Understanding the Concept of Strategic, Tactical and Operational Resource Management

In a recently conducted survey by Daptiv, it was revealed that resource management is the top business challenge for most senior executives. Nearly 67 percent of senior executives surveyed identified prioritizing work to fit available resource capacity as their biggest business challenge. Despite the key role of strategic alignment, many organizations leave their managers mired in a myopic view when it comes to resource management.

Hence, when we look at resource management activities in Project Portfolio Management (PPM), I believe that there isn’t a single / linear approach to manage the resource management process.  In fact, resource management in its essence is hierarchical; there are three views wherein the strategic lens drives the tactical lens, which in-turn drives the operational lens. Therefore, resource management is best explained through the following framework.

Strategic Resource Management

What is it?

Strategic resource management focuses on resource demand at a macro level. A level where portfolios are defined and budgets are committed to. This is usually done at the executive level in an organization. Executive teams should be looking at various Run, Grow, and Transform initiatives trying to determine what investments are going to allow the organization to achieve their defined goals and objectives.  In most organizations decisions are made on the budget/portfolio and no consideration is ever given to the resource impact on the organizations responsible for implementing the portfolio has. Organizations ignore resource impact until they are ready to execute on the initiatives – this is tactical or operational thinking, not strategic.

Strategic resource management is about understanding the impact of resource commitments needed for the initiatives to succeed.

Why is it required?

Strategic resource management is fundamental to organizational alignment.  If the executives in an organization need to see results from various initiatives they have authorized, then they must make sure that capacity needs are addressed and available  to make things happen.  If there is no organizational alignment, it doesn’t matter how good the strategy is, it will fail due to poor execution.

How is it done?

  1. Understand true capacity – Key to this is making sure there is a clear delineation between project time, non-project time, and non-working time so that true capacity [net & gross] is understood.
  2. Project Time – The planned, forecasted and actual time to complete project deliverables – this could be either at the task level or if your organization is not ready for task level management, then project level at a minimum.
  3. Non-project Time – This is effort that can’t be categorized into a project , but is a classification of time like admin and other business-as-usual effort. It is important to track non-project time to get that complete picture of capacity. Besides, it is really difficult to predict true capacity without knowledge of the amount of non-project effort that is actually happening. As a side note, after a while you’ll be delighted to actually uncover that what is classified as non-project effort is actually related to a project.
  4. Non-working Time – Again – complete capacity – we need all time including vacation, jury duty, sick time, etc. It is also important to define the “splits” of project time vs. non-project time. Some organizations use the 80/20 rule; 80% non-project time, 20% project time.  You really need to identify and set aside the plan for non-project work. Analysis of planned non-project time provides a deeper understanding of actual non-project time and available project time.
    1. Align resources to resource types – Although our inclination is to go directly to a named resource.  The goal is to align like resources to a “resource type” or resource classification. This makes the task of understanding capacity much easier and the identification of additional headcount requirements controllable.
    2. Forecasting Strategy – An organization also needs a good forecasting strategy for project and non-project activities, to insure the forecasts, are always accurate.
    3. Portfolio strategy – A good portfolio strategy will align to the business drivers and allow the organization to categorize various initiatives as Run, Grow, and Transform for example.
    4. Governance – Simply prioritizing once a year is not sufficient, initiatives pop up all year and decisions on how to act on those requests need to be put in context with the rest of the portfolio to ensure optimum return.
    5. Time sequencing of resource demand – This is the critical part. At the investment/project level and for each resource type, identify the requirement hours for each resource on a weekly or monthly dimension for the length of the project.
    6. Identify strategic demand – With resource demand now identified to the project and the list of proposed projects for the portfolio, you can analyze strategic demand from the true capacity in step 1 whilst analyzing resource demand from steps 2 and 6.

What are its benefits?

The organization as a whole will be in alignment with what needs to be executed, how it should be done and who needs to do it.  The mid-level managers will be empowered to make the right staffing decisions.

Tactical Resource Management

What is it?

Tactical resource management is about understanding project relationships and dependencies and “slotting” the projects to start when resource availability is aligned with project requirements.  At this point you are looking at roles and not individuals.  If your organization has a Project Management Office, then this activity is conducted by the PMO in coordination with the various project sponsors (usually Line of Business executives), and resource managers.  If your organization doesn’t have a PMO, then this needs to be done by a VP of Strategic Planning in coordination with the project sponsors, and resource managers.

Why is it required?

Aligning resources to work on the right project at the right time is the key to getting projects off the ground and running, and this needs advanced planning to make sure there are no resource shortages or contentions.

How is it done?

