Abstract
Resource management challenges are the top issues facing project management today, according to recent Center for Business Practices (CBP,) research. This presentation will help you assess resource management in your organization, identify the skills and roles key to your success, and involve the Project Management Office (PMO) in improving resource management across the organization.
Introduction
More than ever, the saying that “people are your greatest asset” rings true. While human resources were once merely a cost, today they are human capital—capital that must be invested and managed wisely. Proper management of the skills and schedules of the workforce is the essence of today's knowledge-intensive enterprise. How can you obtain, structure, and analyze your resource management information? What proven practices will enable you to use your talent effectively and streamline resource deployment?
Resource Management Challenges
Resource management challenges are the top issues facing organizations today, according to CBP research. This finding surfaced in studies conducted on other topics in 2006 and 2007, as well as during roundtable discussions at Project Management Benchmarking Forums (Pennypacker, 2006). Several of the resource challenges identified from these sources are shown in Exhibit 1.
Exhibit 1. Top 10 Resource Management Challenges
Because resource shortages and conflicts can plague your ability to deliver, understanding the resource capacity and skill sets that exist within your organization give you the ability to balance demand and apply the right resources at the right time. This ability can make the difference between successfully executing strategy and failing—failing to meet deadlines, deliver products and services with the desired quality, or serve the interests of shareholders and stakeholders.
In fact, further research (Pennypacker, 2009) has shown that there is a strong correlation between organizational performance and the level of resource management maturity and overall organizational performance of organizations (See Exhibit 2).
Exhibit 2. As organizations mature their resource management practices, overall organizational performance also improves. “Performance improvement” is defined as rating higher on a scale of 1 to 5 on all eight organizational performance measures used in the study, as shown above. Bars represent groups of companies at resource management maturity levels 1 to 5.
Source: Resource Management Challenges: A Benchmark of Current Business Practices. Center for Business Practices, 2009.
However, resource management maturity is low in organizations—74.4% of organizations are at resource management maturity level 1 or 2 according to this study. Organizations experience significant challenges in all components of resource management, but particularly in resource planning and estimating; they even fail to practice many of the resource management standards noted by the Project Management Institute (PMI®). To compound the problem, there is a significant disconnect between decision makers who assume that there are enough resources for all projects when, in fact, there often are not.
In fact, analyzing the factors that set the worst performers (those who scored lowest on the eight performance measures shown in Exhibit 2) apart, we find that the problems challenging them are signs that a good, basic project management culture has not been established:
- Too many unplanned requests,
- Unrealistic schedules and budgets,
- Scope creep,
- Too many pet projects jumping the queue, and
- Poorly defined deliverables.
Because these companies suffer from a lack of understanding of and support for project management basics, the one step that many companies rely on to improve their resource management capabilities—that of implementing related software tools—often proves disappointing. Almost half (47.9%) of all organizations use automated information systems to assist in resource management functions. But those who do are lukewarm in their description of the value of those systems. Of those who used these systems, almost half (47.3%) thought they did not accurately calculate resource forecasts. More than half (55.0%) said their managers did not use the systems consistently or effectively (Pennypacker, 2009, p. 5).
If implementing tools alone won't address resource management problems, what strategies can companies pursue to improve resource management and business results? To answer this question, we looked at the organizational characteristics of high-performing companies.
The high-performing organizations in the Resource Management Challenges study (Pennypacker, 2009)—those that score in the top 25 percentile on the eight performance measures shown in Exhibit 2—are at a significantly higher level of resource management maturity than low-performing organizations. But it isn't simply a matter of consistently practicing resource management standards that makes the difference. Successful organizations also display some structural and process characteristics that support good resource management. These characteristics include:
- The organization has a strong, effective PMO,
- Effective portfolio reporting capability exists,
- Resources understand project management practices, and
- Stakeholder roles/responsibilities are clearly defined.
We were not surprised to see “a strong, effective PMO” at the top of this list. In fact, our experience tells us that effective portfolio management, project management training, and resource allocation is rarely carried out except by such a PMO.
