While there are several important metric and key performance indicators (KPI) in the project management world, few are as important to the success of projects and the health of portfolios as resource utilization.
What is Resource Utilization?
Resource utilization in project management focuses on how much time team members spend on various tasks. While there are multiple ways to measure resource utilization, the simplest and most common method is by taking the actual number of hours worked by a resource, and dividing it by the total number of hours that the resource could have worked. For example, if over a six-month period a resource worked for 840 hours and there were 960 hours of work available, then the resource utilization is .875 (840/960).
Lower-than-expected resource utilization often indicates that the project is over-staffed, or that incomplete tasks are blocking other scheduled tasks. If any of these tasks fall along the critical path, then deadlines will be missed, deliverables will be delayed, and costs will rise.
Higher-than-expected resource utilization might not be good news, either. Instead of indicating that resources are being more efficient and productive, it could mean that the project is under-staffed — or might even be in crisis.
Obviously, the goal of every project leader (e.g. project manager, resource managers, PMO executive, etc.) is to optimize resource utilization. Granted, this is easier said than done; especially on complex, multi-faceted projects. However, it’s certainly not a case of dreaming the impossible dream.
The key is to shift the emphasis away from frenetically correcting resource imbalances during a project — which is like trying to keep a bunch of spinning plates in the air from slowing down and crashing! — and instead taking a more strategic approach that minimizes the frequency and severity of resource imbalances when (not if) they occur.
To that end, here are five best practices for resource utilization that will help all project leaders, regardless of whether they’re at the helm of their 1st project or their 300th:
- Start by Creating a Global Pool of Resources
Before allocating individual resources to specific projects, it’s wise to take a step back and create a global inventory pool that is comprised of resources that are currently needed, and of the anticipated resources that will be required for projects coming down the pipeline. This inventory helps project leaders know whether it is necessary to dial-up recruitment efforts, as well as determine resource constraints that could (and probably will) impact project deadlines and delivery dates.
- Leverage Full Visibility to Allocate Resources
Once a global inventory pool has been created, project leaders should leverage visibility to allocate resources based on availability and need. This visibility is driven by project management software (read: keep spreadsheets out of this!), and is characterized by the ability to look across the entire project pool, quickly determine overall capacity, and compare current load with future demand.
- Create a Detailed Project Plan
New project managers — as well as non-project managers who have had the glory of project management thrust upon them! — may think that this best practice should be at the top of this list. After all, shouldn’t project building start with the plan? The short answer is no, it shouldn’t — although it often does.
The simplest, smartest, and most successful approach is (as described above) to create an inventory of resources, and then assign individual resources to specific projects as required. From there, the project manager (sometimes with support from the resource manager) has the inputs required — i.e. people — to build a detailed and above-all-else realistic project plan. Indeed, it frankly doesn’t matter how intricate a project plan is, and whether the work breakdown structure is beautiful to behold. If the plan isn’t realistic because it’s not aligned with available resources, then it is doomed to fail before it starts.
- Inform and Schedule Resources
- Monitor Under-Loading and Over-Loading
All project leaders know that they need to tell resources that their services are required, and schedule them accordingly for tasks. However, what makes this process time consuming and error-riddled is when it must be done manually through emails, sending spreadsheets back-and-forth, and so on. Granted, on very small and simple projects this isn’t too much of a burden. But on larger and more complex projects — which is the norm in enterprise environments — trying to get on-site and remote resources in the loop can be an exercise in frustration; and often, futility as well.
Using powerful (but easy to use) cloud-based project management software to assign individual resources to specific work items is essential here, as it turns an uphill and unwelcome challenge into a smooth, streamlined and largely automated process.
As noted above, resource imbalances in either direction are a major — and in some cases, catastrophic — project threat. To mitigate this risk, project leaders need to regularly monitor load and availability for all resources, and perform real-time balancing that automatically updates schedules and budgets, and informs and re-schedules resources as required.
The Bottom Line
Resource utilization can be a difficult objective, but it shouldn’t give project leaders nightmares as they watch in horror as their projects veer off-track, and their portfolios fail to generate ROI. Clarizen’s award-winning cloud-based project management software is designed to drive all of these best practices described above, and turn resource utilization from a risky challenge into a competitive advantage.
Learn more by scheduling your live guided demo, or launch your free fully-fledged 30-day trial of Clarizen today.