Many organizations do not have a dedicated resource capacity planning tool. They have been carrying out the resource allocation and capacity planning process using their legacy systems, such as Excel spreadsheets/other home-grown applications. There are many resources, and no mechanism exists to link their work together to get enterprise-wide visibility for resources.

The Excel spreadsheets and half-baked home-grown capacity planning solutions are incredibly limiting, time-consuming, and hard to maintain. In fact, “88% of spreadsheets are difficult to maintain.” It cannot meet new business challenges.

Businesses are in desperate need of an enterprise-level futuristic resource capacity planning solution. This guide has been designed for businesses to understand enterprise resource demand and capacity planning in project management. In addition, it will help any company to establish the right processes with the tool.

But before delving into the details, let’s first understand the capacity planning definition.

What is resource capacity planning?

Resource capacity planning predicts the gap between future demand and workforce capacity to identify the shortfall/excesses of resources. Accordingly, one can develop a resource capacity plan to bridge the gap proactively for successful project delivery while ensuring every resource is optimally utilized. Thus, it becomes an essential step before resource allocation, providing all available resources before the project’s onset.

The resource capacity planning process requires centralizing information from various systems. These systems are human resources, skills, current projects, future pipeline projects, resource demand/ allocation, vacations, and non-project activities. It helps you build a single real-time system as a single source of truth.

Role of resource capacity planning in project management

The resource capacity planning model plays a vital role in project management. It helps align sales and delivery by planning and forecasting pipeline opportunities. Once a pipeline project reaches a certain probability stage, the manager estimates the resource requirements and initiates the requisition process.

The corresponding resource manager then starts planning for fulfillment. But first, they need to analyze if there are sufficient resources to start the project.

The resource manager compares the existing resource capacity against the project demand from multiple perspectives such as role, department, team, skills, etc.

It helps to identify the shortages or excesses ahead of time. Accordingly, managers can apply appropriate resourcing strategies, such as hiring a permanent or contingent workforce, to bridge this gap.

Allowing sufficient lead time helps avoid last-minute hiring/firing costs and ensures that the right resources are available for projects at the right time and cost. Simultaneously, capacity resource planning helps minimize bench time proactively by facilitating on-the-job training, adjusting timelines, or selling excess capacity.

In a nutshell, resource or workforce capacity-based planning helps build an optimized project team, reduces project costs, and future-proofs the workforce against market volatilities and economic uncertainties.

What are the key elements of resource capacity planning?

Resource capacity planning involves determining and managing the availability and capacity of resources required for project execution. It ensures appropriate resources are allocated to tasks and projects based on availability and workload capacity. The key elements of resource capacity planning include:

Identifying and categorizing resources

Managers must have complete data on the available resources in the workplace. For this, they should first establish specific categorization criteria, such as role, skills, expertise, availability, cost, etc. Following that, they can then use these criteria to group their available talent pool into different resource categories required for various project activities. This category-based grouping provides an overview of the resources at the organization’s disposal, helps assess the resource capacity, determine bottlenecks, and evaluate gaps.

Estimating resource demand

Organizations must accurately forecast and estimate the resource demand to ensure successful completion of projects. To achieve this, they must evaluate project plans, scope, and timelines to determine the specific resources required for each project activity.These resources include skills and expertise, materials, equipment, etc. In addition, they must also identify the total resources or capacity required to complete the project on time. By thoroughly assessing these factors, organizations can align their resource allocation strategies effectively and optimize the utilization of available resources.

Assessing the resource capacity

Assessing resource capacity is a critical element of resource capacity planning, which involves evaluating the organization’s ability to meet demands and requirements for resources within a specified period. Here, once project managers determine the resource demand, managers analyze the existing workforce using availability or capacity vs. Demand reports. This step helps understand whether the organization has the right number of resources with the desired skills to meet ongoing and future demands.

Capacity vs. demand gap analysis

A capacity vs demand gap analysis is key to identifying the gaps between the resources needed for future projects and the ones available within an organization. This step is vital as it helps managers check for any imbalances in capacity and demand. It involves comparing the future resource demand with the available capacity to identify shortfalls or excesses. If there are any potential gaps, managers can take corrective measures to bridge them to ensure uninterrupted project execution and improve overall billability.

Now that we know the various components, let’s understand the importance of capacity planning for firms.

What are the business benefits of resource capacity planning?

Resource capacity planning helps businesses plan pipeline projects and futureproof the workforce against ongoing market volatility. Here are some of the advantages of resource capacity planning for your business:

Reduces project resource costs across the enterprise

Capacity planning helps forecast the skill demand precisely and arrange the requisite personnel. It:

• Reduces last-minute expensive hiring measures to fulfill sudden demands
• Helps avoid unnecessary overhead costs and frequent hiring/firing cycles.
• Allows for the allocation of resources to tasks based on the available capacity, preventing double booking, burnout, and unplanned attrition.
• Eliminates under/over-skilled resources on projects
• Utilizes cost-effective global resources without compromising quality
• Minimizes hiring/firing cycles by aligning project workload with workforce capacity
• Avoids double booking of resources and minimize burn rate
• Controls unplanned attrition of resources

Maximizes productive utilization of every resource

Billable resource utilization is a critical KPI for a professional service business to ensure profitability and sustainability. Capacity planning helps balance the availability of resources with the project demand to prevent under/overallocation to minimize idle time, billing losses, and work overload.

Additionally, it allows for forecasting billable and strategic utilization of the workforce ahead of time. Based on that, managers can mobilize employees from non-billable or low-priority work to billable or high-priority projects to tap into their maximum potential and enhance profitability.

Ensures competent resource allocation for successful project execution

Having the right-skilled employees available at the right costs is crucial for a project to finish within the budgeted time and cost. Capacity planning enables resource planning and management to identify and allocate competent resources to each project based on their skills, experience, qualifications, location, team, resource cost rate, and other defined criteria.

It, thus, helps implement the “best-visible-best-fit” instead of the “first-visible-first-fit” approach to distribute tasks evenly based on resources’ ability and capacity. It, therefore, prevents work overload, schedule overruns, and contributes to timely project completion.

Forecasts and bridges the skills gap

Capacity planning helps identify skill shortages or excess ahead of time and take several corrective actions to eliminate them. For example, managers can:

• Readjust project start and end dates to align with the available capacity.
• Hire a contingent workforce for short-term requirements
• Retrain and upskill employees to prepare them for future projects.
• Bring forward some initiatives to meet strategic goals in case resources are in excess to optimize bench size.
• Mobilize resources across several departments to maximize utilization and increase profitability.

Aligns sales and delivery by forecasting pipeline opportunities

Capacity planning helps consider the forecasted and actual deals a company wins to estimate the resources ahead of time. It also allows the delivery team to coordinate with the sales team to evaluate and determine the feasibility of the sales pipeline opportunities based on the project’s resource requirements and the client’s expectations.

Accordingly, the delivery team can forward-plan and ensure the right resources are available at the right time to finish the project. It also helps prevent the ‘overcommit and underdeliver’ trap often arising from sales-delivery misalignment to ensure timely project initiation and enhance client satisfaction.

Once the benefits of resource capacity planning are clear, let’s move on to learn some of the best methods of resource capacity planning.

Best practices of resource capacity planning

Resource capacity planning in project management is becoming increasingly critical for a business to reduce resourcing costs and become responsive to the market. As a result, resource capacity planning has gone beyond the basics of measuring workforce demand against capacity.

Here are some key strategies to implement capacity planning efficiently in your firm

Forecast capacity vs. demand and form a project resource plan in advance

A business must forecast capacity vs. demand from multiple dimensions, i.e., by role, department, team, location, skills, etc. It helps identify short- or long-term shortages/excess of resources. This enables the managers to implement the right resourcing treatments to bridge the gap.

For instance, in case of shortages, organizations can facilitate re-training/upskilling resources, or hiring a permanent/contingent workforce to avoid last-minute hiring/firing costs. Conversely, when the resources are in excess, managers can either bring forward project timeline or sell extra capacity to optimize resource utilization and ensure successful project delivery.

Track and analyze the competency matrix in real-time

Tracking and keeping up-to-date information about the workforce competencies and skills is critical. It allows the right resource with skill, experience, qualifications, individual preferences, etc., to be allocated to the proper work.

It helps plan a new project that may need a niche skill that is difficult to get from the market. If such a capability is available within the organization, the resource can be outrotated with a suitable backfill candidate. It, thus, helps initiate the new high-priority project on time without disrupting the ongoing one.

Manage project pipeline efficiently

The system should keep track of future potential projects in the pipeline and forecast estimated resource demand. It will ensure the resource pool is optimally balanced, skilled, and ready to meet the demands of new projects.

Managers can decide whether to re-skill, hire, or have contingency resources to do the work. They can also assess the pipeline project demands to determine whether they are one-off or recurring to create an optimal mix of permanent and contingent resources and overcome budget constraints.

Predict and improve overall resource utilization

The system should provide short- or long-term billable, strategic, and overall utilization forecasting. If resources are underutilized, managers can bring forward some project timelines or sell excess capacity to optimize their utilization.

If resources are overutilized, they can adjust projects’ timelines to match the future availability, pull in additional team members, or initiate a planned or project-specific hiring as required. This way, managers can take proactive measures to ensure optimal utilization levels of the workforce.

Foresee project vacancies and people on the bench

Failure to find the right resources for the right project can cause you to lose an opportunity. Therefore, the system should give you foresight into future resource needs and people who will end up on the bench.

It helps resource managers mix and match available people against project vacancies to avoid increased idle time and billing losses as repercussions. Not just that, robust capacity planning measures also help ensure all the projects are staffed with the right-skilled resources and ensure their successful execution.

Streamline resource requisition to deliver projects on time

Conventionally, resource requisition and allocations are done through email or phone requests that cause chaos. The reason is that it leads to silos of information regarding resource requests and allocations across various projects. Therefore, a resource may be booked for multiple projects beyond their capacity.

It can cause not only burnout but also power conflicts among project managers for similar-skilled resources. Therefore, streamlining the process using workflow is critical to ensure resources are allocated with appropriate approvals and notifications. In addition, one must avoid unnecessary emails/telephone calls as they cannot be easily reconciled, documented, and analyzed later.

These are some effective strategies businesses can adopt for resource capacity planning. Let’s look into the effect of resource capacity planning on utilization.

How does resource capacity planning affect utilization?

Achieving high utilization rates relies on the efficient movement of team members across tasks and projects, minimizing unnecessary downtime. Successful resource capacity planning is vital in aligning resources, their skills, and project demands. By implementing effective resource capacity planning, companies can experience increased utilization rates that remain strong over time.

Additionally, it is also crucial to continually implement capacity planning strategies, learn from past projects, and build a comprehensive catalog of employee skills. This continuous improvement approach enhances planning and resource allocation, resulting in a positive impact on utilization rates. Ultimately, the goal is to reach a utilization percentage that maintains profitability while avoiding employee burnout.

Knowing how resource capacity planning impacts utilization, let’s understand how to select the right solution for effective capacity planning.

How to choose the right solution for efficient resource capacity planning?

Capacity and resource planning is a crucial part of the performance improvement of modern business. It is critical to look for a solution beyond the current spreadsheet functionalities. A business should ensure that they have robust capacity planning software that can provide the following:

The system should be scalable, configurable, and expandable

Every business is different, and so are its workforce capacity planning needs. Therefore, a business must select a scalable and configurable capacity planning tool to meet current needs and expandable to meet future business requirements. In addition, system performance must not degrade with more users using the device across the organization.

It should forecast profitability and productivity

Resource capacity planning methodology should help your business to do multi-dimensional forecasting. It will provide real-time business intelligence to improve business performance, profitability, and productivity.

It must solve the complexities of matrix organization

It must align with the matrix organization structure. Nowadays, most businesses have established a matrix organization structure to best utilize their resources. So, companies must have a capacity planning tool that aligns with matrix organization structure and associated complexities.

The solution must provide real-time BI analytics

Project demand in a real-life business environment changes every minute. So, it is crucial for resource management and capacity planning techniques to get real-time business intelligence, i.e., reports, analytics, and dashboards.

It should integrate with other applications

Most businesses have already invested in enterprise-level systems. They hold a lot of data required by a capacity planning solution, i.e., resource profile, competencies, project detail, etc. So, the resource management system must integrate seamlessly with existing applications.

