Project Portfolio Management: the Resources Make the Decision

Far too often, I still read: “Pack as many projects into your portfolio as your budget will allow. If you don’t have enough resources, outsource. Compare the resource requirement with last year’s projects.” And so on, and so on. Every time I read another one of these “Project Portfolio Management in 7 Steps” articles, it seems to me that many organizations still treat project portfolios like a machine: fuel (money) in, revenue out. Unfortunately, that doesn’t work anymore. A project portfolio is more like a living organism that has to adapt to its constantly changing environment.

For this reason, I would like to sketch out a project portfolio management theory from the perspective of resources.

1 – Resources Are Not like Money

Resources, which can sometimes also be referred to as “people,” behave entirely differently than money in the context of project portfolio management. Because:

  • Excess capacities cannot be shifted (or can only be shifted in a veeeery limited scope) from one month to the next. In other words, if you have an employee who has finished a project and has excess capacity to work on something else, it isn’t always easy to match that employee to the right project for the time he has available.

  • You can “borrow” additional capacity by having your people work overtime, but there is a limit to how often and how much overtime you can request.

2 – Capacity Cannot Be Expanded Quickly

If you realize in the middle of the year that you don’t have enough capacities for the planned projects (and you are already too deeply indebted to your current workforce), you have two options:

  • Add external capacities (outsource some of the work): this is possible, but it costs more in the short term, it takes time in the beginning before they’re up to speed, and it results in the loss of intellectual capital at the end of the project.

  • Expand internal capacities (hire more people): this is not always easy, and it also ties you to a long-term commitment. In any case, you will always have to integrate the new people and deal with certain social dynamics.

3 – Resources Burn Out

People burn out if they are consistently overworked. Either they leave the company (and you lose the capacity), or their performance fails and their productivity decreases. If that happens, it doesn’t really matter how well your portfolio is planned. Projects will run into difficulties and problems that very quickly devour all available buffers. Even worse, the projects won’t produce valuable results.

4 – Resources Are Specialized and Thus Scarce

Typically, it is the bottlenecks that determine your portfolio. If too many projects pile up around your management specialists or your database team, all of the projects get held up. So, it doesn’t really help to plan a portfolio for the year. Bottlenecks need to be either systematically avoided or promptly recognized and buffered (see our blog post on Lean PPM). This applies to internal as well as external resources.

So? When considering your project portfolio, don’t just think about money. First, consider your resources on a more detailed level. Meet with your project managers and develop plans that include detail not necessarily on a daily level but at least on a monthly level. Get regular updates and be aware of the risks. Plan hiring and training for the long term, train your internal workforce, or reorganize it. Negotiate larger, longer-term contingents with your external resources.

And in closing, the most important piece of advice: listen to your organization. Are your people overloaded, or are they going with the flow? If they’re happy and going with the flow, then you don’t need to find additional capacity; you’re getting it for free.

By | 2017-05-17T09:15:47+00:00 May 12th, 2017|Categories: Project Portfolio Management, Resource Planning|Tags: Budget, Capacity Planning, Money|

About the Author: Dr. Jörg Leute

Jörg has been fighting against project portfolio and resource management catchphrases like “The project will still work!” or “It’s always worked well before” for over 15 years. As founder and managing director of itdesign, the company behind Meisterplan, he is striking a blow for lean PPM. He shows companies and organizations how they can use lean PPM to create a manageable, valuable project portfolio. Jörg is an active member of the ipma and holds a doctorate in Business Economics from the University of Tübingen, Germany. Please feel free to contact Jörg Leute to get feedback on your PPM: mail@meisterplan.com

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