The Role of the PMO in Improving Resource Management
The first organizational characteristic on the above list sets the stage. Organizations with mature PMOs are able to address a wide range of business problems more effectively, from executing corporate strategy and implementing project management methodology, to managing the project portfolio and balancing resources across competing initiatives (Pennypacker, 2008). In fact, to get a firm handle on the data and practices that can improve resource management, the PMO is essential.
Of key roles identified by Gartner, Inc. (Light & Berg, 2000) for a PMO, three specifically address issues central to resource management:
- Resource evaluator: Based on experience from previous projects, the PMO can validate business assumptions about projects as to people, costs, and time, and can also serve as a source of information on cross-functional project resource conflicts or synergies,
- A competency center: providing mentoring and training across the organization, and
- Project management consulting center: providing a seat of governing responsibility for project management, and perhaps staffing projects with project managers (PMs) or deploying them as consultants (Light and Berg, 2000).
These roles—outlined with great foresight nearly a decade ago, at a time when PMOs were relatively rare—provide a picture of an organizational entity wherein the resources who staff projects are hired, trained, developed, career-tracked, and evaluated, as well as being thoughtfully allocated to projects. Over the past decade, we have seen PMO practice move in precisely this direction. Today, the mature PMO contributes to effective resource management in two crucial ways: By centralizing the management of project resources, and by deploying those resources rationally across the project portfolio.
Pooled project resources, managed from within the PMO.
Increasingly, according to our State of the PMO study, top-performing organizations have mature enterprise-level PMOs that pull in a number of roles and responsibilities related to human resource management. For instance, the top performers in that study, far more frequently than low-performing companies, perform resource identification; develop processes for assigning resources; manage a staff of project planners and controllers within the PMO; and manage their own training, professional development, and performance evaluations. Among the Top Ten PMO functions, according to the study, coaching and mentoring PMs ranked third, with 81% of the responding PMOs performing this function (Pennypacker, 2008, p. 10).
In the recent past, it was rare for PMOs to maintain and manage their own project management staff. However, the past few years have seen a significant trend in this direction. It's only logical that, as organizations move further and further away from the functional organization and ad hoc projects, project expertise becomes more centralized. Today, the most successful organizations are those with enterprise PMOs that manage a staff of PMs and project support roles. In fact, organizations identified by the State of the PMO study as high performers have larger PMOs (30% more staff), with more staff performing specialized roles, such as mentors, team leads, planners, controllers, and relationship managers (Pennypacker, 2008, p. 12).
By concentrating project management resources within the PMO, an organization is able to achieve four goals critical to mastering resource management:
1. Assess the competency of PMs. Defining competencies for critical jobs helps a company identify criteria that can be used to assess employees for recruitment, in performance appraisal, and in making professional development choices. In truly competence-driven organizations, pay and other rewards are also linked to competency, as are training opportunities and other forms of professional development, so that:
- PMs are appropriately recruited,
- PM training is more effective,
- Projects are managed at a higher level of quality,
- Projects are delivered on time and within budget, and
- Project failure rates decline.
Resource management is only one of the project management competencies that poor PMs struggle with; elevating the capabilities of PMs resolves a host of project problems, including resource challenges.
2. Build professional development programs. As a center for the development of expertise, the PMO makes possible a systematic, integrated professional development path and ties training to real project needs as well as rewarding project teams in ways that reflect and reinforce success on projects. This is quite different from the reward and training systems presently in place in most organizations, which tend to focus on functional areas and ignore project work in evaluation, training, and rewards.
When the PMO takes charge of developing professional, proactive managers, the process includes training, but begins with identifying PM competencies, hiring for or identifying those competencies in-house, creating performance metrics that reward PMs for the right behaviors, and creating a career path to attract and keep the best project performers.
