Project Resource Planning: How to Plan Effectively for the Short and Long Term

November 17, 2022
Project Resource Planning

TwitterTweet it:'Get project resource planning right and you can make accurate and timely decisions about the types of opportunities to pursue – and how to manage your workforce in the future – with confidence and ease.'

What Is Project Resource Planning?

Resource planning is the process of carefully and methodically planning and distributing your firm’s most important resource – its people – across multiple projects. The objective is to deploy talent and teams according to their expertise and experience; delivering outcomes that go above and beyond your client’s expectations; and even reducing stress all within the established budgetary parameters.

It sounds simple, but it can be a complicated process to juggle. Shifting demands and timeframes, delays beyond your firm’s control, personal emergencies, competing tasks and all sorts of other contingencies can easily derail your resource planning if you don’t have the right systems and processes in place.

Get it right, though, and you can make accurate and timely decisions about the types of opportunities to pursue – and how to manage your workforce in the future – with confidence and ease.

Why Is Resource Planning Important When Managing Complex Projects?

1. Maximize Productivity

Project resource planning is most successful when observations taken from past data are used to predict future resourcing needs. In this way, strategic capacity planning enables a firm to maximize its productivity, and to deploy its available resources to meet current obligations and plan for future opportunities.

Observing historic and current project resourcing requirements and trends provides a strong foundation to plan the best way to distribute your team across future projects.

2. Play to Your Team’s Strengths

It pays to establish project team structures that position project managers to focus on resource planning, thereby freeing up the rest of your team to oversee, manage and deliver upon their own areas of expertise.

Careful resource allocation helps to ensure that all the necessary tasks and roles within a project are occupied by the best-suited person.

3. Identify Skills/Resourcing Gaps

For some firms, and on particular projects, it may be necessary to bring in contractors or freelancers for short periods – particularly if a team lacks a specific skill, or capacity or is overstretched working across several projects.

However, this can become costly if the right controls and definitions are not put in place at the outset. Ideally, contractors and freelancers are best deployed for short and pre-determined periods, to minimize the chance of their associated costs outweighing any benefits.

4. Avoid Foreseeable Resourcing Issues

When it’s done well, resource planning and allocation makes it easy to identify problems before they arise, pinpointing for example that team capacity is on the cusp of being over-stretched, or identifying potential gaps between skillsets and necessary tasks.


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What Is the Best Way to Approach Resource Planning in the Short Term?

Resource planning can be a difficult discipline to implement, especially when it comes to managing large and complex projects. It is important that everyone contributes to making the required updates to resource planning systems, so that the data is accurate and trustworthy.

And there must be clear processes in place that everyone can easily follow, so that they do not resort to localized information storage. Here are some ideas to help you improve your resource planning over the short term.

1. Identify Who Should Be Involved

As the name suggests project managers oversee projects from inception to completion, taking charge of planning, scheduling, and updating across a project’s lifecycle. Project managers identify who is needed to staff a team, and then plan how the project will be carried out, using the skill sets at their disposal.

Perhaps one of the most crucial roles in resource allocation is that of resource manager or line manager. They understand the ins and outs of all the people they manage and can allocate resources to maximize your firm’s productivity.

These two positions need to work together in a coordinated way. Usually, the resource manager helps to source the best team member for each required role, although they might liaise with the project manager to outsource some tasks to contractors if required.

And the project manager needs to regularly update resource planning systems and prospects and opportunities, so the resource manager can seek out the right people for upcoming projects and tasks.

Sitting above these two roles, the top line manager makes big-picture decisions about current and future teams, tasks and availability. By analyzing revenue and staffing forecasts, Top line managers plan for future work and make management decisions involving labor force and cash flow.

2. Implement a Weekly Resource Planning Process

Once you have established your ideal project team it’s time to implement your resource planning strategies.

Unexpected setbacks – such as supplier delays, team members leaving the business or illness – can affect project delivery and performance. We recommend weekly planning processes. That way the project manager can easily devise an alternative plan – or better still have several alternatives ready – to avoid the prospect of labor sitting idle or skills gaps potentially holding up project delivery.

If you haven’t adopted a weekly planning process yet, this best-practice example may help to get started:

  • Project managers always update resource plans on Thursdays
  • Line managers and planners review and adjust bookings for the following week on Fridays
  • Employees execute tasks during the following week, according to the booking schedule.

