Nearly one-half of projects aren’t resourced properly, with 19% receiving too many resources and 29% receiving too few, according to a survey cited in the PMI report Implementing the Project Portfolio: A Vital C-Suite Focus.
Balancing resource supply and demand is a delicate undertaking for project management offices (PMOs). And it has an enormous impact on results.
Resource capacity planning in PMOs involves evaluating the resources within your organization and ensuring that you have the right resources positioned correctly when and where they are needed to meet your strategic objectives.
In order to achieve these goals, you must leverage top-down capacity planning and leading KPIs. Here’s how to stop negotiating for headcount and start leading with insight.
Resource Capacity Planning 101
Resource capacity planning means evaluating your current resources and what you will need in the future. This is an integral part of a holistic resource management strategy It involves assessing your resource supply and demand and assigning them to ensure that they properly meet the needs of your portfolios.
You must have the right people, funding, tools, and materials in place to be efficient and productive. This approach takes a broad view, ensuring you can handle all your initiatives in the long term.
Benefits of Capacity Planning in PMOs
Resource Optimization
Through proper capacity forecasting and planning, you will reduce waste and maximize the value of your existing resources. You’ll have a clear view and understanding of your current resources, including your people, tools, and materials. You are well equipped to leverage team members’ skill sets at their full potential and make the most of your materials.
Resource optimization also means you are relying on employees at a reasonable level and not overutilizing them, which can lead to burnout and resentment.
Predictability and Risk Management
Capacity planning allows you to be more proactive in your overall portfolio management strategy. Data-backed forecasting enables greater predictability, giving you insight into the resources you have and the ones you’ll need. Your workflows will contain fewer surprises that could negatively impact delivery and timelines. You can keep projects on track and more accurately anticipate project results.
Cost Efficiency
Effective resource and capacity management reduces both over and underutilization. That means you’re expending resources efficiently, curbing costs, and ensuring that you’re maximizing value.
Remember: Cost efficiency doesn’t just mean cutting costs. It means getting the most bang for your buck, so to speak. This approach reduces waste, prevents overspending, and allows you to budget more accurately and effectively.
Better ROI
In addition to improving cost efficiency, this approach also delivers a better ROI for your organization. Because you’re investing resources strategically, you will achieve stronger results and value. For example, it aids your project prioritization by ensuring that you’re devoting resources to the most important initiatives—the ones that will deliver a greater return.
Challenges in Capacity Planning in PMOs
Reliance on Lagging Indicators
You can’t properly hone a capacity forecast by relying on lagging indicators. These are reactive metrics. Forecasting solely according to past data isn’t the answer. A balance of lag and lead indicators allows you to plan capacity according to current and future demand.
Lack of Visibility
If you don’t have real-time data, you don’t have the full picture of what you have and what you need in terms of resources. You must have a platform for aggregating and tracking data. A project portfolio management (PPM) platform provides real-time insights and ample reporting to give you visibility into resource supply and demand.
Skills Shortages
Not having enough people with the right skills means you can’t properly allocate resources or meet your goals. It could also lead to overextension of people who don’t necessarily have the right skills, which, in turn, could cause burnout. You need to plan according to role and qualifications. If you lack the necessary skills to complete critical initiatives, then you must invest in more professionals with the right skills or upskill existing staff.
Resource Conflicts
You may well face resource conflicts, or competition for the same resources across multiple projects or even portfolios. That causes numerous problems across the organization, from overrelying on and overloading team members to straining budgets.
However, by prioritizing strategically and having a comprehensive process for evaluating prospective projects, you can allocate resources according to the value and weight of the initiative.
Data Silos
Data silos occur when your resources and tools aren’t consolidated. You may have multiple platforms and technologies, leading to confusion and fragmentation. With so many data sources, there is no centralized repository of information. Establishing a main PPM system keeps everything (and everyone) organized. You will be able to see the big picture and spot holes.
Key Steps for Capacity Planning in PMOs
Resource capacity planning in PMOs should follow a top-down approach, beginning with high-level organizational goals. These steps help ensure that you are meeting the needs of the holistic enterprise, not just tracking resource utilization by initiative.