In addition, since the PMO also is responsible for improving project performance at the same time that it grows project talent, it's usually advisable to create a “permeable” organization by blending in-house and contracted resources. For most companies, it takes five to seven years of investment to develop a competent team of in-house PMs. Organizations that don't have a proficiency in managing projects, or which don't have as many PMs as they need and don't want to incur the overhead to recruit and orient new employees, increasingly turn to outsourcing relationships. For the PMO, coordinating the development of PMs from diverse sources is a critical role.
The entire organization should view the PMO as a source of experts with focused ability in project management. When another department in the enterprise wants to manage a project themselves, the PMO can provide expert assistance in the form of mentoring and coaching for the staff involved. When a project needs additional oversight, a PMO mentor can help develop new estimates, resource reallocations, and replanning. This also provides an audit function for existing projects to determine how effectively the project management process is being utilized within the organization.
3. Develop realistic role descriptions that spell out responsibilities. Job descriptions have a dual purpose: They both describe the ideal candidate for the job (and can be used as a checklist when considering internal hires or seeking external candidates) and they assist the person fulfilling the role in keeping focused on the right areas, in knowing when to say no, and in understanding how their job fits into the larger picture of the organization. This information can also assist project participants in identifying their own personal professional development needs, in relation to the knowledge, skills, and competencies required for their project role(s). One of the most pressing human resource problems facing project organizations today is the difficulty of communicating about the work that needs to be done due to a lack of consensus on the names, descriptions, or required backgrounds of jobs in project management.
Commonality in the language surrounding staffing projects helps avoid wasting the talents and time of precious human resources by putting the right people in the right positions (Crawford and Cabanis-Brewin, 2005).
4. Assess organizational capacity. Establishing the PMO as an organizational home for project management expertise helps to surface existing skills in project management and related specialties that are presently diffused across the organization.
PMs actually report to the mature PMO and are deployed to projects either as full-time managers or on a part-time basis. The PMO maintains a database of PMs and related personnel—their skill sets, capabilities, specialties, experience, and technical skills. A simple categorization structure, usually developed collaboratively by the PMO and the human resources function, facilitates resource allocation decisions across the organization. New projects can be staffed from this database, while PMs between full-time assignments work on special projects such as developing new processes, methodologies, techniques, templates, and capabilities. The tools used can be as simple as Excel spreadsheets, as complex as enterprise resource management software, or somewhere in between, depending on the sophistication level of the PMO.
Surprisingly, many large companies are only beginning to get a handle on who their project resources are and where they reside on the organization chart. For some companies, the scarcest resource isn't money but PMs. A critical factor in project selection thus becomes: Do we have a PM who can manage it?
Here's a test: How many PMs and project team members do you have? What is each one doing, right now? When will he/she be finished with it? What are his/her areas of particular expertise? Without a system for knowing what each person in the pool of potential project personnel is capable of, and when they will be available, you cannot really be able to manage a portfolio.
As a first step, performing a resource inventory, analyzing any resource shortages or added capacity uncovered, and recommending appropriate actions to optimize resource utilization—from hiring or contracting to training and development—the PMO can show immediate value.
Project portfolio management maturity: Hand in hand with resource management maturity
Portfolio management is the action of a mature organization to gather all the pieces of the project value puzzle—human resources, technology, corporate strategy, and financial resources—into a coherent picture. That's why enterprise resource allocation is a key feature of Project Portfolio Management (PPM). It shows whether projects can be staffed with current resources. If the resources are not available or if they have been committed to more work than they can reasonably accomplish, project(s) will not be completed as scheduled. This may sound simplistic, but in practice, many companies do not know how many projects they have scheduled, or who is going to do them. PPM sheds light into this darkness. About half (53.2%) of all organizations practice PPM, but high-performing organizations in the Resource Management study are far more likely to practice it than low-performing organizations (Pennypacker, 2008, p.5).
