Resource management and project demand management work best when they support each other. Here's why.
Successful project demand management is impossible — or at the very least, very difficult — without smart resource planning.
As companies with limited resources try to tackle multiple projects at the same time, the probability of success hinges on how well they work with what they have.
Without a clear strategy for aligning resources with project needs, even the most well-prioritized initiatives can fall short, leading to delays, budget overruns, or missed opportunities.
In this article, we will touch upon the key principles of project demand management, see how it relates and where it depends on resource planning, and give you valuable pointers on how you can use resource management to meet increasing project demand.
Project demand management is the process by which you identify, capture, prioritize, and manage the demand your business has for resources, services, or projects.
This demand management process helps you make sure you can meet current and upcoming project needs by aligning existing resources with overall business goals.
There are several steps you should take when developing your demand management strategy:
Step 1. Identify demand. This means you need to go behind existing project needs and requests, and do an audit of what you as a company can and should focus on.
Step 2. Set priorities. Depending on the type of your business and the industry you serve, demand levels might fluctuate within a period of time. When they are high, you need to set priorities based on criteria like expected business value, company goal alignment, urgency, resource availability, and risk.
Step 3. Allocate resources. Assign the right people to the right projects based on their suitability to accomplish the work, and their availability.
Step 4. Maintain balance between capacity and demand. Considering the dynamic nature of project-based businesses, resource allocation is never going to be a "one-and-done" process that runs seamlessly on autopilot. You need to maintain and revisit this balance by monitoring project bottlenecks and resource availability changes.
In an ideal world, you'd always have just enough resources to cover all demand - no one is left on the bench, and your resource potential is used with maximum efficiency.
In reality, however, it's a never-ending balancing game with many hurdles to overcome. But that's why the resource management function exists - to play with the puzzle pieces and assemble a path towards successful project delivery.
Here's what you need to keep in mind about those challenges:
Demand has peaks and valleys, and it usually depends on a number of internal and external factors like company priorities and market changes.
Sometimes demand fluctuations are easy to predict ahead of time based on your contextual knowledge. However, some change can be sudden and difficult to anticipate - yet you still need to have a plan of action on how to minimize risk and adapt to unexpected demand fluctuations.
Having too many or too few resources is equally challenging. In both instances, you stand to lose out - either by overspending on underutilized staff, or by losing out on advantageous opportunities owing to having a team that's already fully booked.
More often than not, limited resources are the issue - followed by the struggle to meet the demand. In this case, strategic project and resource workload prioritization is key.
On that note, priorities can clash, and when you have different departments and stakeholders speaking out at the same time reaching a consensus might be difficult.
Effective communication, transparency, and strong alignment should help you get through the toughest parts of this.
Perhaps your team has the capacity to take on extra work - but what's missing is the exact technical skills? Depending on the situation, you might need to make fast hiring decisions to meet customer demand or arrange for an upskilling program to close that talent gap.
Resource forecasting is an essential part of the demand planning process, but you won't always have a guarantee of 100% accuracy. After all, some things are just difficult to predict, which can lead either to under-allocation or over-allocation of resources.
Read on: How Can You Achieve Greater Forecasting Accuracy? ➡️
The portfolio management process can always benefit from a level of flexibility, but that flexibility is not always going to be available. For example, your teams might have the skills but lack the time to complete certain tasks, or they might be missing some critical tools to optimize their work.
Resource management goes hand in hand with demand forecasting and project portfolio management.
When done right, resource management helps project managers meet consumer demand and achieve strategic objectives.
In fact, resource management is not just a nice-to-have if you want to successfully manage customer demand — it's a must. Here's why:
Now you understand why resource management is critical for demand management, let's dive into the specific resource management processes that can make an impact.
Resource allocation is the process during which you identify and allocate people to do specific jobs on a project. There are lots of factors you need to account for during the allocation process such as capacity, availability, expertise, and even the personal preferences and skill development goals of your teams.
After that, you need to schedule your resources and distribute the work so that everyone gets an even amount of work on their plate and you avoid the risk of project resource conflicts.
It is at this scheduling and allocation stage that you might already discover that your supply cannot cover the demand. Or, vice versa - that there isn't enough demand to keep all of your people busy with work.
Learn more: Break down project tasks with a Work Breakdown Structure ➡️
Strategic capacity planning helps you see if you have enough people and if they have the right mix of skills for the business to meet future customer demand.
It shows you how many projects you can take on with your current resource pool and gives you the needed strategic direction to take if you want to be able to cover more demand. To get there, you can create placeholders for demand planning, and work back from these plans to figure out your hiring needs.
Resource management gives you the data to continuously track your resource availability and utilization.
Resource availability shows you how much free time people still have on their hands (or if they already have too much work scheduled). And resource utilization, in its turn, shows you whether you're making the most out of your resource potential.
Utilization is usually expressed as a percentage, which represents the overall proportion of someone's time is scheduled on project work.
Read on: How to Calculate Billable Utilization ➡️
.png)
If you seemingly have enough people to cover all demand but somehow projects are still tentative or you can't find the suitable people to assign to particular tasks, resource management might have the answer.
Your skills inventory system, for example, might show that although you have the people and the time, they're missing the core skills or prior experience that's needed to see the project through to the finish line.
Since project management is all about playing the balancing game, here are some insider tricks on how you can balance resource availability with project demand.
If you're tackling competing projects with limited resources, communicate with your teams where you are going to set priorities. First evaluate the strategic importance of your projects and consider applying a project prioritization framework or a scoring system to help you decide what to cover first.
With your resource utilization insights, see how you can maximize resource potential. For instance, if there is a resource with a lot of availability left but you don't see how to utilize their time, look into their skills profile, and see if a training program could help them upskill in areas that are in demand.
Bottlenecks can manifest as anything from slow communication and delivery delays to lack of structure or missing expertise. It's crucial to pinpoint what resource issue is blocking your projects and take action accordingly.
With the help of resource management, project delivery professionals can multiply the company's potential and improve customer satisfaction. Here are some tried and tested practices that will set you up for success.
Companies have always had to practice resource management, but "resource management" as a distinct discipline is relatively new.
This means that, in many companies, the resource management process and structure may be relatively ad-hoc and underdeveloped. And for those who have never worked with a resource manager or an RMO before, they may not understand the purpose of resource management simply beyond allocating people to projects.
But if you are trying to build a case for investing in developing the resource management function into something more mature and strategic, it means you need to create buy-in.
Getting that high-level resource management buy-in and proper investment is paramount if you want it to be powerful enough to influence demand management strategies.
In our recent webinar, we talked about growing and nurturing the resource management function so it can earn its deserved place on the strategy building podium.
➡️ Watch the webinar here: How to Successfully Grow the Resource Management Function
Assessing resource management maturity is a means of determining how advanced and impactful your resource management processes are within the company.
Once you get that leadership buy-in, developing maturity is key if you want your resource management to be trusted with things like:
Mature resource management goes far beyond the distribution of project tasks. It gets a deserved seat on the project demand management team and can be a decisive voice influencing the company's direction.
If you want your demand management decisions to be informed and guided by resource management insights, you need to develop your resource management maturity. But you won't get very far on this journey without utilizing automation.
You'll need a tool that can handle the following, as a baseline:
A tool like Runn can refine your demand management process considerably, helping you up your game in every arena - from resource allocation and capacity planning to project forecasting and strategic alignment.
