The Resource Management and Capacity Planning Handbook: A Guide to Maximizing the Value of Your Limited People Resources

By Jerry Manas

THE DEFINITIVE GUIDE TO MAXIMIZING LIMITED RESOURCES TO INNOVATE AND GROW

Trying to accomplish too much with too few resources has become almost customary in business today. More often than not, though, all that we "accomplish" is delayed projects, mass confusion, and missed opportunities--not the achievement of business goals.

The Resource Management and Capacity Planning Handbook helps you tackle the critical challenges of resource management and capacity planning head on by providing a proven tool for making the leap from chaos to control: the Capacity Quadrant, a framework for addressing visibility, prioritization, optimization of existing resources, and integrated planning and governance.

The Resource Management and Capacity Planning Handbook demystifies the complexities of resource capacity and demand management and offers clear ways for maximizing your limited resources to drive business growth and sustainability.

This groundbreaking guide includes:

• The latest benchmark data from a comprehensive study of resource management
• Case studies from organizations that have used the book's methods with great success
• Tools for overcoming common barriers and making decisions involving time capture, resource assignments, and competing priorities
• Recommendations on ownership of the organization's resource management and capacity planning functions
• Considerations for addressing the human side of resource management and capacity planning

The Resource Management and Capacity Planning Handbook gives you the information, insight, and proven methods to take your company where it has never been before.

PRAISE FOR THE RESOURCE MANAGEMENT AND CAPACITY PLANNING HANDBOOK

"There are lots of leadership books, scores of human resources books, and plenty of project and portfolio management books. This is the first book dedicated to what is essentially the drivetrain of organizations--the effective use of its people toward its most important activities. This is Manas's best and most ambitious book yet." -- Judith E. Glaser, CEO, Benchmark Communications, Inc.; Chairman of The Creating WE Institute; and author of the bestselling Conversational Intelligence

"Jerry's book and the Capacity Quadrant model he outlines give you a realistic view of your workforce and an approach to maximizing the 'people power' in your organization that's easy to understand and apply. It could very well help transform your company and make you a hero in the process!" -- Dave Garrett, President and CEO, ProjectManagement.com

"Unlike lifeless products, people skills and capacity are difficult to measure and vary widely between 'good' days and 'bad' days. Manas steps nimbly through this minefield with solid evidence and practical advice--all laced together in an easy-to-read style." -- R. Max Wideman FCSCE, FEIC, FICE, FPMI

"It didn't take me too long into reading when I realized how much we really needed this book. I wish we had it when we started implementing Resource Capacity Planning and Investment Planning. I will make sure all of my staff members have copies." -- Gary Merrifield, PMP, Manager, IT Project Delivery and Quality Assurance, Blue Cross Blue Shield of Louisiana

"A great guide to the most important topic in management: how to maximize your limited people resources." -- Hans Heuschkel, Senior Business Intelligence Analyst/Project Manager, Swiss insurance company

• Language: English
• Publisher: McGraw-Hill Education
• Release date: Aug 29, 2014
• ISBN: 9780071836197

Book preview

generation.

Introduction

A Bigger Boat or a Smaller Shark

Any organization, no matter how large or small, faces the same fundamental issue. It’s a deceptively simple, but loaded, question: How do I make the best use of my limited resources? The challenge is the same whether you’re looking at a stock portfolio and trying to maximize your limited funds toward retirement or whether you’re running an organization and want to be sure you’re making the best use of the people you have.

People are an organization’s most precious asset. They’re how work gets done, how products get made, how financial targets are met, how customers are attracted, how ideas are generated, how cultures spread, and—well, you get the idea. If people are the fuel on which an organization runs—and how it accomplishes its goals—then what burns that fuel?