3. Implement a Monthly Resource Planning Process

In addition to these weekly tasks, monthly forecasting helps businesses maintain control of their cash flow, labor and time, thereby ensuring that resources are allocated effectively across projects. Knowing where your revenue and expenses are likely to be incurred before embarking on a project puts your firm in a good position to capitalize on new opportunities as they arise.

In addition, these streamlined processes can help to free up time and energy for business leaders to proactively seek out new opportunities. Resource management best practice suggests that making time – once a month is ideal – to meet with clients, partners and project managers will help you to plan effectively in short-term increments and secure long-term workflows.

How Can You Optimize Project Resource Planning for the Long Term?

The most straight-forward way to approach resource planning is to break down your tasks into achievable chunks, as follows:

Step 1: Plan current projects 2 to 3 months ahead

Get a complete view of tasks being performed over the next 2 to 3 months, including planning existing and any recently signed-off projects. And make sure that project managers are considering project plans for the next 2 to 3 months.

Step 2: Plan new opportunities 3 to 6 months ahead

Shift towards longer term planning, by deciding how to incorporate seeking and converting new project opportunities into your planning schedule. This may require collaborating with your business development team about prospects and opportunities that could potentially close in 3 to 6 months.

Step 3: Combine with forecast and hire on facts

Having mastered the short and long-term planning of steps 1 and 2, it's possible to implement revenue forecasting and make labor hire decisions based on known project and opportunity data.

Forecasted revenue predictions are essential if you intend to make decision-making around current projects and future opportunities both sustainable and profitable.

Depending on the size of your firm, the nature of your business and the complexity of your projects, it may be a good idea to ask your client services team to provide forecasts on a monthly basis, thereby freeing up capacity for managers and employees to focus on projects in hand.

How To Measure Resource Utilization to Achieve Optimization

It’s not enough just to plan and schedule your current and future projects; you need to analyze your performance to ensure your outputs match your business objectives.

In resource planning, there are three main Key Performance Indicators (KPIs) that can help you monitor and improve employee performance. These are:

  1. Actual utilization: hours spent on billable projects, as a percentage of available hours, on a per person basis
  2. Planned utilization: a weekly view of future workload, expressed as hours booked or utilization
  3. The freelancer ratio: the percentage of your total salary costs that is spent on contractors

These KPIs can be used to improve employee productivity and performance via a process of enhanced accountability. In addition, there are two important resource utilization formulas that focus on costs and productivity. The first is 'Billable Utilization', which measures the percentage of hours employees spend working on billable tasks while at work. And then 'Productive Utilization', which combines both billable hours and business development tasks, as a percentage of total available hours.

Whilst KPIs serve a purpose – such as helping to inform where the firm is optimizing its resources and where it needs to improve in relation to productivity – it is important not to rely solely on these metrics. If you observe room for improvement in your productivity metrics, you might ask:

  • Are there any current business processes that could be hindering or obstructing team members from meeting their KPIs and driving business success?
  • Has the firm already adopted resource management best practice, or is there room for improvement in the systems and processes that support teams to do their best work?

What Are the Prerequisites for Effective Utilization of Resources?

Achieving best-practice resource allocation is a complex task, but through our work with project-based businesses we’ve observed three main pillars that will help firms to do so successfully. These include:

  • Management decisions and support: when management spearheads an initiative to improve business processes – and does so in a supportive way –people are more likely to engage with those initiatives, which helps to achieve better productivity outcomes from existing resources
  • Clear processes: the more succinct and easily understood the firm’s processes are, the more likely they will be adopted across the company. It’s essential that every team member plays their role, otherwise the initiative is likely to fail, so make it easy and straightforward for everyone to adopt the new measures
  • Balance within the reporting system: Overly detailed planning can be off-putting and deter team members from providing regular updates to your plans. Examine how detailed your plan will be and consider how you plan projects. Is it possible to combine rigorous and flexible reporting in the one system?

While it’s true that the revenue stream of project-based firms can fluctuate significantly over time, a firm’s ability to weather these fluctuations can be maximized by streamlining its workforce against its incoming revenue, at all times.

Putting these strategies and processes into place will enable firms to make workforce and labor hire decisions based not on gut feeling, but on facts and insights from existing and prospective projects and known revenue and resource data.

Getting effective resource planning right can help to position your firm to deliver profitably on existing projects, and to secure and deliver more of the right types of projects in the future. At Deltek our project ERP solutions enable you to proactively manage your resources, build profitable project plans and increase resource utilization.


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