Resource allocation between strategy and operational management

The right allocation of resources plays a central role in operational project management: Whether the right resources are used in the right place determines the success of a project in most cases. The optimal ranking can only be implemented operationally if the resources are actually allocated according to the project priorities and the bottlenecks identified in the planning have already been eliminated. As obvious as this may sound in theory, it is often difficult in practice. Project managers tend to make the mistake of only marginally considering resource planning and instead throwing themselves into scheduling with much more energy. In day-to-day business, the pressure of deadlines quickly tempts them to reallocate the available capacity to projects for which the delivery date is approaching, contrary to the original resource planning - regardless of whether they are strategically important or not. This is all the more frequent when resources are lacking at short notice; foreseeable absences can be included in planning at an early stage, but not so unforeseeable absences due to accident and illness.

How project risks influence resources

In addition to personnel, resources include equipment, services, supplies, goods, materials, budgets, and funding. Balancing the individual resources is a complex task in itself. In addition, realistic project and resource planning must always take project risks into account. As soon as a risk event occurs, it has an immediate impact on the resources in a project: If costs increase and processing times lengthen, in the extreme case the project may be aborted. Such risks cannot be eliminated, but it is possible to prepare for them. If they are assessed in advance in terms of probability, impact and possible countermeasures, it is possible on the one hand to react more quickly and efficiently if the worst comes to the worst. On the other hand, proactive resource planning reduces the probability of a risk event from the outset. If it does occur, a quick response is called for, through reprioritization, troubleshooting and implementation of countermeasures. The trend in Project Management Offices (PMO) is towards ever more tightly calculated projects and tightly planned resources. Reliable resource planning will therefore be even more important in the future than it has been in the past. The use of different methods (e.g. critical chain) can create additional benefits in implementation.

Line versus projects - who comes out on top?

However, the correct allocation of resources is not only a challenge between the individual projects, but also between project and line business. In most companies, it is the responsibility of the department managers to decide which tasks the employees devote how much time to. However, a department manager is first interested in fulfilling the tasks and goals of his department. Only when all tasks in the department can be accomplished, any free capacities are reported to the projects. This is in direct conflict with the portfolio management requirement to prioritize resources to high priority projects. In addition to this conflict of interest between line and project organizations, opposing strategies arise in each case from the bottom-up and top-down perspectives on a company: While from a top-down perspective the motto is to achieve the greatest possible benefit with the available resources (e.g. sales or earnings, the finished product at an important trade fair), from a bottom-up perspective the aim is to achieve the specified goal within a project with the smallest possible expenditure of resources - a maximization strategy is opposed by a minimization strategy. Within the framework of the maximization strategy, the management, which is concerned with an optimal utilization of the resource personnel, often overshoots the target: In order to avoid idle times at all costs, projects are started for which ultimately not enough time is available - for example, because other tasks require more time than planned or because employees are absent due to illness. Instead of an optimal workload, bottlenecks arise in this way, from which the progress of all projects and tasks involved suffers. Such competition for scarce resources is often only recognized by management at a late stage. A solution to the conflict rarely comes without drastic steps and strategic decisions, not to mention the disruption to projects and loss of benefits.

Primacy of central resource planning - PMO success model

In order for both the individual projects to be completed successfully and the entire project portfolio to contribute to the realization of the corporate strategy, the right resources must be deployed in the right project at the right time. In principle, it makes sense to delegate this task to a central office: A dedicated PMO or a corresponding position in portfolio management has an overview of all project priorities and capacities. Short-term changes in project planning are coordinated directly with the respective project managers, whereby the central office always ensures that the rescheduling of resources is in line with the project prioritization. In smaller companies, the project managers themselves are responsible for resource allocation. If several projects are competing for scarce resources, a popular method is to hold project meetings in which the principle of a marketplace is used to negotiate where resources should best be deployed. Here again, there is a great danger that those projects with the highest deadline pressure will be given preference. Such an approach can therefore only be a solution to deal with short-term failures.

Resource management requirements for PPM software

For regular resource planning, it is first essential to have historical data available: How much time was invested in project and line tasks in the past? Only on the basis of this information is it possible to assess which capacities are realistically available for future projects. A meaningful database is provided by project and portfolio management software: the resource manager can use it to record and manage attributes such as capacities, costs, qualifications, availability, and so on. Evaluations are also important for the PMO in order to analyze the job and qualification profiles of the departments; only then is long-term personnel planning possible. When planning resources for an individual project, the resource manager is in close dialogue with the project manager. In order to optimally allocate resources, they are guided by forecasts that the software calculates based on qualified specifications and requirements. The following functions of a software are relevant for resource allocation:

• Centralized management of resources within the organizational structure,
• Reorganization of future organizational structures as of the reporting date,
• Resource requests by means of job, qualification and organisation profiles (generic resources),
• time-variable availability and cost profiles,
• Automatic proposal of available resources for generically scheduled jobs, qualifications or organizations,
• Display of resource availability in real time, taking absences into account,
• short, medium and long-term resource requirements,
• Resource contracts between project and resource managers,
• approved input volume per project,
• Capacity leveling based on agreed availabilities.

If a company succeeds in walking the tightrope between strategic and operational management, this is a quality characteristic of a professionally managed organization. The degree of maturity of a company depends to a large extent on clear, explicitly described and correspondingly lived processes. Only on this basis is it possible in the long term to deliver high-quality products on time. Converting past experience into future tasks and thus optimizing the efficiency of the organization is then the supreme discipline.