Demand

Demand represents the influx of work and other activities that consume people’s time. But demand has many faces. Demand can include:

• Strategic major initiatives that can catapult an organization forward

• Large projects and programs that improve processes, products, or services

• New ideas, some riskier than others, deemed worth doing

• Mandatory initiatives required by a regulatory body

• Small, planned improvement efforts

• Small, ad hoc requests for minor work efforts

• Keep-the-lights-on operational work

• Ongoing support work or consulting

• Unplanned emergencies or firefighting

• General staff meetings and administration

• Personal time, such as checking personal e-mail, taking snack breaks, ordering show tickets, or making the occasional personal phone call

All these items are legitimate and unavoidable forms of demand. Of course, some leaders try to micromanage, in a desperate but futile attempt to control how people spend their time. This often backfires and ends up reducing productivity. A better approach is to employ a number of other levers for maximizing the use of limited resources, including but not limited to:

• Reducing the volume of demand

• Staggering the demand in a prioritized fashion

• Allowing time for minor interruptions

• Increasing the number or strategic use of resources

• Increasing productivity

• Reducing waste

Many organizations take on new demand the way a broken dam takes in water. They open the floodgates to any and all initiatives without regard for the timing or availability of resources to accomplish the work. People are then overloaded, which decreases productivity and compounds the problem. Then projects get delayed, which consumes even more resources as new work continues to come in. It’s a vicious circle.

Making matters worse, demand across all industries is increasing as everyone strives to compete in today’s economy. Technological advances, process innovations, mergers, and other variables force organizations to innovate or die. And so the demand piles on.

As if that isn’t enough, the pressure to reduce costs across all sectors leads to cutting back resources, so doing more with less has become a mantra in today’s economy—the curse of our times.

To recap this sad state of affairs, today’s leaders and managers live in a world of increasing demand, a general reduction in resources, and precious little visibility of the volume, breadth, or priority of incoming work—or the capacity to take it on. And on top of all this, there’s constant change to deal with; new initiatives needed to address market shifts, organizational changes, or competitor advances; or reshuffling of resources due to project delays or unforeseen problems. As a result, hours are spent in meetings each week—and sometimes daily—reviewing hundreds of projects in attempts to determine how to staff them, reschedule them, or resolve conflicts. As Yogi Berra said, It’s like déjà vu all over again.

The bottom line is that, with limited resources, management simply can’t keep up with the shifting priorities, emergent activities, and sheer complexity of trying to manage resource workload across an entire organization. This book is meant to address that challenge and to help you conquer the complexities of resource and demand management.

In Steven Spielberg’s classic film Jaws, landlubbing police chief Martin Brody, played by Roy Scheider, frantically entered the cabin of the Orca, a fishing boat captained by fearless shark hunter Quint (Robert Shaw), and ad-libbed the now famous line, You’re gonna need a bigger boat. Brody had just had a firsthand look at the 25-foot great white shark that had been eating up the town. We’re getting a bigger boat, right? he added.

There are many organizations that have a similar reaction when faced with a large volume of requests and an overworked and underpowered staff.

Let’s speculate for a moment. What if, somehow, in addition to the bigger-boat option, there was a way to arrange for a smaller shark? That would be a little less intimidating, wouldn’t it?

When it comes to demand, organizations can and do have multiple options. You can certainly get a bigger boat by adding resources. This usually isn’t an option though, just as it wasn’t for Chief Brody out in the middle of the ocean with a deadly shark and an equally determined shark hunter unwilling to turn back. In the case of an organization, requests for more resources are likely to be met with rejection, laughter, or both.

But unlike Chief Brody, you can indeed control the size and impact of the demand shark, by either limiting the volume of demand or reducing its impact—often through better prioritization and planning. You can also take a number of actions to boost productivity and reduce waste, which further tilts the odds in your favor. And some of these actions aren’t apparent to most managers but nevertheless have a direct impact on people’s morale, efficiency, and effectiveness.

In essence, what is needed is a toolbox of approaches, and that’s what this book offers—a selection of proven approaches for maximizing the use of limited resources and minimizing the impact of demand.

We’ll hear from a variety of organizational leaders who have broken through the barriers of chaos and complexity and have achieved control and optimization on a consistent level. We’ll explore benchmark study results, summarized from the responses of more than 600 participants from around the globe from a variety of industries and backgrounds. We’ll look at proven paths to maturity and best practices for managing resource capacity and demand. And we’ll examine various tools and techniques for success, including the Capacity Quadrant, a breakthrough model for organizational capacity planning that addresses the four lenses of visibility, prioritization, optimization, and integrated planning.

Ultimately, The Resource Management and Capacity Planning Handbook is a book about innovation, productivity, and value. Indeed, the recommended techniques and approaches included in this book will enable your organization to take on more innovation initiatives through a balanced demand portfolio, drive greater productivity through better utilization of resources, and supercharge value delivery by focusing people on work that matters.

We’ll begin with some basic definitions of capacity planning, resource management, and demand management and take a closer look at the current state of affairs in these areas, both from a comprehensive 2013 benchmark study and from several leading organizations. You’ll hear firsthand some of the challenges companies have faced—many of which might sound all too familiar—as well as the benefits they realized once they made improvements. You’ll also learn about the risks of doing nothing—a caution these organizations have wisely chosen to heed. These companies have managed to conquer complexity and tackle the demand shark, and soon you’ll be equipped to do the same. Let’s dive in.

  1  

The Current State of Affairs in Resource Planning

Human resources are an organization’s most valuable—and typically most constrained—asset. Adding insult to injury, they’re also the most frequently misapplied asset. It’s almost epidemic that organizations take on too much work for the people they have, stressing everyone out in the process. There’s no sense of which new initiatives are most important, little visibility of who’s available to do what and when, and not much awareness about how to get the most out of the people they do have. And no, it’s not having them work harder or more hours. The result is usually delayed projects, mass confusion, and missed market windows.

Recently, the most comprehensive study conducted to date on resource management and capacity planning revealed just how prevalent the problems are in these areas, as well as the negative business impacts. The study,¹ which also shed light on some practices that have proved to help, was conducted by Appleseed Partners and OpenSky Research and was sponsored by Planview, a leading enterprise portfolio management software company. Maureen Carlson, chief researcher at Appleseed and author of a number of benchmark studies, led the research. More than 600 executives and managers from around the globe participated, from a variety of functional areas, including information technology, product development, services, enterprise PMOs (program management offices), and more. Before we examine the findings of the study, which I’ll refer to throughout the book as the Appleseed RMCP study (the RMCP standing for resource management and capacity planning), let’s step back and take a look at a few definitions.

First, what do we mean when we say resource management and capacity planning? In fact, let’s step back even further and examine what we mean by terms such as resources and demand.

Though resources can imply hardware, software, equipment, supplies, finances, people, or any number of elements that the organization must rely on to deliver products and services, in the context of this book, we will use the term resources to mean people. Some of the same concepts we’ll talk about may also apply to other types of resources, but people are uniquely different from any other type of resource, a topic we’ll discuss in more detail later.

Now let’s look at demand. When an organization has a collection of pending or active initiatives that require resources—whether the initiatives were generated as part of a strategic plan, an idea campaign, or a request from a manager—we can refer to this collection of pending and active work as demand. Put simply, resources represent supply, and work represents demand. Demand is also referred to in product organizations as the pipeline.

When trying to decide which demand to take on, the activity of evaluating, prioritizing, and selecting what to do and when is often referred to as investment planning. And which items you choose to invest in or undertake will depend upon the organization’s strategic goals, its tolerance for risk, and the availability of resources.

Think of a personal stock portfolio. If you’re close to retirement age, you might invest differently than you would if you were 20 years old. Or you may have a higher tolerance for risk than someone else. Also, much will depend on the financial resources that you have to invest. In other words, it’s nice to want things, but what can you afford and when? And if you can’t afford the nice things you want, is there anything you can do to reallocate your resources so you can?

This commonsense logic also applies to organizational investments and people, and yet so few organizations think along those terms. They invest to infinite capacity, assuming they’ll have all the resources to carry out the work in the time desired. Then a little thing called reality happens, and the work gets delayed because there is a lack of resources or because people are spread too thin, which in turn leads to mistakes—which, oh yes, causes more delays. Bad things tend to happen when you tax your resources beyond their capacity.

Incidentally, investment planning should not be confused with demand planning, which is a business process used for creating more reliable revenue forecasts and for making better predictions about service and inventory levels. In contrast, investment planning asks, Which work should we take on and when? Demand planning happens earlier and can help predict the long-range pipeline of incoming requests.