In this way, organizations can choose the right capacity planning solution. So now, let’s know some ways to do resource capacity planning.

Checklist for resource capacity planning for a specific period

Here are some critical capacity planning strategies you must consider while managing capacity and demand for projects.

Forecast & calculate workforce capacity

• Take an inventory of your organization’s full-time, part-time, contractor, or freelance resources.
• Include resources who will be joining or leaving during this period
• Assign calendar (Workweek and Holiday list) to your resources if they are working at different locations
• Track the skills and competencies of the selected resources

Establish project portfolio

• List all the current and future projects
• List all the potential opportunities which are in the pipeline
• Account for non-project activities like BAU, Support Maintenance, Administrative Work, Training, etc.
• Categorize the projects into Billable, Strategic, and Non-Billable Projects
• Prioritize your projects for a better Capacity Planning process

Forecast resource demand

• Get foresight into the resource requirements of the pipeline projects
• Identify the competent resources and their availability during the same timeline
• Prioritize the demand as per the criticality of each project and their subsequent tasks

Compare resource demand against capacity

• Analyze Resource Capacity versus Demand
• Identify the Gap between Resource Capacity and Demand
• Identify skill shortages or excesses, if any.
• Plan on how to bridge the gap of shortfall of resources ahead of time

Allocate resources to the appropriate projects

• Assign the right resources to the right Project. Avoid allocating over-skilled or under-skilled resources
• Allocate generic resources or placeholders on future Projects
• Create estimates using placeholders for your Opportunities
• Record resources unavailable time, i.e., People going on Leave, training, etc.
• Implement the right resource optimization technique to avoid employee burnout

These are a few techniques to be considered for managing project capacity and demand.

Conclusion

Resource capacity planning is a crucial aspect of project resource management. By leveraging the functionalities of advanced capacity planning tools, businesses can use their resources more effectively. In addition, it also helps in reducing resourcing costs, eliminating reactive hiring, and futureproofing their workforce against market volatility.

Glossary

The SAVIOM solution

SAVIOM is the market leader in providing an Enterprise Resource Capacity Planning solution. With over 20 years of experience leading the market, Saviom is actively used by over 15 highly esteemed global companies worldwide. The tools within the suite include project portfolio management, professional service automation, and workforce planning software. Re-engineer operational efficiency with a system shaped around your business!

This improper resource planning and allocation blows up costs, delays delivery, and ultimately derails projects off their tracks.

According to PMI’s 2017 pulse survey, “43% of projects spike the budget, and 49% cannot adhere to deadlines.” The study also reveals that only 26% of organizations use resource management for successful allocation of resources.”

Resource allocation is an essential step in the resource planning process, and an efficient resource management system helps achieve the same. This article will cover the concept, challenges, importance, and successful resource allocation methods.

Before that, let’s understand the definition of resource allocation.

Resource allocation definition

Resource allocation, also known as resource scheduling, is the process of identifying and assigning resources for a specific period to various activities. These activities can be project or non-project work, such as BAU, admin, support, operation, etc. Efficient allocation of organizational resources ensures projects are delivered within time and budget.

Assigning 100% of their capacity ensures maximum utilization of resources.

Resources can be either fully or partially available. Therefore, resource managers must ensure the availability of allocated resources for optimal utilization.

Now let’s look at some of the challenges managers face when allocating resources to projects.

What are the challenges of resource allocation?

Effective resource allocation is often easier said than done. Without the right tools or techniques in place, identifying and allocating the right resource can be a daunting task. Let’s have a look at some of the resource allocation challenges:

Changes in project scope

Despite taking necessary control measures, the project scope can still change anytime during the project lifecycle. In addition, changes in project requirements in an agile world can lead to fluctuating resource demands. So, without an up-to-date resource schedule, frequent allocations to meet the changing needs become incredibly challenging.

Use of outdated legacy tools

Spreadsheets and homegrown tools are inadequate for the allocation of resources. They fail to provide real-time updates in project/resource schedules, causing discrepancies and redundancies. It can lead to double-booking chaos that dampens the project’s success.

Miscommunication between sales and delivery team

While focusing on achieving sales targets, sometimes the sales team doesn’t involve the delivery team before signing the deal. As a result, the delivery team ends up scrambling for resource allocations at the eleventh hour to meet the delivery deadline.

Lack of resources visibility within a matrix organization

Not having a centralized resource scheduling system means there is no visibility of allocations of resources across matrix boundaries. Hence, resource managers find it extremely challenging to allocate the best-suited and cost-effective workforce to the project.

Mismatch in the skillset between capacity and demand

The inability to forecast future pipeline project requirements prohibits identifying skill shortages in advance. This incorrect estimation of capacity vs. demand hinders the project resource allocation process.

Next, let’s learn about the benefits of effective resource allocation in project management.

What are the benefits of resource allocation in project management?

Resource allocation is essential in project management as it allows you to plan and prepare for project implementation or achieving goals. In addition, it helps schedule resources in advance and provides insight into the project team’s progress.

Allocation of resources is much more than just delegating assignments. It plays a vital role in project and operations management and eventually improves business performance. It also helps achieve optimum utilization and enhances ROI.

Here are some key benefits of resource allocation in project management:

• Reduce project resource costs significantly
• Maximize the productivity of resources on projects
• Enhance employee engagement and satisfaction
• Facilitate client satisfaction with successful project delivery
• Achieve the best outcome within existing resource constraints

Following this, let’s learn about the external and internal factors affecting resource allocation.

Factors that influence the resource allocation process

Factors influencing resource allocation are critical considerations in project management. By understanding and evaluating these factors, managers can make informed decisions to optimize resource allocation and enhance project success.

Resource availability

The availability of resources, including personnel, budget, equipment, and technology, directly impacts resource allocation decisions. The manager must assess the quantity and quality of available resources and allocate them effectively to ensure the successful execution of project tasks. Resource availability constraints may require prioritization or reallocation to optimize resource utilization.

Project requirements

The specific requirements of a project, such as scope, complexity, timeline, and quality standards, heavily influence resource allocation. Projects with tight deadlines may require a larger allocation of resources or even resource intensification (increased resources for a shorter duration) to ensure timely completion. Similarly, projects with complex technical requirements may necessitate specialized resources or additional training/upskilling.

Project cost considerations

Another key factor in resource allocation decisions is cost considerations. It’s essential to balance the resource cost rate with the available budget. Allocating resources within budgetary constraints ensures financial feasibility and efficient resource utilization. Cost-benefit analysis and return on investment assessments can guide resource allocation decisions by weighing the potential benefits against the associated costs.

Resource interdependencies

Resource allocation decisions should also consider interdependencies between different tasks, activities, and resources within a project. Some tasks may require specific resources to be completed, and changes in resource allocation for one task can have ripple effects on other tasks. Evaluating these interdependencies helps in optimizing resource allocation to maintain project flow and minimize bottlenecks.

Environmental factors

Environmental factors beyond the control of the organization or project team can also impact resource allocation. Market conditions, economic factors, industry trends, regulatory requirements, and competition are examples of external factors that may influence resource allocation. For instance, if there is intense competition in the market, organizations may allocate additional resources to R&D (research and development) or marketing to gain a competitive edge.

By considering these factors, project managers can make informed decisions about resource allocation, ensuring that the right resources are assigned to the right tasks at the right time.

With that in mind, we look at some of the commonly used resource allocation strategies and methods.

Best resource allocation techniques and strategies

There are numerous methods to allocate resources in an organization. Let’s take a tour of some of these strategies in detail:

Bottom-up resource allocation

Bottom-up resource allocation is a strategy that involves identifying and allocating resources based on specific tasks or activities within a project. In this approach, individual team members or departments estimate their resource needs and submit them to the project manager or decision-making authority.

The project manager then aggregates these estimates to determine the overall resource requirements for the project and starts the resource-requesting process. Bottom-up resource allocation allows for a more detailed and accurate assessment of resource needs, as it considers the specific requirements at a granular level.

Top-down resource allocation

Top-down resource allocation, as the name suggests, involves allocating resources from a higher-level perspective, typically driven by high-level project objectives and constraints. In this approach, the project manager or decision-making authority determines the overall resource allocation for the project and then assigns resources accordingly.

This method provides a broad overview of resource requirements but lacks the granularity of bottom-up allocation. It is often used when there are time or budget constraints and when a quick estimation of resource needs is required.

Critical path method (CPM)

The Critical Path Method (CPM) is a project management technique used to identify the critical activities and sequence of tasks that determine the shortest possible duration for a project. CPM involves creating a work breakdown structure (WBS) that represents all project activities and their dependencies.

By analyzing the dependencies and durations of these activities, the critical path is determined—the sequence of activities that must be completed in order to minimize the project’s overall duration. Resource allocation in CPM involves identifying critical activities and allocating resources to ensure their timely completion, thus minimizing project delays.

Program evaluation and review technique (PERT)

The Program Evaluation and Review Technique (PERT) is a project management technique that focuses on estimating the duration of a project by considering three time estimates for each activity: optimistic, pessimistic, and most likely. PERT calculates the expected duration by using a weighted average of these estimates.

Resource allocation in PERT involves considering the estimated durations of activities and the availability of resources to create an optimized schedule. By allocating resources efficiently, project managers can ensure that activities are completed within the estimated time frames.

Agile resource allocation

An agile resource allocation is a dynamic approach to resource management that is commonly used in agile project management methodologies such as Scrum or Kanban. It emphasizes flexibility and adaptability in allocating resources based on changing project scope and organizational priorities.

In an agile framework, resources are often organized into self-managing teams that collectively decide how to allocate resources to specific tasks. This approach allows for quick adjustments in resource allocation based on real-time feedback and enables teams to optimize their performance and productivity.

Just-in-time resource allocation

Just-in-time (JIT) resource allocation is a strategy that aims to allocate resources precisely when they are needed, thereby minimizing waste and reducing idle time. This approach aligns resource availability with the project’s immediate needs, ensuring that resources are not tied up unnecessarily.

JIT resource allocation requires careful planning and coordination to ensure that resources are readily available at the right time for the right project. It is particularly useful in projects with tight timelines or where resources are limited, as it maximizes efficiency and reduces unnecessary resource allocation.

By employing these resource allocation strategies and techniques, resource managers can effectively allocate resources, optimize utilization, and improve overall project outcomes. It is important to tailor the chosen strategies and techniques to the specific needs and characteristics of each project, considering factors such as project size, complexity, timelines, and stakeholder requirements.

Let’s dive into the steps of efficiently allocating organizational resources to various tasks and projects.

Steps for efficient resource allocation

Effective resource allocation is crucial for successful project management. While there are various strategies and techniques that one can follow, given below are the best ways to assign resources efficiently across the organization:

Identify and allocate the best-visible-best-fit resources

A resource management system consolidates resource data from various systems into a centralized platform. Complete visibility enables the effective allocation of resources to the project based on skills, qualifications, experience, availability, costs, and other selection criteria. Scheduling cost-effective global resources from low-cost locations maintains profitability without compromising quality.

One of the methods of project resource allocation is assigning best-visible-best-fit instead of first-available-first-fit resources. Visibility also allows the uniform distribution of skilled resources across multiple projects instead of only deploying them to a high-priority project.

Avoid under or overallocation of resources

Uniform distribution of resources across all projects ensures that there are no over-allocated resources across the enterprise. Under allocation of resources results in productivity and revenue loss. Conversely, over-allocating resources can cause burnout, affect the quality of output, or, worst, result in unplanned attrition.

Forecasting billable /strategic utilization helps project managers to move resources periodically from non-billable to billable/strategic work. Thus, it facilitates optimum resource utilization and improves business efficiency.

Subscribe to an automated resource request process

While allocating resources, manually sifting through the resource pool or taking phone/email requests from individual project managers can be cumbersome. An automated resource requesting that is independent of cumbersome spreadsheets streamlines the process.

It allows project managers to specify the required skill sets, qualifications, experience, cost, and project timelines. This request directly reaches the inbox of the resource manager in charge, who starts planning for the same. As the entire process is documented and auditable, tracking allocation records eliminates any process-related confusion.