Assess your current resource availability.
Understand the state of your existing resources. Perform an audit of your personal, tools, and budget. This will allow you to know what skills, technologies, equipment, and other assets you have and prepare you to plan and allocate resources accordingly.
Evaluate demands.
Establish the requirements of your current projects and projects in the pipeline. Determine what types of resources you will need for each phase of your project. Match demand with availability so you have a clear picture of gaps.
Establish KPIs.
You will need to establish key performance indicators (KPIs) so you can measure and track progress both in terms of capacity and resource management and overall project progression. Resource-related KPIs should be directly linked to components like budget adherence and resource utilization rate. Keep evaluating and reevaluating your KPIs to ensure you are meeting demands and understand your own capacity constraints.
Use tools.
A technology platform such as a PPM tool is essential for managing resource supply and demand. It makes the process of capacity planning more manageable and efficient. It also streamlines reporting and provides real-time and predictive analytics in a centralized repository, allowing you to understand and evaluate your resources.
Conduct scenario planning.
Use “what if” scenario planning to consider different scenarios that demand various resources and could present constraints. Brainstorm as many scenarios as possible so you can map out solutions. For example, what would you do if a key team member had to go on medical leave for an extended period of time? You can rely on Prism PPM’s “What If” feature to aid this process.
Forecast future demands.
Leveraging the data you have on hand forecast resource needs for the short and long-term. Consider the entire project portfolio (or portfolios), looking at current and prospective projects in the pipeline.
Allocate resources.
Devise a selection strategy with criteria for weighting projects and allocating resources. These criteria will depend on factors like existing skills, skills gaps, project importance, and overall resource availability. Once you have a methodology in place, allocate resources based on this evaluation approach.
Continue to evaluate your resource needs and availability and adjust accordingly.
Capacity planning in PMOs requires diligence. You must put forward continuous effort and standardize your processes. Establish procedures for evaluating and reevaluating your resource management practices. Continue to monitor and adjust at regular intervals. You will inevitably need to make changes to your plans, KPIs, structures, and assessments.
Role-Based Accountability in Capacity Planning
Clear accountability is essential for capacity planning. Establish roles and responsibilities for:
- Resource forecasting
- Resource supply and demand planning
- Resource allocation
- Governance
- Workload balancing
The breakdown of roles will vary from organization to organization, but you will likely need some or all of the following:
- PMO Lead/Director: Establishes governance and resource management strategies, delegates responsibilities, and liaises with executive leadership.
- Portfolio Manager: Oversees complete project portfolios, prioritizes projects and resources within the portfolio, and aids capacity planning.
- Resource Manager: Balances and forecasts short- and long-term resource supply and demand, allocates resources, identifies skills needs and gaps, and oversees utilization.
- Project Manager: Oversees discrete projects within larger portfolios, determines which resources are necessary, budgets, and tracks performance.
- PMO Analyst: Collects and evaluates data, makes recommendations for resource allocation and utilization, and provides larger strategic insights.
How Technology Helps
Manual processes are time-consuming, difficult, and prone to errors. You need a platform to eliminate data silos and deliver insights into your capacity and resource pipeline. Technology helps you handle intricate resourcing, track resource consumption and needs, consolidate data, and automate data collection and analysis. It also allows you to forecast resource supply and demand and provides visibility into your capacity.
A platform like Prism PPM is a centralized platform for managing all your resources—and your holistic projects. Leveraging these tools, you’ll ensure that you have the necessary resources and that they are delegated to the right projects.
Conclusion: Measured Capacity Planning in PMOs
With the right practices, tools, and people, you can optimize capacity and resource planning and ensure your PMO functions efficiently and effectively. But managing your workforce, identifying resource gaps, and forecasting capacity and demand aren’t always easy.
Prism PPM allows you to pinpoint issues, assess data analytics, budget, and make decisions seamlessly. Find out how it makes resource management easier on you and your team. Book a 15-minute consult or a 45-minute demo.