When we refer to capacity planning, we’re referring to the need to consider available resource capacity when deciding which demand among a portfolio of potential work to invest in and when. Items to consider during capacity planning are the resources’ working hours, availability, skills, proficiency levels, and average throughput of work. This is still a fairly long-range strategic activity, so capacity at this point is best assessed by role and type (e.g., full-time employee, contractor, etc.) instead of a named person. In essence, capacity planning increases the likelihood that the organization will have the resources to take on specific investments when they’re needed.

Capacity planning is a close cousin of what is known in HR circles as strategic workforce planning. The key point is, with capacity planning we’re dealing with a portfolio of projects or other discretionary work, whereas strategic workforce planning operates at a higher level and encompasses all of an organization’s human resources needs, including business operations, shop-floor operations, and other process-driven activities. Certainly to the extent that those same operational resources are required for project work, then there can be an overlap. But both capacity planning and strategic workforce planning are strategic in nature and should operate harmoniously.

In contrast, resource management is the ongoing, tactical assignment of personnel to planned and unplanned activities, as well as the selection and identification of those resources by skill, type, cost center, and other categories.

In other words, resource management deals with the selection of resources, the assignment of resources, and the maintenance of the resource master data, such as skills, role, cost center, department, active and termination dates, hourly rate (often a blended rate for in-house employees), and so on. This selection, assignment, and maintenance of resource data typically includes internal resources as well as external resources, such as contractors.

As for resource assignment, this, too, consists of multiple components. First, there are long-range requirements, where resources are requested by project managers to the appropriate departmental or functional managers far in advance, often at a phase level. These requests are generally by role or skill, as it’s hard to tell with any degree of accuracy which specific person will be available by the time the work comes along. However, a preference for certain individuals can be stated as part of the request, if appropriate. Note the difference from capacity planning, where resource roles are merely being assessed for availability during the demand prioritization and selection process. Here those roles are being officially requested.

Having requested the need for one or more roles, as it gets close enough to pick a specific individual, the appropriate department manager will fill the requirement with a named resource. This is generally a soft booking or reservation and can be done at either a phase or task level. Finally, as it gets within five or six weeks of the work, the project manager will hard-book or allocate the resource to the task(s) in question, thus fulfilling the reservation.

To put all this in context, let’s look at an analogy. You may be planning to arrange a huge family reunion dinner sometime in the next month. You’ll probably look to see when you’ll have the money—or room on your credit card—to pay for it. It may be worth noting that you can—and should—assess capacity from a financial lens and a resource lens. So you’ll need to make sure everyone is available as well. Collectively, this is capacity planning. You’re making sure you’ll have the resources to host the event.

Once you assess the capacity and timing, you agree on a specific date for your dinner, let’s say three weeks from now. Now imagine if you didn’t assess your capacity first and just booked the dinner for this weekend, regardless. You might be in for a few surprises when you get the bill. Companies do this all the time by scheduling or launching initiatives without assessing when they have the capacity to take them on. That’s when chaos ensues.

Let’s continue this analogy and assume you’ve assessed the capacity and picked the date for your dinner accordingly. You may call a few restaurants with your requirements in advance. For instance, you might say, I’m going to need a table for 10 on Sunday the 25th at 7. Oh, and we’ll need a high chair as well. If you actually make a dinner reservation, your name is then placed on the table. You’re soft-booked. But if you don’t show up—or show up extremely late—the table can still be given to someone else, hence the term soft booking.

If you do show up, however, and your party is sitting at the table eating dinner, nobody is going to push you away if someone else wants to sit there. You’re allocated to that table. You’re hard-booked. Likewise, if someone else invites you to a competing event, it’s far too late to make trade-off decisions, unless, say, your wife is having a baby (in which case you shouldn’t have picked this time to host the dinner in the first place).

From capacity planning to requirements to reservations to allocations, it’s fundamentally the same process with planning and assigning organizational resources, only across a longer timeline.

So to recap, capacity planning is the act of assessing available resource capacity when deciding which demand among a portfolio of investments to take on and when. This is part of a demand prioritization and selection process known as investment planning. Resource management, on the other hand, is the process by which resources are assigned—through requirements, reservations, and allocations—and by which resource information is maintained, such as role, skill, department, working hours, cost centers, and so on.