Empower employees to work on projects of interest

Studies have shown that when employees work on tasks of their choice, it has a positive effect on their engagement and productivity. Therefore, managers must also consider their interests instead of allocating resources only based on their skills and availability. To achieve this, resource managers can create open positions and publish the same, which becomes visible to all the relevant personnel across the enterprise.

Accordingly, interested resources can show their interest in joining the project, and the concerned resource manager can select the appropriate project team. It also saves the resource manager’s time from looking across the enterprise to find the right fit and negotiating with their line/ project managers. Therefore, this method is a win-win for both resources and the managers responsible for their allocation.

Diversify employee skill sets and responsibilities

Encourage employees to have at least two or more skills. To allocate resources efficiently on projects that need various skills allows them to sharpen their primary skill sets and an opportunity to build new ones. They can also be given further training on acquired skills, and on-the-job experience helps them improve their capabilities.

Sometimes, when employees get roll-off from a project, there isn’t any task to assign them based on their primary skills. Here, their secondary skill sets will come in handy, and they can be made billable by allocating them to other projects.

Sometimes, the demand for a niche skillset to start a new project may arise. As these resources are hard to find, out-rotating a niche resource from an ongoing project helps kickstart the new project. Simultaneously, another resource having minimum qualifications can backfill to continue the current project. This dynamic resource allocation ensures that none of the projects suffer.

What-if analysis to fulfill dynamic project demands

Juggling resources within multiple projects is common when resources are limited. However, in this ever-evolving business environment, any error from poor judgment can prove to be very costly. So it is when the simulation of business scenarios comes in handy.

Applying different sets of rules on the same resource pool and comparing situations can help visualize various impacts. For example, it can involve stalling or extending the low-priority project’s timeline and allocating its available resources to a high-priority one.

What-if analysis, a powerful feature of resource modeling and simulation, helps arrive at potential outcomes using constraint-based assessment. Like weighing the pros and cons of options in our everyday situation, this principle applies to resource planning and allocation. Once the ideal and feasible scenario is derived, implementing the same on an actual project schedule facilitates successful resource allocation.

Use real-time Business intelligence to monitor and improve resource allocation

Even after the resource allocation process is complete, there can be changes in the project requirement that requires immediate attention. Modern resource management solutions equipped with real-time business intelligence dashboards and reports help improve the enterprise’s health index.

Role-based customizable dashboards enable decision-makers to make informed decisions and make adjustments to resource allocations accordingly. Thus, real-time business intelligence help in tracking and controlling resource allocations ahead of time.

Conclusion

Proper resource planning and allocation play a crucial role in the success of any business. It ensures that organizational resources (human & non-human) are allocated appropriately to achieve the desired outcome. It also helps to identify potential resourcing risks and allows for contingency planning.

Ultimately, effective resource allocation can lead to increased productivity, better cost savings, and improved business performance. By implementing the aforementioned strategies, combined with robust resource management software, can help companies reap the numerous benefits of resource allocation.

The Glossary

The SAVIOM Solution

SAVIOM is the market leader in offering the most powerful and configurable solutions for deploying appropriate resources to suitable projects. With over 20 years of experience, this Australia-based MNC has helped more than 100 clients across over 50 countries address specific business challenges. SAVIOM also provides tools for project portfolio management, professional service automation, and workforce planning software.

Taking project resource management into account, it is a systematic flow of several steps, starting from planning and scheduling to executing and ensuring successful project delivery. Every step is well-documented, using a sophisticated tool to keep every decision-maker and stakeholder informed of the project’s progress.

A critical step amongst these is the request for resources. While the resource schedules and project plans are well-formulated and recorded, resource requesting is often unstructured at firms.

Now that organizations are matrixed and foster a shared-services model, forming a resource requisition workflow is imperative to avoid internal conflicts and discrepancies.

This article emphasizes the basic concepts and significance of process-driven resource requisition and some tips for implementing it efficiently.

Beginning with the definition,

Definition of resource request

Resource request is a formal procedure that a project manager follows to request and procure resources for an open position. This process typically involves defining the quantity, type, and quality of resources needed for the project.

Before drawing out a project plan, the project manager assesses the resource requirement to execute every project task. To fulfill this project resource demand, the project manager will request resource managers to allocate the right resource to the open position.

This process of placing a formal request to fill the project vacancies before the initiation date is known as resource requesting.

If managers follow the traditional method, they will get stuck in the endless loop of emails and phone calls. The project manager sends an email to the resource manager, who will then go to various departmental heads, team leaders, and so on. By the time they find the right resource, the opportunity is lost.

To ensure that your project demands are fulfilled on time, it is essential that you invest in a reliable resource management tool. It will provide you with a bird’s eye view of the enterprise-wide workforce and their schedules and help you reap the benefits of a systematic project-staffing process. And that’s how to request company resources for a project.

Let us now see how resource requisition benefits the firm,

Benefits of efficient resource request process

Integrating an automated resource requisition and approval workflow in your management system can provide a myriad of benefits. This process covers everything from helping you maintain an audit trail to enhancing transparency and avoiding double booking.

Here is a brief description of each one of these:

Facilitates better resource planning

If a resource request is made well in advance and is rejected due to resources’ unavailability, managers have enough leeway to take appropriate resourcing measures. They can either hire a new employee or upskill a benched resource to take up the job. This enhances the overall efficiency of project resource planning.

Avoids internal conflicts

Often is the case when multiple projects require the same competencies and skills at the same time. When a project manager requests the workforce, the resource manager will assign them based on the project priority and availability. This methodical approach eliminates disapproval and conflicts between the project managers.

Eliminates double-booking

When resource managers equip a multi-dimensional resource scheduler against their siloed spreadsheets, they get real-time updates on every resource’s allocation and utilization. In accordance with this, they go ahead and assign project tasks to available resources or those who have the capacity and approve the request. It eliminates double booking, thereby preventing over-utilization.

Maintains an audit trail

One of the most important advantages of following a resource requesting workflow is that it keeps a log of every detail. All the stakeholders stay informed about when the request was made, if the request is approved, the resource scheduled against the task, and so on.

An audit trail accessible to the concerned authority promotes a culture of transparency in the firm and helps in conflict resolution.

Step-by-step guide to request resources efficiently

The resource requisition workflow encompasses the following steps:

Placing the request

The first step is placing a resource request. The project manager specifies the skillset, primary role, resource cost, and other important attributes to get the right person for the job.

Look for the core competencies

Once the resource manager receives the request, he/she will look for the core competencies across the enterprise. In other words, the manager will analyze the capacity against the resource demand.

Assess the resource schedules

If resources with niche skills are present in the organization, the following step includes studying their schedules and allocation. Resource managers will now forecast their utilization and gauge if they are available for the stipulated time.

Manage the request

The next step is to accept the request and assign the resource if the findings align with the criteria. In case the position remains vacant, the resource manager will take the right resourcing measure to fulfill the request.

Final decision

Finally, after evaluating all the critical metrics, managers will decide to accept or reject the resource request.

This is what a typical resource request workflow looks like. Both project and resource managers are equally responsible for the continuous improvement of resource planning and requisition process.

Here are some steps you can follow to enhance its efficiency and effectiveness:

What are the best methods of resource-requesting?

If the traditional approach of relying on office directories is followed to request resources, project managers get stuck in endless trails of emails. However, with an advanced resource management software solution, resource managers gain enterprise-wide visibility of the workforce and activities pinned to their schedules. Using these tools, you can simplify and fast-track the cumbersome process of resource requests. Here are the ways to do it in a breeze

Forecast the project resource demand

The problem

Organizations that still rely on legacy tools to manage their workforce and projects fail to predict future projects’ resource demand. Project managers then place the request at the eleventh hour, which becomes a challenge for the resource manager.

The solution

As mentioned above, using an advanced resource scheduling tool gives unmatched visibility into pipeline projects and future resource requirements. This provides foresight into the resource demand and project timeline well ahead of the curve. When project managers are forewarned about the requirements and place a request in time, resource managers get enough lead time to fulfill it.

Even if a resource with niche skills is not present, managers can do planned hiring or retrain the available workforce to execute the work efficiently.

Evaluate the project priority and place the resource request

The problem

One of the critical areas of concern is that resource managers work on a ‘first-come, first-served basis.’ This is due to the countless resource requests they receive in a day. In such cases, they sometimes end up scheduling resources to projects that do not add substantial value, and the critical projects stay queued. It can cause further delays and even cost you the project.

The solution

Resource managers must have centralized visibility of all the ongoing and pipeline projects. This helps them categorize the projects based on their criticality and priority. When they have an intuitive solution in place that helps them identify the billable, strategic, and non-billable projects, they are better positioned to deploy resources to the right tasks.

Assess the resource availability well in advance

The problem

As mentioned earlier, many organizations still rely on siloed spreadsheets to schedule resources and plan projects. These spreadsheets do not provide real-time updates, and thus, resource managers cannot foresee resource availability in advance. This can cause project bottlenecks due to a lack of information on leaves, holidays, etc.

The solution

Every project requires a resource for a specific time period. When resource managers are aware of the timeline, they must be able to forecast the future availability of the required resources. Or else, last-minute absenteeism can cause potential bottlenecks and unnecessary delays.

A robust resource management software is equipped with business intelligence that provides intuitive reports on future resource utilization and availability. Using these reports, managers can stay ahead of time and plan better with accuracy.

Automate resource request process and minimize discrepancies

The problem

The majority of firms still rely on manual resource requests. This causes a communication gap between departments, and the cumbersome emails only lead to project delays. It makes project resource management all the more difficult in matrixed organizations.

The solution

Organizations encouraging a shared-services model must automate their resource requesting process. This is only possible when you deploy the right tool for your firm.

A modern resource scheduling tool provides 360-degree visibility across the organization and narrows down the resources using advanced filters.

Leveraging the resource metric reports and dashboards, you can allocate the right resource to the right task at the right time. Moreover, when every stakeholder has an insight into all the nitty-gritty, it automatically bridges the existing communication gap. Ultimately, it helps in the efficient management of resources across the enterprise.

All the steps mentioned above cumulatively help you enhance the efficiency of your resource requisition workflow.

Best practices to follow for efficient resource requesting

To ensure efficient resource requesting, it is helpful to follow some best practices. Consider the following guidelines:

Always plan ahead

Resource managers must anticipate the organizational resource needs and plan for them in advance to avoid last-minute firefighting that may lead to rushed decision-making or delays in resource allocation.

Understand the requirements

Resource managers must clearly understand the specific requirements of the resources project managers are requesting before scheduling the resources. This includes understanding the quantity, quality, specifications, and any dependencies or constraints associated with the resources.

Prioritize the resource requests

It’s important to prioritize the resource requests based on their importance and impact on project or task success. The focus should be on scheduling the critical or niche-skilled resources first, followed by other resources, to ensure the availability of the required staff for project initiation.

Consolidate requests

Whenever possible, resource managers must consolidate multiple resource requests into a single comprehensive request. This helps streamline the evaluation and allocation process, reducing administrative burden and improving efficiency.

Provide justification

Resource managers clearly articulate the rationale and benefits of the requested resources. They must explain how these employees will contribute to achieving project goals. Moreover, if the required resources are not available within internal channels, resource managers should inform the project managers about the same.

Collaborate and consult with stakeholders

To fulfil resource requests efficiently, resource managers must engage relevant stakeholders early on and involve them in the resource-requesting process. Seeking their input, expertise, and feedback ensures that the requests align with organizational objectives and are supported by key decision-makers.

Consider alternatives

It’s essential to explore alternative solutions or options before fulfilling a resource request. Managers must assess whether existing resources can be utilized more effectively or if there are alternative resources available that can achieve similar results. This promotes resource optimization and efficiency.

Leverage the right technology

Utilizing technology tools, such as resource management software, streamlines and automates the resource-requesting process. These tools can help track requests, manage allocations, and provide real-time visibility into resource availability.

Follow-up and track progress

Once the request is placed, managers must regularly follow up on the resource requests to ensure they are being reviewed and processed timely. They should maintain open communication with decision-makers, provide updates on the status of the requests, and address any concerns or questions promptly.

Evaluate and optimize whenever possible

Continuously evaluating the effectiveness of the resource-requesting process improves its efficacy. It helps identify areas for improvement and implement necessary adjustments to streamline future requests.

By following these best practices, you can streamline the resource-requesting process, improve allocation efficiency, and ensure that the right resources are available at the right time to support your organizational goals.

The takeaway

A standardized resource requesting process is at the crux of smart project resource management. If not done correctly, it can have a catastrophic effect on the project’s progress and a decline in profitability. Thus, managers must strive to get it right and enhance its efficiency.

Once done, it will help you deliver the project on time and escalate project resource productivity and engagement. When resources are utilizing their expertise at the right place and adding value to the firm, they will stay with the firm for the long run.

Technology has made these processes a lot more convenient for all business leaders, allowing them to efficiently manage resources and their schedules. So, one must invest in the right tool to maintain their project and resource health index.

How do you manage your resource requirements? What practices do you follow to streamline resource requisition?

The Glossary

SAVIOM Solution

SAVIOM is the market leader in providing an Enterprise Resource Capacity Planning solution. With over 20 years of experience leading the market, Saviom is actively used by over 15 highly-esteemed global companies worldwide. The tools within the suite include project portfolio management, professional service automation, and workforce planning software. Re-engineer operational efficiency with a system shaped around your business!

This proliferation of accounting and auditing firms can be attributed to market volatility, rapidly changing tax laws, global trade expansion of companies, and so on.

An accounting and auditing consultancy firm requires a diverse range of people with different auditing and accounting skills combined with some niche expertise roles like actuary and forensics accounting.

However, building an optimized workforce while ensuring every assignment is delivered successfully is easier said than done. These firms’ projects are often seasonal and witness a noticeable surge in consultants’ demands during different times of the year. These factors cumulatively make resource capacity planning challenging.

The pertinent question is, how to address these capacity planning challenges in accounting & auditing firms?

This informative article will address the query and delve deep into this concept. So, let’s get started.

Salient features of an accounting and auditing firm

An accounting and auditing consultancy firm specializes in providing customized and knowledge-based services to their clients. For example, it organizes and manages a company’s cash flow, conducts regular audits, gives tax advice to stay compliant, etc.

Let’s delve into the services it delivers.

A. Corporate accounting & finance advisory – It consists of services like portfolio review, capital allocation processes, financial planning, and so on. They help corporates, governments, sovereign wealth funds, family-run businesses, educational institutions, etc., with critical financial issues.

B. Auditing – Auditing is basically the examination and analysis of an organization’s financial records after the final preparation of financial statements. It gives an unbiased and fair opinion on the financial position of an organization and helps make decisions accordingly.

C. Tax advisory –It provides connected services across all tax disciplines. This includes calculating and filing business tax, international tax, transaction tax, etc., while avoiding legal penalties and issues related to people or compliance.

D. Consulting – This empowers a company to adapt to the latest technology trends and develop sustainable and responsible strategies and operations to stay ahead of the curve. Consulting service also helps a firm to become more agile and resilient and avoid threats to ensure business protection.

E. Forensics – Encompasses the investigation of fraud or financial manipulation through in-depth research and analysis of a company’s financial records. It helps resolve issues like insurance claims, insolvency, embezzlement, skimming, or any other type of financial theft.

Now that we know what accounting and auditing firms comprise, let us understand the several roles involved.

A. Accountants – They are responsible for analyzing a firm’s assets and liabilities, preparing profit-and-loss statements, evaluating a business’s financial records/processes, and creating and managing other relevant financial records.

B. Auditor – The auditor analyzes an organization’s financial reports and records to ensure they are accurate and comply with business laws. They help make a business immune to potential fraud.

C. Business analyst – They work in coordination with stakeholders to determine goals, identify areas of improvement, and implement changes and strategies to strengthen the business process.

D. Tax staff – It consists of accountants, auditors, compliance officers, and consultants to help a company file corporate tax properly, implement suitable tax-saving measures, and stay compliant with corporate national or international tax laws and regulations.

E. Risk analyst – These consultants are often more on the technical side and help a company with its holistic risk management approach. They compile and evaluate data about risks, share it with managers, and mitigate their negative outcomes by implementing the most appropriate measures.

Subject to these roles, accounting and auditing firms often find it challenging to employ the right personnel. The following section explains the importance of capacity planning in this industry. Let’s delve deep:

Significance of capacity planning in the accounting and auditing industry

Capacity planning is the process of predicting the gap between resource capacity and demand to the shortage/ excess of the workforce. To bridge these gaps, organizations can take measures proactively, like upskilling, hiring, redistributing work, etc.

Capacity planning enables the audit and accounting industry to utilize its professionals and consultants to the maximum potential. Furthermore, accounting firms can estimate and forecast demand for various accountants and consultants based on the sales pipeline opportunities.

Efficient capacity planning ensures the competent allocation of auditors and accountants based on their skills, competencies, qualifications, cost, etc. Moreover, it helps identify skill shortages ahead of time so that managers can implement resourcing treatments to mitigate the gaps.

Capacity planning helps eliminate last-minute hiring/firing costs and ensures that the right resources are available for projects at the right time and cost. Additionally, it helps minimize bench time proactively by facilitating on-the-job training, adjusting timelines, or selling excess capacity.

Furthermore, capacity planning enables audit and accounting firms to forecast billable and strategic utilization of the workforce ahead of time. Accordingly, they can mobilize consultants from non-billable work to billable or high-priority projects.

In this way, capacity planning plays an essential role in the accounting industry. Let’s delve into the capacity planning bottlenecks in this industry and ways to overcome them.

Capacity planning challenges in accounting and auditing firms

As discussed above, an audit and accounting consultancy company requires a myriad of human resources with varying skill sets. Hence, capacity issues in these firms are several. Moreover, seasonal fluctuations in the workforce demand make it an even more arduous job.

Nevertheless, one can implement a robust resource management solution and follow a few best practices to overcome them. So, here are a few major capacity planning challenges and how resource management software can help counter them.

Lack of visibility into project resource demands

Due to the absence of foresight into upcoming accounting and auditing projects, managers fail to forward-plan them efficiently. As a result, in case of resource shortage, it may lead to last-minute firefighting and hiring of high-cost or incompetent consultants.

On the contrary, excess accounting consultants can escalate project costs and lead to a loss of billable hours as managers can’t find suitable activities for them. In either case, this causes project delays, budget overruns, and subpar deliverable quality.

So, what is the suitable solution for this?

Solution – Forecast resource demands and plan accordingly

With the help of project vacancy reports, resource managers can witness demands in current and pipelined projects. It helps to stay abreast of these requirements and get foresight into the capacity vs. demand gap. Accordingly, they can implement resourcing measures to bridge the gap.

If there is a shortage, managers can initiate planned hiring or upskill/train benched resources or employees with partially matching skillet before the project’s onset. This way, one can avoid excess/shortage of accounting consultants, fill project vacancies, and allocate competent resources. It also helps to save last-minute firefighting costs, thus ensuring profitability.

Shortage of skilled accounting consultants

Accounting and auditing is a knowledge-intensive industry. Therefore, it is often challenging for accounting firms to maintain a large talent pool of highly skilled accounting and auditing consultants all the time. That is why,

Managers often face resource constraints, especially in a multi-project environment, due to the shortage of experienced consultants.

Failure to cater to resource demands across all the projects jeopardizes one or the other project and affects the bottom line. Moreover, an ongoing shortage of accounting consultants causes a loss of billable opportunities as the firm fails to acquire new clients.

So how do you combat these issues?

Solution- Implement appropriate resourcing treatments

A resource management solution provides visibility into future skill demands. This helps identify the shortfall of consultants across the organization. Accordingly, the resource manager can implement appropriate resourcing measures to fill capacity gaps.

In internal channels, they can first look into the benched personnel or the consultants soon to get rolled off from ongoing projects. If the right consultants are still not found, they can go for external resourcing channels. They can initiate project-specific or skill-based hiring based on business requirements and also contact their empaneled vendors to get the requisite consultants.

Inability to manage seasonal fluctuations during financial year-end

During the financial year-end, an accounting consultancy firm often faces high demands for accountants, tax analysts, budget analysts, etc. As a result, it becomes infeasible for accounting firms, especially small ones, to scale up and cater to these requirements across multiple projects.

Eventually, this failure to manage the seasonal increase in demand can lead to a loss of one or more business opportunities and client dissatisfaction.

How can managers manage seasonal periods?

Solution – Create the right mix of permanent and contingent workforce

A resource management solution provides visibility and insights into the current and future demands for consultant resources. It helps understand the nature of project requirements and evaluate if they are one-off or recurring.

Based on the analysis, they can make an informed decision on whether to hire permanent and contingent consultants to fulfill given project requirements. They can eventually form the right balance of permanent and on-demand workforce to bridge capacity gaps and handle all projects efficiently.

Difficulty in increasing billable hours of accounting consultants

Resource managers find it hard to ensure that all the consultants are utilized to their maximum capacity. It happens even more during the trough season when there are not enough billable opportunities to deploy all the consultants on.

For instance, tax consultants are often required towards the financial year closing and have comparatively higher availability at other times. So, finding billable projects during the trough period becomes arduous. As a result, their bench time goes up and leads to a significant decrease in billable utilization, reducing the overall profitability.

So, what is the suitable solution?

Solution – Maximize productive utilization with suitable measures

Resource management software provides insights into current and future bookings of the consultants. It helps resource managers to forecast the utilization rates of individual consultants.

This information helps them identify the ones whose billable utilization rates are sub-optimal and proactively mobilize them from non-billable to billable opportunities wherever feasible. They can also bring forward various projects’ timelines to make the people on the bench billable and maximize productive resource utilization.

Surge in employee burnout resulting in unplanned attrition

Resource managers often tend to book high-performing accounting consultants on multiple projects. These resources are booked beyond their capacity, and their schedules are stretched thin during this process.

If not checked at the right time, continuous overallocation of work results in these consultants’ burnout. In the long run, they may decide to leave the organization, causing unplanned attrition.

What can you do to prevent employee burnout?

Solution – Ensure uniform workload capacity distribution

A resource management solution provides data-driven insights into the consultants’ utilization levels through various BI reports, including utilization and forecast-vs-actual. They can leverage these reports to find out the resources overburdened with work and take appropriate resource optimization techniques to ease their workload.

They can use resource leveling techniques for projects with flexible deadlines and readjust the demand against the capacity. For projects with stringent timelines, they can pull in more consultants to complete the project without overloading the existing project team members. Managers can also raise the minimum acceptable benchmark percentage of billable utilization rates by a certain percentage during trough seasons to evaluate burnout accordingly.

High consultants’ costs due to global competition

An increase in global competition has caused a rise in the demand for audit and accounting professionals across the globe. As a result, the costs of hiring and retaining a skilled workforce have also increased.

While a large-scale accounting consultancy firm can offer high salaries and other monetary benefits, it is not the same with small to mid-sized companies. Therefore, it becomes challenging to maintain a large talent pool for them on a permanent basis.

How can companies reduce resourcing costs?

Solution – Leverage cost-effective global accounting consultants

A resource management solution provides 360-degree visibility into accounting professionals, their skills, cost rate, etc.

In addition, it enables resource managers to filter and view the consultants by location.

This helps managers to identify and assign cost-effective resources from low-cost regions or countries and maintain the project’s financial health. It also enables them to upkeep the quality of the project without any budget overruns, thereby increasing profitability. The consultants from a different country may need to be given a fast-track course on local law and accounting practices.

Conclusion

Rightly expressed in the words of Waren Buffett, Berkshire Hathaway’s former CEO, “Accounting is the language of businesses.” Hence, it has emerged as a valuable industry in this fast-paced modern business scenario.

However, capacity planning in this industry can pose several challenges, as explained above. Nevertheless, with the right strategies combined with a robust resource management solution, one can overcome them and streamline the firm’s operations and projects.

What capacity planning challenges are your audit and accountancy consultancy firm facing?

The Glossary

The SAVIOM Solution

SAVIOM is the market leader in helping multinational clients manage their resources efficiently and effectively. With over 20 years of experience, this Australian-based MNC has a global presence across 50 countries and has helped 100+ clients with their Workforce Planning Software. Saviom also provides tools for Enterprise Project Resource Management, Project Portfolio Management, and Professional Service Automation. Boost your remote team collaboration with Saviom.

An effective workforce planning process can fuel the adaptability of companies to adjust to market conditions quickly. Capacity planning is a scientific process to assess their current and future workforce demand and proactively take necessary action.

