Wondering where to start with scenario planning? Here’s your how-to guide to normative and quantitative scenario analysis.
‘Be prepared’ may be the mantra of the Boy Scouts movement, but we’re going to borrow it for resource management too.
The professional services landscape is unpredictable and it sometimes feels like change is the only constant. That’s why savvy resource managers use scenario planning to be prepared for different circumstances as they emerge.
Whether preparing for changes in project demand or working toward an ideal team structure, scenario planning is important so you’re ready for whatever comes next.
Using scenario analysis techniques, resource managers can make data-informed decisions that optimize resources, manage project risk, and contribute to both project and organizational success. But how do you do it?
NB: If you’re new to the concept of scenario planning in resource management, bookmark this article and hop over to our Beginners Guide to Scenario Planning. It’s got everything you need to know about the what and why. Then come back here for the how 💪
There are four types of scenario analysis you need to know about – quantitative, operational, normative, and strategic. We’re going to explore two of those here:
Both use data to accurately assess the impact of different approaches to resourcing in your organization, and support strategic resource management activities like capacity forecasting and workload forecasting.
Quantitative scenario planning is all about being prepared for what might happen. It uses data to predict the impact of different scenarios and recommend actions to take to manage that impact, so the organization isn’t caught off guard.
Imagine you’re a resource manager in a consulting firm. You want to be prepared for different levels of project demand, so that you always have the right mix of resources to deliver great outcomes, without under- or overutilizing your people.
In a quantitative scenario analysis, you’d look at data like:
Then, you’d use this information to run ‘what-if’ scenarios.
This helps you make more informed and confident decisions about what types of projects to take on, and whether the company needs to consider hiring or upskilling initiatives.
For example, if demand surges, you understand the impact on your resources and what workforce strategies to implement – like using contingent workers or prioritizing projects that best match spare capacity. Or, if demand dips, you’re ready with redeployment and retraining strategies.
The name might sound intimidating but it’s just about using data to be prepared for different scenarios so that when one comes to pass, you have a plan of action.
Normative scenario planning is about what you want to happen, not what might happen. It’s about picturing the perfect scenario – for your people, projects, or organization – and planning how to achieve it.
Imagine you’re the resource manager in a busy internal IT department. Your team is overstretched and unhappy. The unbalanced workload is creating burnout and retention issues. And that’s making the problem even worse, putting more pressure on the people who stay.
Your perfect scenario is a team that’s optimally utilized with high engagement and low turnover – so you can both deliver individual project outcomes effectively but also align with organizational objectives around productivity, retention, and stability.
Normative scenario planning is about assessing different ways to achieve that.
For example:
Normative scenario planning is about proactively working towards a dream scenario, instead of accepting the status quo and reacting to whatever comes your way 💪
It still uses data to inform decision-making, but is also powered by your ambitions and imagination.
The scenario planning process differs depending on the type of analysis you’re undertaking. But it broadly involves:
You’ll see all of these in action in the how-to information below.
There are so many different situations you could explore with scenario analysis. For this how-to guide, we’ll stick with the one outlined above, but the principles are universally applicable.
Say, for example, that you’re a resource manager in a consulting firm that needs to prepare for potential changes in demand. How do you go about it?
Consult your leadership team, finance, sales, and HR to understand what they want to achieve from this project. Expect different priorities – finance will be interested in the bottom line but HR in employee experience. Hit them up for any market knowledge that will influence the analysis – such as anticipated market growth or competitor activity.
Julie McKelvey RMCP®, CEO of Gem Resource Management Solutions, emphasizes the importance of relationship building and collaboration in order to obtain the data you need to build your scenarios:
You need to work with the sales team and really look at the sales pipeline, because they are going to have much better insight into that future planning than you might have. Generally, in an Resource Management Office, you don't see projects until they are closed and commitments have already been made to the customer. So you need to start building those relationships with sales, provide them with some sort of outline, so you can go to them and say : ‘Here's the information I need.'
All of these pieces contribute to building the scenarios - some of it is based on historical data and averages, and some of it is based on the sales pipeline.”
Set the scope and goals for your scenario analysis to keep you focused. For example, your analysis will assess the impact of increased, stable, and reduced demand on your resource utilization. And will make recommendations to allow the business to maintain an 85% overall utilization rate and current turnover rate.
Consider what stats you’ll need to assess different scenarios effectively. In this case, you will want to look at utilization and turnover rates. But also consider capacity, availability, project success rates, skills alignment, and employee satisfaction trends. This provides the full picture of how changes in demand could impact everything from availability to morale.
Make informed assumptions about key variables, so you can control them and use them consistently throughout your analysis. For example, how big do you expect most of your projects to be? How many of your team members will likely be available to work on projects at any given time? How often do you expect to hire new employees or lose current ones? You can base this on historical data.
Use your data and assumptions to build several ‘what-if’ scenarios. For example:
Before you start modeling scenarios, establish clear quantitative triggers for action. For example, if utilization exceeds 90% or drops below 70%, you know this will trigger a recommendation for action, such as recruitment or redeployment.
Conduct simulations for each scenario – calculating how metrics like utilization, resource needs, and turnover are impacted. For example, if demand spikes, calculate whether your current staff can meet the increase or if hiring will be necessary.
This will be considerably easier using a resource management platform like Runn – which has all your resource and project data in one place, and offers powerful modeling, reporting, and data visualization tools.
You have thousands of resources, thousands of skills, lots of things are going on - and at the end of the day, you are trying to sort of put this puzzle together to have the most efficient plan. This requires a little bit of trial and error. But you don't want the trial and error to be ‘live’. So investing in a tool that will support scenario planning is so crucial.” - Lyssa Parisella, VP of Customer Success at Runn
Learn more: Take a look at this article on scenario planning from Runn’s product team for more info ➡️
Compare the results of each scenario against your defined goals. For example, assess if the high-demand scenario aligns with your target utilization without risking burnout, or if the low-demand scenario impacts current recruitment and training plans.
Equipped with the likely outcomes of each scenario, develop action steps to optimize resourcing in each situation. For example:
High-demand scenario
Low-demand scenario
Skills-shift scenario
Revisit your scenario models and assumptions regularly, especially when new data becomes available or when actual conditions shift. This makes sure that your plans are up-to-date and ready for real-time market conditions.
Normative scenario analysis is about assessing the best way to achieve your desired objectives. Here’s how to do it.
As above, consult your stakeholders and determine your scope and goals. This ensures you understand the context of your analysis and align it to organizational strategy.
With an understanding of what the organization wants to achieve – and what you need to achieve at team level, if appropriate – consider what success looks like. For example:
‘You have to decide what your end goal is and you have to evaluate where you compared to that end goal,’ says Julie McKelvey, ‘Where are you currently? What do you already have in place? And what are the steps in between?’
Learn more about forecasting and scenario planning in our recent webinar ➡️
Next, you need to assess the current state of resourcing by reviewing relevant data. In the examples above, that could be:
This highlights the gap that you need to close between your current and ideal state – and provides a benchmark for future measurement.
Establish any variables that will impact the scenarios. Variables are like levers you can pull to change the outcome of any scenario. For example:
Use your data and assumptions to build several ‘what-if’ scenarios. In the example above – where the internal IT team is overstretched – these might be:
Each scenario should represent a realistic, data-informed pathway toward achieving your goals.
Using your resource management platform, simulate the scenarios and assess their impact. For example, add resources to your project plans and look at how that impacts metrics such as overall capacity, individual project schedules, and resource utilization.
Based on the scenarios you’ve run, prepare recommendations for your senior stakeholders, based on their strategic priorities. For example: