For a project-based business, it is vital to have a resource management approach that supports the organization’s business goals. While doing so, you want to empower the people who are responsible for resource planning, project management, billing, and budgeting. You also want to enable project leaders to get the insights they need, the way they need it, whenever they need it.
While choosing a resource management approach, you must ensure that it adapts to your organization size or type. A centralized approach is a commonly used strategy; however, you must pick an approach to achieve specific business goals. The best-fit resource management approach holds the key to driving higher revenue per employee. It will help your project delivery managers take informed decisions on resource scheduling, staffing projects on-time, and to optimize utilization levels of employees.
How effective is your resource management approach?
“Success most often comes down to operational excellence – with visibility and management controls in place to ensure effective resource management. Done right, gross profit margins of more than 60% are possible. Done wrong, project can drop to single digits or go negative.” – 2023 Professional Services Maturity Benchmark, SPI Report
Choosing an approach aligned to your goals also makes it easier to unlock the following benefits:
- Estimate which of the current resources are available into the future to be matched against future projects
- Get a clear picture of how many new hires or contractors are required and when they need to onboard
- Draw up an appropriate budget for hiring based on the skills and experience required for the project or task
Here are five resource management approaches used by resource planners to enable visibility the way they need it.
1. Centralized resource management
Definition:- This approach involves a focused, centralized team that is responsible for scheduling resources across an organization. They manage the master resource schedule and make staffing decisions based on skills, availability, location, cost, etc.
Pros:- The centralized resource management approach provides an organization-wide-view into the entire project backlog as well as resourcing requirements for the present and the future. This results in fewer project overruns with higher profit margins and best levels of revenue per consultant. With standard processes and methods followed across the team, it increases efficiency while reducing costs and conflicts.
Cons:- The pitfall of this approach is that it may encourage a bureaucratic style of working. It can take away the flexibility sought by local business units to perform resource allocation, skill mapping, and capacity planning.
Best suited for:- This approach is best suited for businesses that are looking to standardize repeatable ways of delivering work. For example, a centralized system can store all past estimations, quotations, and resource plans that can be applied to similar projects in the future. A centralized system can help replicate uniform templates for resource planning and staffing.
2. Local resource management
Definition:- A localized approach to resource management is a decentralized model that offers greater autonomy to local business units and decision-makers. It means having flexibility across standards and practices that are relevant to local business units and giving local project offices the ability to use their own tools.
Pros:- This approach allows space for multiple tools and information sources. It makes way for local level solutions and resourcing strategies instead of having a straight-jacket centralized view.
Cons:- This approach can often prove to be more expensive as it involves maintaining multiple, fragmented tools and processes instead of relying on a single and centralized solution.
Best suited for:- A local resource management approach is suitable for smaller businesses that value flexibility over structure and are willing to sacrifice some efficiency. Typically, this approach works best in companies where people wear multiple hats with no real walls between role definitions. It is used more by smaller businesses as they can’t usually afford the overhead of a dedicated Project Management Office.
3. Account-based resource management
Definition:- An account-based approach places greater emphasis on client-centric resource management strategies and tools. With this approach, your tech stack and resourcing strategy finds greater alignment with client outcomes in a project setting.
Pros:- An account-based approach helps achieve the Strategic Account Management goals set by the organization. It helps build long-term partnerships with the client while capturing new up-selling and cross-selling opportunities that can be mapped to these focused accounts.
Cons:- As the relationship with the client grows stronger, a tendency to accept ad-hoc requests, iterations, and tasks without billing the client can emerge. Another challenge is when a large account suddenly goes “dry” due to unforeseen circumstances leading to unannounced financial chaos. Organizations using an account-based resource management approach also tend to witness higher staff turnover as the people seek diverse experience which they don’t get from a narrow focus on a single account.
Best suited for:- The account-based resource management approach is more prevalent among companies that have very large accounts or clients. It works best for organizations that have a very visible and hard booked backlog of work.
4. Horizontal resource management
Definition:- A horizontal resource management approach brings together all employees who possess a certain shared domain expertise, under a specific workflow. For example, you can bring all technical consultants associated with a specific industry to be aligned under a single skill.
Pros:- This approach is useful for developing best practices, repeatable processes, and sharing knowledge. It helps create templates for staffing, scheduling, and managing projects involving resources with similar skillsets.
Cons:- The horizontal resource management approach can create problems for resource planners when staffing and scheduling resources for projects that require diverse domain experts. They would then have to spend a lot of time in manually validating resource estimations and staffing plans.
Best suited for:- This approach is extremely effective for businesses that want to create an easy mechanism for project managers or specialized consultants to standardize methodologies, create new templates, or share best practices.
5. CoE-driven resource management
Definition:- The CoE-driven resource management approach helps develop and demonstrate end-to-end subject matter expertise in a specific industry or practice. For example, if you run an IT consulting firm and have clients from the banking industry, a Center of Excellence (CoE) will show your banking clients your best practices and talent in that industry.
Pros:- A CoE helps you showcase a deep understanding of the client’s processes and transformation needs. The advantage of industry-specific CoEs is the development of deep industry domain knowledge.
Cons:- Excessive overhead costs can become a big downside of this approach. It also makes it difficult to staff projects that require skillsets and technologies outside of the CoE.
Best suited for:- Centers of Excellence are favored for outsourced consulting – particularly development and managed service centers where consultants are co-located to maximize collaboration, repeatability, and quality control while minimizing cost.
Conclusion
Identify an approach that aligns with your resource planning and forecasting needs. Once you have identified the best-fit approach to resource management, it becomes easier to align processes and people with your business needs. Choosing the right approach will also significantly minimize budget overruns while driving higher revenue on every employee.
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