The traditional paradigm of resource planning leads to guesstimate without proper insight into future requirements. A modern capacity planning solution gives an indication of current and future requirements and allows firms to make data-driven informed decisions. It not only contributes in determining the capacity and demand gap but also helps to identify appropriate resources within professional service companies in advance.

This article will cover some critical factors to scale up the capacity planning strategies and also explains the essential benefits of resource capacity planning.

Let’s begin with understanding the characteristics of PS firms in detail.

What are the salient features of a professional services firm?

Professional service firms are considered service-based businesses that cover several service types: business consulting, accounting, law, advertising, IT solutions, architecture, engineering, recruitment, financial services, marketing public relations, research, and so on.

These firms also maintain a healthy client base, differentiate their services from the competition to win work, retain the best talent pool, and deliver organizational profitability.

Here are some salient features of a professional services firm:

Resource-based

Professional service businesses are fundamentally about human resources, as they are the greatest asset of the company and provide knowledge-based services. Therefore, these firms acquire a highly specialized workforce from the competitive market and make them billable.

Billable utilization is one of the most critical KPIs for professional service firms. For instance, It is calculated as resource hours spent on billable client work divided by the number of hours in a week, i.e., Full-Time Equivalent or 1 FTE.

According to SPI, “Maintaining high utilization of resources drives higher billings, revenue, and profits to an organization.”

Client-focused

Professional services firms place an enormous emphasis on the needs of their clients or are client-focused. For them, the client is always the king, as they provide commercial stability to many organizations. By delivering top-notch service aimed directly at the requirements of their clients, a company will see a simultaneous rise in business performance.

Higher service rates and profitability

Like any business, multiple factors influence the pricing strategy of professional service firms – market needs, competition, service model, brand value, company command, etc. Usually, profit margins for well-run professional services firms can be 10% to 20% or more, which yields relatively high cash flow and revenue in an organization.

Shorter assignment model

New deals and repeat business from existing clients are the fundamental pillars of growth for the professional services industry. They provide the knowledge and skills of their employees, often on an assignment basis, where a specific resource or team is responsible for delivering services to the client. It is usually for a shorter duration, and resources are generally charged hourly.

Now that we know the features of PS firms, let’s understand how capacity planning can benefit professional service firms here.

Benefits of capacity planning in professional services firms

An advanced capacity planning solution provides managers with foresight into workforce capacity. Using these insights, they can tap into the right potential and allocate the right resources to the right job.

Here are the benefits of capacity planning that aid professional service firms:

Empower resource/project managers

Today, capacity planning is an integral part of the core resource management process. The planning empowers both resource managers and project managers with enterprise-wide visibility of the resource pool. After analyzing the demand skills gap, they then make decisions based on capacity information.

Moreover, this foresight into capacity and demand for future projects helps resource managers proactively implement various resourcing treatments, manage work, and enhance productivity.

Forecast pipeline projects proactively

With today’s professional service business challenges, it’s no longer appropriate to allocate resources to tasks impromptu. Managers have to be more strategic in forecasting pipeline projects and estimating project resource requirements in advance.

This aids managers with proactive measures to bridge the demand difference. In case of a shortfall of resources, they can select any competent benched resource or hire a permanent/contingent workforce with the right skill set. Whereas for excess resources, they can bring future work ahead or redeploy resource capacity in other projects.

Therefore, forecasting and capacity planning help reduce last-minute hiring activities, which can lead to cost escalation and compromised work quality.

Leverage the right talent on various projects

Resource capacity planning aims to allocate resources to work efficiently. With the right people doing the right work, managers prevent under or overutilization of resources and help in improving employee satisfaction.

Using an intuitive resource management solution, managers lead strategic workforce planning practices such as acquiring low-cost global resources, hiring on-demand resources, out rotation of niche resources, etc. These practices help to drive organizational results with the most vital asset- the people.

Facilitate effective bench management

With effective capacity management, managers can foresee resources that will land up on the bench and allocate them to suitable project vacancies accordingly. Enterprise-wide visibility into the available skills allows them to quickly assign these resources to project tasks, thereby reducing bench strength. Benched resources can also be made billable by providing training on the job or shadowing opportunities.

Align sales and delivery of projects within time and budget

The right capacity planning measures ensure all project resource requirements are identified and fulfilled. It is also revisited throughout the project life cycle as resource demand fluctuates from time to time. Real-time data and regular monitoring of projects and resources are essential to align sales and delivery within a specified budget and time.

The benefits of capacity planning are substantial. Let’s now look at some of the critical factors that support a better capacity planning process.

Critical factors for better capacity planning

Hiring is an important activity for professional services companies. They can not depend too much on contingent resources due to skill set requirements. Many professional services companies also have a policy of taking fresh graduates and training them as per their business demands. At the same time, the shortage created by unplanned attrition also needs to be replenished. Both over and under-capacity are bad for profitability and must be carefully analyzed and planned.

To be competitive and effective within an industry, all firms need to ensure it has the right resource pool that helps promote success. With appropriate capacity plans in place, managers can foster a conducive work environment to achieve client-focused results.

Listed below are the five critical factors that will help to better professional services capacity planning practices in place:

Historical data & future trends

Resource Managers and Project managers can collaborate and create a resource plan by examining both past data and upcoming future trends. For example, if the company turnover grew 15 percent last year, they can plan to build 15 percent more resource capacity this year. This will create a process where managers will periodically review/revisit business objectives and plan for future resources well in advance.

Strategize with what-if scenarios

It’s not common for a professional service company to have multiple business models and complex project environments. Therefore with robust resource capacity planning tools, managers can simulate numerous scenarios and predict future outcomes with accuracy. Using data-driven actionable insights, managers can select the best result under the given constraints and apply it to a real project plan.

For example, when planning to hire 20 new engineers to tackle a significant project or reduce marketing resources by 15 percent, managers can better overview all future outcomes through a what-if scenario. It will help them create a more accurate capacity plan.

Resource factor

As mentioned before, resources are an essential part of any professional service firm. Hence they can be effectively managed by using a multidimensional resource scheduler. The tool helps managers get a comprehensive view of all resource-related information, such as skill sets, cost rate, location, and resource capacity, among others. Using appropriate filters, managers can allocate competent resources to the specific project’s task.

In addition to human resources, companies should also understand how business performance draws on infrastructure resources as well. For example, Suppose a firm expects a marketing initiative to drive 50,000 sales in the coming year. In that case, managers can use this information to determine how much more inventory assets, like storage devices, computers, etc., would be required in advance.

Operational factors

Effective professional services capacity planning is the foundation that impacts business processes and management essentially. Finance management, stakeholder management, risk management, change, and dependency management are some of the operational factors that affect the project’s progress and success.

Therefore, managers need to regularly revisit the planning process and manage the project lifecycle to avoid bottlenecks down the road.

Having a central source of real-time data lets a project management office (PMO). standardize processes, and generate best-practice metrics for delivering high-quality projects.

Budget and timeline

Capacity planning helps businesses to complete project needs within budgetary and timeline constraints. For each phase of the project, managers first need to estimate both limitations. The budgetary constraint may include human resource costs, equipment/assets procurement costs, and operational costs (licenses, material costs).

Thus, managers need to monitor the variance between the planned budget vs. actual spending and timeline as they are the baseline to measure project performance.

Conclusion

A robust, advanced, and comprehensive capacity planner is pivotal in utilizing the talent pool to its best extent. When a resource manager has 360-degree visibility of the resources and their skills, they can make capacity and demand planning decisions. It can be backed by data instead of speculation and avoid potential pitfalls.

The tips mentioned above will help scale up your capacity management plan and help futureproof the workforce within a professional service firm. Additionally, these tips will enable managers to empower their decision-making, enhance productivity, and manage resources efficiently.

What challenges do you face in implementing capacity planning strategies in your organization?

The Glossary

SAVIOM Solution

SAVIOM is the market leader in offering the most powerful and configurable solutions for managing enterprise resources efficiently and effectively. Having more than 20 years of experience, this Australian-based MNC has a global presence in over 50 countries. It is also popular with more than 100 customers and helping them to achieve their business goals. SAVIOM also has products for project portfolio management, professional service automation, and workforce planning software which can be easily customized as per business requirements.

Having the right resources for suitable projects at every stage is crucial for the overall efficiency and success of the company.

There is a constant struggle to find the best solution that will align with each project goal and balance resources between the projects. Often managers have to run from pillar to post for competent resources to deliver their projects on budget and within time.

With a strategic resource management approach, managers can improve each project’s outcomes, productivity, and profitability.

In this article, we have discussed some of the best practices that can help in resource planning across multiple projects seamlessly.

Importance of resource planning across projects

Formulating an intelligent project plan requires accurate information on every resource attribute, from skills and core competencies to their utilization and availability. These insights allow managers to develop high-level resource planning within the allocated project budget.

It will also help them enhance productivity and ensure the project’s success by facilitating the appropriate allocation of the right resource to the right project in the right capacities.

Timely project delivery

Proactive resource planning in project management allows managers to assess the capacity vs. demand gap in advance and bridge it with appropriate resourcing measures. Furthermore, the effective distribution of competent resources in project management ensures that no under or over-skilled resources are allocated to projects.

Over-skilled resources can spike project costs, and under-skilled ones can cause severe delays. Therefore, proper resource allocation helps to maintain the project quality and consistent delivery of services on time and within budget. project quality and consistent delivery of services on time and within budget.

Increased profitability

Resource demand forecasting facilitates planned hiring, which helps to reduce last-minute hiring/firing costs. Managers can implement suitable resourcing measures to identify and allocate competent and cost-effective global resources across matrix boundaries. It will enhance profitability by reducing project resource costs significantly.

Improve client satisfaction

The satisfaction of clients depends on how effectively the organization meets their expectations. It is considered a success when projects are delivered with quality services, on time, and within budget. on time, and within budget, it is considered a success.

Effective resource scheduling allows you to maintain the quality of deliverables and increase the company’s image.

Now that you’ve understood the essential benefits of planning resources effectively let’s learn about the various types of projects and resources:

How are projects and resources classified?

Resources and projects are regularly reviewed to maximize productivity, and the right type of workforce is deployed for every project.

The below section describes a classification of the different types of workforce deployed on projects:

Types of human resources:

Depending on the project requirements, the manager hires different types of resources, such as permanent employees, contractors, or freelancers.

• Permanent employees (full-time & part-time)

Permanent employees can be full-time and part-time resources and are often perceived as a cost-effective solution for any business. In addition, their productivity and contribution to meeting business objectives are higher due to their participation in any or all of the internal and strategic works.

• Contractual or contingent workforce

On-demand or contingent workforce is beneficial for businesses facing workload volatility due to changes in market conditions. In addition, a contingent or contractual workforce is considered helpful for short-term assignments as they have fewer overhead costs than full-time resources. Often the project managers utilize contractual resources at a higher price but have no liability to maintain them once the task is accomplished.

• Freelancers

Freelancers are hired for a specific work period with more work schedule flexibility. They are often employed for particular expertise or niche skills on a project at hourly or daily rates. Hiring freelancers is a cost-cutting strategy many businesses use as they cost less to the company in terms of training and other overhead costs.

Workforce in a matrix organization:

In a matrix organizational structure, employees have more than one line of reporting managers. This structure offers flexibility to businesses where resources with expertise can work across various departments and projects within the organization. Below is the resource classification in matrix organizations:

• Local resources

A local resource is limited to a specific location within the local infrastructure of the project. Local resources have the advantage of being in the proximity of the business, and they can build a better relationship with the key personnel of the client organization.A local resource is limited to a certain location within the local infrastructure of the project. Local resources have the advantage of being in the proximity of the business and they can build a better relationship with the key personnel of the client organization.

• Global resources

A global resource is known to exceed the system of the project location as it can be accessed from multiple locations through a global resource management model. It aims to have a centralized repository of a worldwide resource pool having diverse skill sets. As a result, companies can utilize skilled resources from cost-effective locations.

Project managers use the Nearshore and Offshore outsourcing model to program the expertise needed for any project.

• Nearshore model:

This outsourcing model refers to the resources in neighboring countries with similar time zones. As an example, the nearshore location for the US would be Mexico.