When used effectively, PPM ensures that projects are aligned with corporate priorities and optimizes resource allocation. As a center for the collection of data about project human resources, and tools for evaluating and scheduling them, based on experience from previous projects, the PMO can validate business assumptions about projects as to people, costs, and time; it is also a source of information on cross-functional project resource conflicts or synergies. The human capital implications of rational allocation of human effort are immense. Having common corporate data on resource projections means that planning can be accomplished in a common database, resource projections summarized at the project level, then at the organizational level, on up to the corporate level. This resource-based approach to planning is an integral part of portfolio management, and a key to the rational allocation of resources, both human and financial.
As a central clearinghouse for project information, the PMO is the owner of the PPM process, coordinating between project level and portfolio level to make sure that decision makers have the best information in the most accessible formats. The investment decisions reflected in the portfolio form the blueprint for the work carried out by the PMs and teams within (or mentored by) the PMO (Crawford, et al, 2007).
The ability to centralize resource planning and forecasting, match availability to portfolio needs, and deal with resource risk by running “what if” scenarios that predict the effect of new initiatives on resource capacity, puts the organization on a new level of effectiveness. In one study, implementing PPM resulted in an improvement of up to 300% in the number of projects that could be completed with the same resources (Kendall, 2005, p. 290).
Mastering Resource Management Starts at the Top
Establishing the PMO as the competency center for project management makes it possible for the entire organizational culture, from executives all the way through project teams, to communicate in a common language and work together. In its primary role as developer and maintainer of the processes and methodologies pertaining to the management of projects, the PMO also incorporates lessons learned on projects nearing completion into the project management methodology. As the keeper of these standards, the PMO also maintains the templates, forms, and checklists that are developed to ease the paperwork burden on PMs, teams, and executives.
But, it is important for the sustainability of the PMO not to get bogged down at the process level, because the key to mastering resource management – or portfolio management, or strategy management – lies in the governance set up to define how projects will be selected, and how resources will be allocated. Remember our list of the Top Ten Resource Management Challenges? Only sound governance – setting the rules, and adhering to them – will address issues such as “too many pet projects.”
Benchmarked Best Practices for RM
In June of 2009, project management leaders from dozens of Fortune 1000 companies gathered to benchmark their resource management practices. Like the study participants, the majority of them admitted their resource management maturity was low. Yet, they agreed that the following were (or should be) accepted best practices for mastering resource management (PM Solutions, 2009):
- Full visibility of all work across the enterprise or at least business unit
- Start with project level and resource level visibility and move to portfolio, business unit/division before you can get to full visibility across the enterprise.
- Pool resources out of functions and then assign based on need and skill (not by name)
- Resources should be managed within the PMO
- Leverage staffing plan, skills data, skill gap analysis, known resource allocation and availability.
- Need to understand current resource pool (wherever they live in the organization today).
- Sponsors that are active, informed, enabling
- Cultural changes – this is a tough, long-term goal. It has to be led by governance and senior management.
- Pay for the people in your financials (no more “free” labor)
- Grow the PMO and cut the number of projects not within it
- Once we know our resource allocation, this will feed into the number of projects. Governance is in play here – armed with resource information the PPM/Governance processes will take over and projects will be scrutinized based on resources. The optimum result is stopping, pausing, killing projects, and realigning portfolios.
- Scenario plan load across projects
- Put everything in terms of dollars to enable chief executive officer (CEO) choices
- Opportunity costs
- Turnover costs
- Costs created by poor morale or missed targets – these are tangible but may take some looking and thinking to surface the numbers
- Balance using people for current skills vs. growing them for the future.
Note that very few of these practices in use at top companies focus on the resource management features of any particular project management tool. Like most management disciplines, resource management starts with doing the tough analysis, and developing sound governance structure.
Understanding the skill sets that exist within your organization gives you the ability to balance demand and apply the right resources at the right time. Once you have a handle on the overall resources available within your organization, you need to get a clear picture of the availability of these resources to support the initiatives within your project portfolio. Only then do tools become crucial. By analyzing any resource shortages or added capacity uncovered, and recommending the appropriate actions that will bring the most value and cost savings to the organization (contracting, hiring, using resources earlier, etc.), you will design a staffing structure that is flexible enough to meet business needs.