But there’s something we’re forgetting. People work on lots of other things besides big projects. And there are other things that consume people’s availability besides planned work. And so don’t forget to keep track of each resource’s estimated percentage of time spent on ongoing work such as administrative activities, time off, general consulting, support work, and staff meetings. These things tend to take much more time than people expect, and they should be accounted for. Some organizations create annual dummy projects to track this ongoing work, whereas some software allows for standard or ongoing activities to be assigned to resources—typically by percentage or effort level. The person who should estimate and track these types of activities is the resource’s department or functional manager, with input from the resource, of course. Department managers need to be accountable for balancing the workload of their staff in a reasonable manner. This is often forgotten, leading to resource overcommitments.

Always keep in mind that making capacity planning and resource management work is an enterprise endeavor. Thus, it requires the enterprise to participate, and engaging department managers is critical. It truly takes a village, especially in today’s day and age where matrix environments and shared resources tend to be the norm. It’s also important to conduct both top-down and bottom-up planning, which is a stated common practice for mature organizations (more on this later). For all these reasons, enterprise portfolio and resource management software is recommended. It’s difficult to keep all the moving parts in sync with spreadsheets. It can be done, just as you can calculate your next tax return with an abacus—but who’d want to?

Now if the above explanations and summary were enough to achieve success in capacity planning and resource management, there would be no need to read any further. In fact, this whole book would be unnecessary. But while the core concepts are simple, the sad fact is, most organizations are struggling in some or all aspects of the above processes. Let’s take a closer look at the reasons.

Why So Difficult?

From years of experience consulting to organizations and speaking with organizational leaders about their resource management pain points, I have determined some consistent patterns. Complaints I hear time and time again are:

1. We have an unrealistic view of both demand and capacity. In particular, we’re not looking at the total picture of demand, and we think our resources have more availability than they really do.

2. Many new projects and smaller efforts slide in under the radar, bypassing our intake process.

3. Data on true resource availability is spotty at best. People don’t keep the system current with what they’re working on.

4. Even when assigned, resources are constantly poached for other work, for a variety of reasons.

5. Communication is lacking between project and resource managers, so changes on either side go unmentioned.

6. Problems are hidden until it’s too late, so we don’t find out we have a resource problem until the project is already delayed.

7. Senior management isn’t committed, which enables bad players, often middle managers, to not participate in the process.

8. There is little discipline about prioritizing work, so we open up the floodgates to way more projects than we have the capacity to deliver.

Do some of these sound familiar? If so, how has your organization approached improvement efforts? Be careful, because sometimes the cure can be worse than the disease. Many people try to implement processes in isolated or haphazard fashions. It’s like adding more and more ingredients to a bad-tasting recipe in hopes to magically transform it into a delectable meal. It rarely works. Instead, it takes a concerted enterprise effort to bring about the necessary changes to the relevant components of the ecosystem. And make no mistake; an organization is very much an ecosystem.

In project management circles, people like to talk about scope creep, that nasty monster that emerges when too many requested changes have turned the project from a bread box into an apartment complex. I think an equally prevalent issue is what I call process creep, which is what happens when the owners of the various parts of an end-to-end implementation process inflict their process steps, approvals, gates, and rules. To make matters worse, their processes are usually created in a vacuum so they don’t operate as a cohesive whole or serve the end purpose well. Soon it feels like the 12 Labors of Hercules just trying to bring about even the smallest of changes. Everyone must navigate an overly complex, burdensome, and often confusing process that fails to solve the problems it was intended to solve. Patchwork never results in efficiency.

Indeed, the way to resolve complexity is with simplicity, not with more complexity. As economist E. F. Schumacher said, Any intelligent fool can make things bigger [and] more complex…. It takes a touch of genius—and a lot of courage—to move in the opposite direction.²

This is particularly applicable when instituting effective resource management and capacity planning practices.

Michele Mills, Program Management Office director at University of Utah Health Care, knows this all too well. Mills created the highly successful PMO from the ground up—so successful that it was featured as a case study in the book A Compendium of PMO Case Studies: Reflecting Project Business Management Concepts by Dennis Bolles and Darrel Hubbard. But before Mills and her team were able to introduce changes, processes were lacking, and the disjointed improvement efforts throughout the organization only served to compound the problem, as she explains:

Prior to implementation of a formal PPM [project portfolio management] process, it was like the Wild