• Offshore model:

The offshoring model refers to outsourcing to resources located far away with considerable time zone differences. An example of an offshore location for the US would be India.

Different types of project:

Understanding the various types of projects is essential for planning and scheduling the resources for the right task. The project type is determined by parameters such as cost, duration, resource requirements, complexity of the projects, etc. Here are the two different project types:

• Small scale project

A small-scale project is characterized by factors such as short duration, a small team, and the budget size of the project. A single project manager can handle one or more such projects simultaneously. Here resources are assigned for multiple tasks and aim to deliver outputs over shorter time scales.

• Large scale project

Large-scale projects, on the other end, are characterized by the complex nature of the project, such as longer duration, larger teams, and a bigger budget. As a result, multiple project managers are seen managing large-scale projects headed by the Delivery Project Executive (DPE). The DPE demonstrates a complete understanding of client requirements and supports various project teams to meet their expectations.

Knowing the classification of project resources, let’s understand the roadblocks of resource planning across multiple projects.

Challenges of resource planning across multiple projects

Below we take you through the challenges that add complexity to managing the resource pool across multiple projects.

Poor visibility due to siloed data

The use of legacy tools and silos of spreadsheets across enterprises results in poor visibility and a lack of real-time updates. In this case, managers often allocate resources without complete knowledge of their competencies and existing bookings. This improper resource allocation leads to double bookings and over-utilization of resources.

A traditional resource requisition protocol

The traditional resource-requesting method brings in a lot of complexity and challenges in the form of double booking, internal conflicts, discrepancies, etc. In addition, the manual resource requisition process involves physically sorting out resources and taking calls/email requests from multiple project managers, which is time-consuming and cumbersome. method brings in a lot of complexity and challenges in the form of double booking, internal conflicts, discrepancies, etc. The manual resource requisition process involves manually sorting out resources and taking call/email requests from multiple project managers, which is time-consuming and cumbersome

Shortage of resources within a multi-project environment

It is particularly challenging if there is a demand for a niche skill set between different projects. The organization may only have limited resources to satisfy all the requirements. Allocating all available critical resources to a single high-priority project can create a resource crunch, adversely affecting other projects.

Rise of internal conflicts between multiple projects

Often multiple projects require the same competencies at the same time. This gives rise to resource competition, creating disagreement between project managers that may lead to conflicts. Some other causes of internal conflicts are differences in needs, resource schedules, project priorities, etc.

Unable to forecast demand vs. capacity

Inappropriate resource allocation and improper use of bench employees lead to unplanned hiring of high-cost resources in place of low-cost, similarly skilled ones. The lack of foresight into the capacity vs. demand gap elevates unplanned hiring at the eleventh hour, and as a result, expensive local resources get recruited. It escalates the project budget and impacts project profitability.

Lack of productive utilization

Planning and scheduling competent resources into non-billable activities reduces productivity. In addition, without the right resource planning tools, project managers fail to track real-time utilization resulting in suboptimal utilization of resources. This can further cause revenue loss, project delays, and a decline in employee satisfaction.

These are some of the challenges that lead to ineffective resource planning. Now let’s look into some of the best ways to manage resources across multiple projects efficiently.

Strategies for effective resource planning across multiple projects

Now the question arises- What is the best way to manage multiple projects?

In a multi-project environment, resource planning is non-negotiable as it enables managers to monitor and track resources across multiple projects and activities.

Here are some 7 strategies that will help to keep everything on track without disappointing any stakeholder within your business.

Gain 360-degree visibility of all resource profiles

A Multidimensional resource scheduler facilitates identifying and allocating appropriate resources to the right project at the right time. With a unified Gantt chart view of the enterprise, it offers 360-degree visibility of all resource profiles and schedules that can help deploy them to the project based on their skills and availability. In addition, the comprehensive view of all resources allows managers to optimize utilization levels and increase revenue and employee satisfaction.

Prioritize projects

Resource management in a shared-services model becomes complex when supervised by two or more managers. Therefore, it is appropriate to categorize projects based on priorities and keep an updated list of tasks that needs to be done by shared resources. This will also help shared resources to be more effective and get involved with more billable and strategic initiatives.

Distribute key resources uniformly across projects

An efficient resource allocation will ensure that no resource is under or over-utilized against their available capacity. In this case, the resource managers can create a revised resource schedule to distribute them uniformly across projects. Resource Leveling and Resource Smoothing are the two strategic techniques that can be used to maintain uniformity.

Enable out rotation and backfill strategy

Strategic resource planning helps managers to out rotate an internal niche skilled resource from an existing project to kick-start a new critical project. To ensure that the previous project’s quality is not compromised, they can imply a backfill strategy, i.e., fill a resource with similar skills. A resource is short-listed for out rotation if the concerned person is not involved with any important activities.

Encourage multi skill building

Implementing skill-building programs that promote sharing and application of one’s knowledge is critical to the success of any organization. Managers should therefore invest in training and development activities to encourage multi-skill building among resources. Furthermore, when a resource’s primary skills are not matching any suitable vacancy, they can be made billable using their secondary skill sets, thereby improving billability.

In addition, Individual Development Plans or IDPs help employees learn new skills and enhance their work performance per their interests. It enables managers to align employee training with the goals and objectives of an organization.

Leverage cost-effective global resources

Developing a proper resource planning strategy that brings in cost-effective global resources and facilitates global resource management helps to control the project budgets. For example, managers can use a multi-location policy to identify and allocate cost-effective global resources from low-cost locations and control project costs.

Determine proper guidelines for matrix organizations

Given the complexity of a matrix organizational structure, where every single resource has dual or multiple reporting and accountability, the onus is on the managers to ensure resources are utilized optimally against their capacity. The shared-service model of highly skilled resources between functional units and projects lets managers check one pool of resources to fill the project’s demand.

A proper resource management tool provides data-driven insights into resource availability, utilization, and capacity, letting managers forecast the demand in advance.

These are some of the best practices to create a well-defined project resource plan.

Conclusion

Managing resources and projects are the two sides of the same coin. Some call it an art, and some categorize it as science to plan resources effectively across multiple projects! One needs to consider the project scope, financials, and every other essential aspect before creating a project resource plan.

But to effectively plan resources and maintain business profitability, it helps to use a powerful resource management tool customized to one’s requirements.

It provides a unified view among resources and ensures everyone has a broad view of different projects. It also significantly helps managers make informed decisions that enhance all business operations and boost resource utilization and productivity.

How do you manage multiple projects and deadlines in your organization? Are you leveraging appropriate project resource management solutions to resolve resourcing bottlenecks?

The Glossary

The SAVIOM Solution

SAVIOM is the market leader in providing the most potent and configurable solutions for . Having more than 20 years of experience, this Australian-based MNC has a global presence in over 50 countries. It is also popular with more than 100 customers and helping them to achieve their business goals. SAVIOM also has products for project portfolio management, professional service automation, and workforce planning software which can be easily customized as per business requirements. , professional service automation, and workforce planning software which can be easily customized as per business requirements.

Many cost centers set a minimum utilization target for the resources that are used during performance appraisal.

Resource utilization is a KPI (Key Performance Indicator) that affects the success of projects. It helps to evaluate and improve productivity by ensuring that all the resources within an organization are being used to their highest potential.

This article takes you through how to track resource utilization effectively using an intuitive tool.

Let’s first begin with understanding the definition of resource utilization:

How to calculate resource utilization?

Resource utilization is the way to measure how effectively the resources are utilized against their availability or capacity. In other words, it is the process of monitoring team productivity and analyzing whether they’re under or overworked. It is calculated using the formula:

Resource Utilization Formula = Actual/allocated work time ÷ Resource capacity

It can be measured in hours/days/percentage and FTE (Full-time equivalent).

Optimal Utilization– It is the process of maximizing the utilization of resources to achieve the most out of their available capacity. While calculating the available capacity, their planned leaves, training schedule, or any other admin-related activities are also considered.

Note: A consistently higher resource utilization rate (>100%) does not inherently mean increased productivity and efficiency. Rather, it can often turn out to be counter-productive.

Managers can predict the utilization rates of the resources based on the resource schedules and implement necessary measures to optimize them.

Now that we know how to calculate the utilization rate let’s understand the significance of a resource utilization report.

Importance of resource utilization report

Most advanced resource management tools provide resource utilization reports and heat maps. Let’s look at the benefits:

Better project resource planning

Improving overall profitable resource utilization requires a comprehensive study of every individual’s utilization level. It allows managers to take proactive measures for better resource planning.

Real-time visibility of utilization enables managers to monitor their resource’s performance at any given time.

Improves ROI

Getting involved with either strategic or billable tasks ensures that the resources are investing their time and effort in productive work. When resources are working on strategic or billable projects, it eventually generates revenue for the firm, thereby improving the ROI.

With a resource utilization tracker and its centralized visibility, resource managers can systematically mobilize benched resources or resources working on BAU activities to strategic & billable projects. This practice drives better ROI and contributes towards the top line.

Capacity planning for pipeline projects

When analyzing the effective utilization of resources by work function or by the department, managers can plan for the future demands of the pipeline projects. They can forecast new resource requirements based on the bench report. Resources on the bench can be provided with further training/ shadowing opportunities in advance to make them billable.

Factors affecting resource utilization

Resource utilization is influenced by several factors that can impact the efficiency and effectiveness of resource usage. It includes,

Availability of resources:

Resource availability is a critical factor that impacts the overall utilization of resources. When there is a resource crunch, utilization tends to be lower because there aren’t enough resources to complete project tasks. In contrast, when resources are abundant, utilization tends to be higher as more staff is readily available to take on various assignments.

Resource costs:

The cost of resources is another essential factor that can impact their utilization. Resources that are expensive may be used more conservatively, while resources that are more affordable may be used more extensively. The total cost of resourcing should be considered when determining the value of utilizing a particular resource, as it may include additional overhead expenses.

Resource capacity:

Resource capacity refers to the amount of work that a resource can achieve within a specific time period. Moreover, capacity is an important consideration as it helps to ensure that the workload is manageable and that resources are utilized efficiently. Resources with higher capacity (full-time employees) can be utilized more effectively, while resources with lower capacity (part-time or contingent workers) may require more selective utilization.

Skill proficiency:

Skill proficiency plays a significant role in resource utilization because it determines the level of efficiency with which a resource can be utilized. When a resource is experienced and highly-skilled, they can complete tasks faster with precision, resulting in higher-quality deliverables and increased productivity. This, in turn, can lead to better resource utilization as more work can be accomplished within a less time. On the other hand, a resource with average skills may be limited in the types of tasks they can perform, which can result in lower utilization levels.

These factors play a critical role in determining how resources are utilized. Now, let’s learn about the different types of resource utilization formulas.

How to measure different types of resource utilization?

Overall resource utilization is one of the main KPIs of a cost center. It can be further split into billable utilization, non-billable utilization, and strategic utilization.

Overall resource utilization

Overall resource utilization is the method of measuring the total utilization of a resource against its availability or capacity. It is the cumulative time that an employee spends on billable, non-billable, and strategic activities. It can be calculated by comparing the total resource capacity against the total work allocated to an employee.

Which means;

Overall Resource Utilization = Actual/Allocated Total Time ÷ Resource capacity

Billable resource utilization

Billable resource utilization is the way to measure how much a resource is utilized for billable work against the resource capacity or availability. The time spent by a resource on billable work is termed billable time for which the client has committed to pay.

Which implies;

Billable Resource Utilization = Actual/Allocated Billable Time ÷ Resource capacity

Non-billable resource utilization

Non-billable resource utilization is a method of measuring time spent by a resource on an activity that cannot be billed to a client. This time is generally related to BAU, internal meetings, admin, training & workshop, bidding work, etc.

Which means;

Non-Billable Resource Utilization = Actual/Allocated Non-Billable Time ÷ Resource capacity

Strategic resource utilization

Strategic resource utilization is the method of measuring how much a resource is utilized for strategic projects. It is the time spent by a resource that is related to a strategic activity to meet the long-term goal of the organization.

We measure strategic utilization as;

Strategic Resource Utilization = Actual/Allocated Strategic Time ÷ Resource capacity

How to track resource utilization?

Forecast vs. actual reports

Keeping a tab on utilization levels is imperative to assess employees’ productivity. However, it’s not easy to do so for every resource manually. There are advanced resource-tracking tools that can help you track resource and project performance in real time.

