journal, J.A. Starr and I.C. MacMillan suggested that resource constraints can lead to "entrepreneurial" approaches to securing the missing funds or the required personnel. For example, the Game Changer innovation program of Royal Dutch Shell Plc long operated on the shoulders of its social network, which allowed innovators to find technically qualified peers willing to contribute to their efforts on a complimentary basis. In other words, individuals innovate despite the lack of funding by using social rather than purely economic strategies. Thus tin-cupping, horse trading, bootstrapping, and currying personal favors partly or wholly substitute for economic transactions in which non-entrepreneurial innovators (or those less socially connected) would pay the full price.
Such efforts speak for "resource parsimony" – deploying the fewest resources necessary to achieve the desired results. For instance, new product development teams might use testing equipment on weekends, when it is readily available and free. Likewise, team members might know engineers or other professionals – say, from supplier firms involved in past projects – who would be glad to give informal design reviews in anticipation of future remunerative work.
Resource constraints can also fuel innovative team performance directly. In the spirit of the proverb "necessity is the mother of invention," teams may produce better results because of resource constraints. Cognitive psychology provides experimental support for the "less is more" hypothesis. For example, scholars in creative cognition find in laboratory tests that subjects are most innovative when given fewer rather than more resources for solving a problem.
The reason seems to be that the human mind is most productive when restricted. Limited – or better focused – by specific rules and constraints, we are more likely to recognize an unexpected idea.
Gibbert et al. argue that managers with access to all the resources they could possibly want tend to fall into the trap of throwing money at problems, rather than sitting down to think of effective solutions to the kinds of problems that arise in the permanent whitewater of the modern business world. Then, when projects fail, 'rationalizations often start with excuses such as 'We ran out of money' or 'If only we had more time'. In such cases, the resource-driven mindset may well have backfired. Resource adequacy is in the eye of the beholder, and if a team has the perception of inadequate resources, it may easily be stifled.
Gibbert et al. describe several projects in which resource constraints turned out to be a blessing, not a curse. For example:
In the post–World War II era, several American teams under General Electric Co., and several German teams under Bayerische Motoren Werke AG were competing against each other in a race to resolve the jet engine performance dilemma. The stakes were high, given that the Cold War had started and the West was eager to come up with reliable jet technology before the Soviet Union did. The German team eventually won by proposing a radical departure from the status quo, an innovation that is, in fact, still used today. It developed a "bypass" technology in which the rotor blades and other engine parts most exposed to high temperatures were hollowed out so that air could flow through them, thereby cooling them off.
Where did this idea originate? The American team had a virtual blank check to buy whatever costly raw materials it needed to create the most heat resistant alloys (the Cold War jet propulsion development program cost the U.S. government nearly twice as much as the Manhattan Project). The German team, by contrast, was forced to rely on cheaper alloys, as it had significantly less funding at its disposal and simply couldn't afford the more expensive metals.
Don't underestimate the management hours required to keep track of a high number of resources. For example, an experienced manager of engine-related projects reported that more than 50 core team members was too many for one project manager to keep track of. With over 50 team members, the burden of coordination and communication often outweighed the benefit of extra resources.
Resource Management and Proactive Resilience
In their book Becoming a Project Leader, Alexander Laufer, Terry Little, Jeffrey Russell, and Bruce Maas discuss the benefits of proactive resilience – taking timely action to prevent a crisis, often by introducing a change that upends the usual way of doing things. In living order, where resource availability is never a given, proactive resilience is an essential component of good resource management.
As an example of proactive resilience in action, Laufer et al. describe the work of Don Margolies, a project manager in charge of NASA's Advanced Composition Explorer, a robotic spacecraft launched into orbit in 1997 to collect data on solar storms. At one point, facing a $22 million cost overrun related to the development of nine scientific instruments, his dramatic intervention ultimately saved the project:
Don concluded that unless he embarked on an uncommon and quite radical change, the project would continue down the same bumpy road, with the likely result that cost, and time objectives would not be met. To prevent this, he made an extremely unpopular decision: He stopped the development of the instruments, calling on every science team to revisit its original technical requirements to see how they could be reduced. In every area – instruments, spacecraft, ground operation, integration and testing – scientists had to go back and ask basic questions, such as "How much can I save if I take out a circuit board?" and "How much performance will I lose if I do take it out?"
At the same time, Don negotiated a new agreement with NASA headquarters to secure stable funding, detached from the budget of the other six projects affiliated with the Explorers program. To seal the agreement, he assured them that by reducing his project's scope, it would not go over budget. With the reduced technical scope and the stable budget, the ACE project gradually overcame both its technical and organizational problems. Eventually, it was completed below budget, and the spacecraft has provided excellent scientific data ever since.
Resource parsimony is not the answer to every resource allocation problem, but it can definitely stimulate new and effective approaches that might otherwise go undiscovered. In the same way, the many living order challenges facing today's organizations can encourage managers to develop new ways to manage resources.