A resource scheduler can let managers have a periodic check on resource utilization. Moreover, managers can draw a comparison using actual vs. forecast utilization reports. The actual number of hours is drawn from the timesheets, and the forecast time is taken from the resource schedule.

Monitor the utilization of different categories

It is important to periodically monitor and track resource utilization under different categories. Below-mentioned are three main categories in which you can track resource utilization: Project, Team, or Individual.

• Project

In this scenario, the cumulative utilization calculation of all the resources working on a specific project is considered. An appropriate tool can aggregate and display this information as per the requirement.

• Team

In a shared-services model, it is required to track and monitor the team’s utilization effectively. They either work on specific issue resolution based on a ticket or work under multiple project managers.

• Individual

Tracking individual resource utilization based on the allocated work against the resource capacity lets managers evaluate the resource performance. It ensures that the resources are neither under or overutilized.

Now that we know how to measure resource utilization in project management let us understand the ways to maximize it:

How to maximize productive utilization?

100% utilization doesn’t necessarily mean the resources are productive. It is essential to check that they are not engaged in mundane admin activities. Thus the onus is on resource managers to ensure their utilization is productive and their skillset is used to the maximum potential.

The question is how to improve utilization without draining the resources.

Well, the right enterprise resource management tool can help here.

Identify over and underutilized resources

When the allotted work is less or more than the resource capacity, it causes underutilization and overutilization of resources. Skill shortage leads to overutilization because a particular resource may be assigned to different projects at the same time.

Poor visibility of resources can contribute to this cause as it can lead to double booking, eventually causing overallocation. The right resource management tool helps managers to detect under and over-utilized resources in a project. Therefore, it allows organizations to maintain optimal utilization of resources as well as a healthy resource index.

Effective bench management

Bench management in any organization is an ongoing activity and must be carried out strategically. Reducing bench time entails reducing non-billable hours that ensure the resources are allocated to billable or strategic work.

The right resource management software helps managers to forecast the demands of the pipeline projects in advance. Using the project vacancy and benched reports, they can go ahead and fill the vacancies with the competent benched resources.

Reduce non-billable activities of resources

It is important for an organization to monitor the overall billable utilization of its highly skilled resources with optimal resource allocation. A resource is profitable only if its working hours are carried out on billable or strategic work and is fully utilized against its capacity.

Resource managers should do a utilization analysis and keep a check on resources so that they spend minimal or no time on mundane tasks such as meetings and discussions. It helps them enhance billability, prevent below-par employee performance, and gain maximum productivity and profitability.

Conclusion: Track resource utilization smarter than ever

Resources are the most important asset for any organization, and optimal resource utilization is crucial to improve productivity and profitability. If you are facing difficulties in monitoring staff utilization, step back and think if you are using the right resource management techniques and tools!!

Gathering reliable insights is one of the best ways that help managers to optimize the workforce and ensure maximum utilization of resources. The tool’s real-time resource utilization report allows managers to understand the challenges and adopt strategies in advance.

How do you calculate utilization rates in your organization? When did you last hit the ideal utilization rate?

The Glossary

SAVIOM Solution

SAVIOM is the market leader in offering the most powerful and configurable solutions for deploying appropriate resources to suitable projects. With over 20 years of experience, this Australia-based MNC has helped more than 100 clients across over 50 countries address specific business challenges. SAVIOM also provides tools for project portfolio management, professional service automation, and workforce planning software.

This growth can be attributed to the increased demand for real estate, advanced technologies, and more. The AEC projects can range from constructing skyscrapers to government projects such as building bridges, etc. Like every other industry, resources are the focal point of AEC projects as their efforts and skills steer the project to succeed. However, building an optimized workforce while ensuring every project is delivered successfully is easier said than done.

Making the right resource available at the right time involves techniques such as forecasting and resource capacity planning.

The pertinent question is, what is resource capacity planning and how to implement it in the AEC industry?

This informative article will address the query and delve deep into this concept. Let’s get started.

What is the AEC industry?

AEC stands for Architectural, Engineering+, and Construction, which describes the collaboration of architects, engineers, and construction professionals on construction-related work such as designing, concreting, carpentry, plumbing, electrical work, etc.

Let’s understand each sector in-depth:

Architectural – Visual aesthetics are an essential component of any construction project. Architects design durable, functionally safe, and aesthetically pleasing buildings. They stay involved in the project from the conceptual stage till completion, create plans according to client needs, environmental factors, and budget. The Architecture department is responsible for:

• Creating designs and drawings based on the client’s requirements.
• Coalescing with the team to quantify and qualify the project w.r.t regulations, budget, and site characteristics.
• Coordinate with engineering/construction teams and validate the work.

Engineering – AEC industry requires civil, mechanical, and electrical engineers. It includes professionals who evaluate and execute the structural, mechanical, and electrical requirements of different AEC projects. The key responsibilities of the engineering department are:

• Evaluate the designs, and understand the material and equipment requirements before the construction work begins.
• Ensure the materials comply with the required quality.
• Identify and resolve technical issues in the construction process.

Construction – In the most widely used context, the construction sector is associated with structural additions, infrastructure, and industrial facilities. The construction managers coordinate with architects, engineers, and laborers to ensure the timely completion of the construction project. In addition, the construction department oversees the following activities:

• Coordinate with architects and engineers to build the construction plan
• Hire construction workers and delegate tasks.
• Manage relationships with clients and AEC professionals
• Supervise the entire construction and identify and mitigate potential risks

By integrating these seemingly independent sectors into one industry – architects, engineers, and construction, managers can work more efficiently to attain the common goal.

Now that we know what AEC comprises, let us understand the list of resources required for project execution.

Key resources in the AEC industry

Different human and non-human resources are required to bring the construction projects to fruition.

Human resources

• Contractor – The contractor is responsible for planning, leading, and supervising the construction work.
• Supervisor – The construction supervisor is the bridge between contractors and construction workers in the field.
• Estimator – The estimator estimates the cost of material and labor required to work on the project.
• Surveyor – The surveyor advises the clients on style=”margin-bottom: 15px;”contractual matters and building costs throughout the construction process.
• Others – Other than the roles mentioned above, multiple other professionals work to bring AEC projects to fruition. For instance, architects envision the client’s needs and develop blueprints. Engineers oversee electrical, mechanical, and civil activities, and so on.

Non-human resources

• Equipment – Construction equipment refers to heavy-duty vehicles and machinery specially designed for executing construction and engineering activities. For example, excavators are used for heavy lifting & demolition, bulldozers are used to remove rock strata or soil, etc.
• Materials – Materials such as – fittings, tools, software, systems, timber, thatch, stone, steel, concrete, etc., are required to complete the construction.
• Facilities – In the AEC industry, facilities include the necessary amenities such as storage sheds, field office, safety requirements, living accommodation, fire protection, etc.

Characteristics of the AEC industry

AEC projects are highly structured endeavors owing to long-term commitments and the demand for a coalition of three departments. These are extremely fluid, which means the changes in weather, equipment, technology, and permits can wreak havoc on a project’s schedule.

Here are some key characteristics –

• AEC projects are resource-driven. From highly skilled architects to engineers and on-site workers, they require diverse expertise. According to the US Bureau of Labour and Statistics, job opportunities in the construction industry are expected to reach 7.5 million by 2026.
• Each construction project is unique and is attributed to geographical conditions. For instance, if two identical dams are to be constructed at two different places, the soil properties, site characteristics, climatic conditions, environment, etc., will introduce multiple variations in the project requirements.
• A bulk labor force is engaged in construction whose employment pattern and working conditions are different from other industries. For example, the construction workers in the field are not selected based on their certifications or academic qualifications, they are solely recruited based on their manual skills. Additionally, they are often employed on an ad-hoc basis and paid hourly wages, encouraging them to work for a longer duration.
• Most AEC firms operate in silos where departments use independent software to function or still use spreadsheets. Many companies still employ outdated data processors and controllers to export/import data from the systems.

Subject to these traits, often AEC industries find it challenging to employ the right personnel. The following section explains these resourcing challenges and how effective capacity planning can help overcome them. Let’s delve deep,

Resourcing challenges faced by the AEC industry and how to overcome them

There are many pitfalls in the construction project lifecycle. According to a study, 77% of AEC projects suffer delays, and 98% go over budget.

So, what is the leading cause of these issues? Here is a look at what’s affecting the industry –

Ineffective scheduling of AEC resources due to siloed information

As mentioned above, multiple resources, including civil engineers, CAD designers, carpenters, plumbers, equipment operators, etc., are required to complete an AEC project.

Failing to plan and schedule the resources appropriately can impact the quality, delivery, and overall project success.

Many firms still use legacy systems and traditional spreadsheets, which often lead to siloed data and a lack of visibility into resources’ present and future schedules. This can lead to double-booking, unnecessary hiring, etc.

For example, construction laborers work on a shift basis, and due to a lack of visibility into their bookings– managers might book the same laborer in two shifts, causing an excessive workload.

Solution: A robust resource management tool helps break down the silos within an organization by providing enterprise-wide visibility of resource schedules. With a unified Gantt chart view, managers can book the resource using simple drag and drop capability and make amendments when required. Additionally, the tool provides a warning if any resource is booked more than the capacity and helps prevent overutilization.

Moreover, the real-time utilization and availability reports help managers make informed decisions and ensure uniform workload distribution.

Growing shortage of skilled engineers & construction workers

‘Aging workforce’ closer to retirement is one of the major resourcing bottlenecks for AEC industries. According to a recent survey, only 3% of young people were interested in pursuing their careers in the construction field. So, due to the current resources retiring and the lack of a new generation workforce, there is an acute labor shortage in the AEC industry.

Moreover, there is an increasing demand for skilled talent because of ever-evolving customer expectations, global competition, and rapid technological improvements. As a result, many construction firms are looking for professionals with advanced skills like – AutoCAD, Rhino 3D, SketchUp, Revit Architecture, etc. Since the existing talent pool is not well versed with these tools and tech, the skills gap is widening tremendously.

So, what is the best possible resolution?

Solution: With a forecasting and resource capacity planning solution, managers can foresee project demand and identify the skills gap in advance. They can leverage the capacity vs. demand reports to assess the excess and shortage of resources and implement corrective measures ahead of time.

If there is any skill gap, they can train/upskill the existing workforce in the latest technologies mentioned above. In case of resource shortage, they can even initiate planned hiring to recruit competent resources and ensure the seamless execution of future construction projects.

Lack of foresight into pipeline AEC projects

Many organizations still use legacy systems such as excel spreadsheets or desktop applications to manage AEC projects. As a result, they fail to foresee pipeline projects’ demand.

Due to a lack of foresight in projects, the construction managers end up requesting workers at the last minute, leaving no room to form an action plan. It may lead to last-minute firefighting for resources, wrongful hiring leading to compromised project quality, budget and schedule overruns, etc.

Solution: Construction managers can foresee an opportunity that is at an approval stage or has reached a certain probability of closure and estimate resource requirements well ahead of the curve.

Then using the resource management software, the project managers can request resources and provide enough lead time to deploy the right ones at the right cost. In case a critical resource such as an architect or engineer is allocated to an ongoing project, managers can implement out rotation and backfill strategy to ensure the construction activities are not disrupted.

Increase in bench size in the construction firms

The majority of AEC projects are prone to frequent ramp-ups/downs. Typically, they include phases: initiation, pre-construction, procurement, construction, and closeout. For example, the manager may require thousands of workers in the procurement and construction phase.

However, once the project reaches the closeout phase, there can be a massive ramp down of resources. Due to this, most of the workforce (typically construction workers and engineers) land on the bench, impacting overall business profitability.

Solution: Managing the capacity of resources and minimizing bench time is one of the main aspects of a construction/industrial project. To achieve this, managers can implement resource management solutions and leverage project vacancy and people on the bench reports. This will help them get foresight into resources likely to end up on the bench and allocate them appropriate project tasks (from the project vacancies) beforehand. Moreover, the managers can also provide upskilling/training to benched employees and utilize them on future projects.

Inability to meet the volatile resource demand

The AEC industry is one of the volatile markets with increasing uncertainties and risk factors. According to a report by KPMG, 78% of engineering and construction companies believe that the risks of construction projects are increasing.

Since AEC projects are susceptible to change due to external and uncontrollable factors, the resource demand is volatile and can change dynamically. For example, if you are working on building a shopping mall, the initial idea was to keep it 4 storeyed. However, the client requests you to add one more.

Due to a lack of visibility into the resource pool, managers are not in a position to fulfil this demand cost-effectively. How can one combat this?

Solution: To meet the volatile resource demand, managers can form a balance of permanent and contingent workforce.

Before forming the mix, resource managers can go through the current and future resource demand, evaluate if it’s one-time or recurring and make an informed decision.

Considering the previous example, managers can hire a contractual resource (engineer and supervisor) to oversee the 5th floor’s construction along with a mix of permanent and freelance manual labor to keep the costs in check.

Let’s go through some more tips to improve resource capacity planning.

Additional tips for AEC managers

Construction projects are more likely to be delivered on time when the resource capacity planning is done right. However, managers can implement additional tips to ensure successful delivery,

• Facilitate collaboration between departments to manage interdependencies, foster trust, empower the workforce and boost productivity.
• Bring transparency in communication and set expectations right to ensure everyone is on the same page. Lack of transparency in defining goals and objectives can lead to discrepancies and conflicts.
• Keep track of workforce competency across the enterprise. It helps to proactively plan for niche skills needed in a new construction project
• Monitor billable, strategic and overall utilization of resources and take corrective measures to ensure profitable utilization.

Final thoughts

The AEC projects are complex, resource-intensive, and of long-duration. To ensure timely delivery, AEC firms have to ascertain they have an optimized workforce in all three areas. It’s about time they implemented a robust resource forecasting and capacity planning solution to build an optimized workforce and futureproof them against market volatilities.

How do you tackle your resourcing bottlenecks?

The Glossary

The SAVIOM Solution

SAVIOM is the market leader in offering the most powerful and configurable solutions for managing enterprise resources efficiently and effectively. Having more than 20 years of experience, this Australian-based MNC has a global presence in over 50 countries. It is also popular with more than 100 customers and helps them achieve their business goals. SAVIOM also has products for project portfolio management, professional service automation, and workforce planning software which can be easily customized as per business requirements.

Efficient Resource Capacity Planning is the most practical solution to address these concerns. It takes both current and pipeline project demand into account to ensure you have the right resources with matching skillsets available and there are no hiccups along the way.  

Capacity planning helps bridge the skills gap, allowing you to effectively utilize the resources and complete the projects on time and within budget.  

However, managers often face bottlenecks at the capacity planning stage, which, of course, is their worst nightmare. On the one hand, having insufficient capacity results in delayed timelines, dissatisfied clients, and overscheduled resources dealing with a massive workload.  

On the other hand, having excess capacity means that you are not utilizing your resources to their full extent, affecting the bottom line. This is why managers should address these bottlenecks sooner than later to secure the project’s fate.  

In this article, you’ll learn some fundamental ways to manage capacity planning bottlenecks and ensure project success. But first, let’s begin by understanding how to spot them:

Signs of capacity planning bottlenecks

The quickest way to identify a bottleneck is to look at your company’s workload and ascertain whether projects are being executed smoothly or delivery managers are firefighting for resources. It is a no-brainer that the latter is symptomatic of a severe problem.   

Below is a list of some prominent telltale signs of capacity planning bottlenecks:   

Skills mismatch

In a multi-project environment, if you observe there is a constant mismatch in the skillsets available with respect to project requirements, incompetent resources are given high-level tasks, or a wrong candidate is recruited, then they indicate a pitfall in the resource planning. When these signs surface consistently, it’s an indication for managers to revisit the capacity planning process.

Excess/shortage of resources

As the available capacity is less than the demand or the available resources don’t have the requisite skillset, project vacancies remain unfulfilled. It implies that there is a shortfall of resources. In another case, there is an unusual increase in bench size and time, indicating underutilization of resources or wrongful hiring. These signs indicate a gap in the capacity planning process.  As a result, businesses might lose market opportunities, billing loss and find it hard to sustain amid the market volatilities.   

Unavailability of niche resource

Suppose there is a project that will begin shortly, but you see the unavailability of niche resources at the eleventh hour. This leads to a delay in the project, and managers may even assign under-skilled resources on critical work, which causes schedule overruns affecting the quality of delivery. Thus, the constant absence of a highly skilled or critical resource is a major sign of a capacity planning bottleneck.    

A surge in employee attrition/absence

If the employee absences and turnover rates for a business are growing at an alarming rate, it can take a toll on the bottom line. This can happen when resources are underutilized, not assigned to projects matching their skills and capability, or overloaded with work against their capacity. If these occur frequently, the resources will disengage and eventually find opportunities elsewhere. This can be one reason for the gap in the capacity planning process.

The rise in the hiring-firing cycle

If there is frequent hiring/firing in the organization and you witness that after hiring resources, they let go of these resources, and then hire similar resources for different projects. This means that there is no adequate resource planning process in the company. For instance, if there is a one-time project, but you hire a permanent resource. Then, after the project work finishes, the firm will struggle to find a suitable opportunity and have no option but to let go of the resource.  

These signs of capacity planning bottlenecks can be faced head-on by simply implementing the right resource management software. Here’s how:

Effective ways to manage capacity planning bottlenecks

As stated earlier, failing to tackle various capacity planning bottlenecks well can hamper the project’s execution and delivery. Therefore, a resource manager needs to stay forewarned of the potential roadblocks and handle them beforehand.  

Enterprise resource management software can help resource managers be proactive and forward plan pipeline projects effectively. Here’s a rundown of how the software is instrumental in combating capacity planning bottlenecks: 

Use a centralized platform for enterprise-wide visibility

As mentioned before, skill mismatch is a huge challenge that can lead to other project bottlenecks such as compromised quality, delayed deadlines, etc. To avoid this, managers can implement a resource management solution that provides 360-degree visibility of all resources across the enterprise on a single platform, including their skills, qualification, experience, cost, etc.  

In addition, it consolidates resource-related information such as their present and future schedules, availability, etc. Leave information helps managers to plan before the resource goes on vacation instead of leaving it for the last minute, which can cause a bottleneck due to resource dependency. Moreover, managers can view the future project demand in advance, which helps allocate the right resources with skills, experience, qualifications, and expertise to the right projects. This will eventually enable them to prevent any case of mismatched skillset and keep the projects on track. 

Prioritize projects based on business strategy

Often, resources spend their maximum time on non-critical projects. This can affect the other priority projects because if their positions are not filled, it will delay the onset and lead to client dissatisfaction. Therefore, managers must carefully assess which projects are high and low priority through a systematic project prioritization framework.  

This will help them understand which projects meet the immediate objectives, bring in more revenue, and add value to the business’s long-term goals. Accordingly, managers can fulfill the demand for the critical projects first and allocate the resources appropriately. It will allow you to take up profitable and strategically aligned projects first and ensure that your company’s resources are utilized at the right place.   

Forecast future resource demand in advance

When the positions are not filled in advance, it will delay the project and result in billing loss. It may also lead to last-minute firefighting, escalated costs, subpar quality of deliverables, and so on. Therefore, managers should stay forewarned of the pipeline resource demand and plan effectively to combat any potential capacity planning bottleneck. Forecasting the demand provides enough lead time to conduct hiring and training activities for fulfilling any open position ahead of the curve.   

Moreover, this foresight into capacity and demand for future projects helps resource managers to form the resource plan before the project begins, implement various resourcing treatments, and prevent future roadblocks. 

Formulate a plan to bridge the skill gap proactively

The evolving technology trends can play a significant role in enforcing the skill gap within the organization. It can result in the loss of many viable market opportunities as you don’t have an adequately skilled workforce to take up advanced projects and complete them successfully. Therefore, managers have to formulate a plan and take corrective action to bridge this skill gap proactively.  

Depending on the nature of the skillset and the project duration, one can initiate retraining and upskilling programs for available employees or hire a permanent/contingent workforce with the right skillset. In addition, foresight into pipeline projects will give sufficient lead time to build a future-ready workforce. These practices enable you to reduce last-minute firefighting, futureproof the workforce, increase the firm’s sustainability, and help maintain a competitive edge. 

Create an optimum combination of full-time vs. contingent resources

The rise of a hybrid workforce is gaining momentum within service organizations. Therefore, balancing the resource pool with a judicious mix of highly skilled permanent employees and contingent workers keeps work operations feasible. This helps you fill the short-term requests, reduce bench time and at the same time minimize resourcing costs. It also fosters innovation and assists in meeting ever-increasing client expectations.  

For instance, let’s consider that there is a demand for a niche skillset in a project. So here, managers should analyze the project requirements and compare them with other pipeline projects. This will give them an idea if the requirement is recurring or limited to one project. Accordingly, they can hire a permanent resource or a contingent worker for a one-time project instead of a permanent one. This will eliminate the challenges of redeploying them to future assignments and resorting to unnecessary firing.

Implement advanced resource requisition

When managers have foresight into the pipeline demand, they can raise requests in advance giving enough time to procure the right project team. Depending on that, the resource manager starts capacity planning by analyzing the demand against existing capacity, thus leaving no room for unnecessary pitfalls. Sometimes, a project manager can also raise resource requests in a staggered manner due to evolving client requirements.  

In this scenario, the onus is on the resource manager to fulfill these requests on time without hampering the project timeline. A resource management tool will help automate these requisition workflows and maintain an audit trail for better transparency.  

Ensure competent resource allocation

Having the right employee with the right skills and cost is crucial for a project to finish within budgeted time and cost. A resource manager first analyzes requests from project managers to identify and assign resources whose skill set is aligned with the demand. An effective resource management solution provides unmatched visibility into the resource attributes such as skills, location, experience, availability, utilization, etc. Thus, resource managers can drill down using advanced filters to identify the right candidate for the right opportunity. 

Besides skills, managers also have to factor in various attributes like project budget, resource location, experience, etc. Even when you find the resources keeping their availability and utilization in mind is essential so as not to overutilize or overburden them. This will help eliminate capacity planning bottlenecks such as incompetent allocation or mismatched skillset, etc., and ensure successful project delivery within time and budget. 

Consider scenario planning with modeling and simulation technique

Forming the right resource mix without hampering the ongoing project’s progress in a multi-project scenario is arduous. To simplify this, managers can create numerous scenarios using modeling and simulation techniques. It helps the managers gauge different ways they can allocate resources to various tasks, compare the possible outcomes and make data-driven decisions.  

These changes can be simulated in a sandbox environment, and the best possible strategy can be applied to the actual resource plan. Accordingly, the resource manager can form different resource mixes to ensure a profitable project and maintain the resource health index.  

Establish a contingency plan for resource-related risks

In coordination with the resource manager, the project manager plays a vital role in creating a resource risk management plan to avoid the derailment of projects. They stay abreast of issues and create a plan ahead of time to tackle them if they surface. These resource risks include a sudden increase in bench size, shortage of resources, unplanned absences, or unplanned attrition.  

For example, if managers foresee any critical resource leaving the organization, they can conduct succession planning in advance to keep projects on track. In another scenario, prolonged absenteeism of a critical resource can hamper the project timeline and contribute significantly to project delays. Therefore, managers can develop a replacement/backup plan if this risk occurs. Thus, a practical resource risk management strategy is formulated to mitigate resource-related issues ahead of time. 

This way, resource management can be a great value addition to combat the capacity planning bottlenecks by centralizing enterprise-wide resources and forming a resource strategy ahead of the curve. 

Conclusion

Resource capacity management is the hallmark of organizational success and business sustainability. It helps ensure that the organization maintains a competitive edge in a constantly changing marketplace to meet the project demands.  

By utilizing a comprehensive capacity planning tool, companies can understand various bottlenecks in advance, shore up any gaps, avoid potential pitfalls, and achieve more with fewer resources. The above-mentioned best practices will help improve your capacity planning process and futureproof the workforce. 

The Glossary

The SAVIOM Solution

SAVIOM is the market leader in offering the most powerful and configurable solutions for managing enterprise resources efficiently and effectively. Having more than 20 years of experience, this Australian-based MNC has a global presence in over 50 countries. It is also popular with more than 100 customers and helps them achieve their business goals. SAVIOM also has products for project portfolio management, professional service automation, and workforce planning software which can be easily customized as per business requirements.