  1. Resources need to be aligned into like resource types (as prescribed in Step 2 of Strategic Resource Management), preferably assigned to a resource manager(s).
  2. Project owners/managers are responsible for forecasting the resource demand (resource types) on projects. This is critical in maintain capacity knowledge.
  3. It is not only critical that the resource manager maintains project demand, but also that resources keep the resource manager informed on non-project and non-working events in order to maintain accurate capacity forecast.
  4. It is generally a good idea, if not best practice, to have periodic resourcing meetings to review resource and portfolio demand. Decisions from this meeting inform the resource manager on the steps required to fulfill demand.
  5. It is the resource manager’s “role” that is responsible for maintaining the right staffing levels for the resource type and for evaluating the correct “slot” to fit resources to projects.
  6. Finally, the ongoing analysis of the headcount delta required to execute the portfolio and available capacity will dictate your staffing/hiring needs.

What are its benefits?

The project sponsors have a higher level of confidence on when their projects will be executed. Resource Managers are involved early in the planning process to create a staffing plan to meet the needs of the sponsors. There is a higher level of accountability on the resource managers to deliver the resources when needed.

Operational Resource Management

What is it?

Operational resource management mainly deals with creating a staffing plan at the project level in consultation with the resource manager and working with the project staff to meet project deadlines. This is primarily done by the project manager of the project.

Why is it required?

Operational resource management is where the rubber meets the road.  Having the right people to work on the right tasks at the right time is paramount to successful project execution.  Failing to do so will lead to cost overruns and delays.

How is it done?

  1. Up to this point we’ve only looked at resources from a forecasting perspective. Now we need to translate that forecast into a plan.
  2. The project manager validates scope, and builds a project plan (work breakdown structure or WBS). He then creates /updates the resources forecast, and make resource requests to build the resource plan.
  3. Once the resource request(s) are fulfilled, then the project manager simply assigns the named resource to the tasks.

When executed properly, resources are updating time in their timesheets and submitting for approval, thus providing the feedback loop to the resource and project management processes.

What are its benefits?

Resources will be available and ready to perform tasks as and when needed.  The project manager can focus on project deliverables rather than scrambling to find people to staff the project.

Employees are the most valuable asset and the biggest expense for most organizations. The ability to deploy employees effectively against often conflicting projects and other work priorities enables organizations to optimize their return on human resource investments. In conclusion, having a hierarchical approach to resource management enables any organization to share unified information across the enterprise so that they can make smarter business decisions across all levels.

Building and Maintaining a Lean and Effective IT Governance Board

Lean.org characterizes Lean as:

“Eliminating waste along entire value streams, instead of at isolated points, creates processes that need less human effort, less space, less capital, and less time to make products and services at far less costs and with much fewer defects, compared with traditional business systems. Companies are able to respond to changing customer desires with high variety, high quality, low cost, and with very fast throughput times. Also, information management becomes much simpler and more accurate.”

Lean.org defines Lean as:

“To accomplish this, lean thinking changes the focus of management from optimizing separate technologies, assets, and vertical departments to optimizing the flowof products and services through entire value streams that flow horizontally across technologies, assets, and departments to customers.”

Building a Lean and effective IT governance should not be transformational but transitional.  It is a major shift for an organization whose only governance is the command and control of the organizational chart.  Simply implementing a PPM tool is not the answer. In the book “The Information Paradox”, by John Thorp  Copyright 2003, McGraw / Hill, states that there are three necessary conditions for an effective governance:

  • Activist Accountability
  • Relevant Measurement
  • Proactive Management

Well technology can’t deliver these three conditions, they’re organizational. However a PPM can contribute to sustaining the knowledge, specifically with Relevant Measures.  It can be the single source-of-truth. Implemented correctly the PPM system IS the repository of the decisions the organization has made in the past.  This means that any governance placed in IT investments must also have the same scrutiny place on the ‘relevant measures.’  Relevant Measures must evolve with the rhythm of business.

As I said earlier, a governance needs to be transitional, it is a continuous improvement process and needs to be implemented at the rate the organization can absorb the change.  Activist Accountability!  Commitment needs to up and down the organization with strong leadership.

To start with the governance needs stewardship. This classically comes from the PMO, but as it has been will documented this isn’t the process/methodology police.  The PMO needs to be open and clearly communicate the “vision of the end” at the beginning.  A lean effective governance is more than how you run a project or any investment for that matter. That’s why it is important to recognize that governance is a combination of two major processes; the first being the project life cycle; the second is the portfolio process.  Your transitional strategy needs to take both of these into mind. And these processes should be instantiated in the PPM tool. Another key to governance is the roles in the governance and the exchange of information and dialog between them.  Oh and this is NOT an organization chart! But is a make-up represented cross-functionally. The roles are:

  • PMO – Is the steward of the governance.  The make of this is more that just project managers.  It needs vision and leadership capable of being the “trusted advisors” for the complete governance. The PMO is the champion for change. Not only does the PMO
    require the PMs but needs the vision and the moxie to champion the “roadmap” for the governance’s evolution.
  • Decision Board – Represents the needs and priorities of the governance.  It’s made of the business leaders accountable for the introduction of change from the investments in the portfolio. The Decision Board is accountable for the decisions of the portfolio make-up and the Relevant Measures.
  • Steering Committee – Represents the needs of the project, program or investment.  This is different from the decision board its scope IS narrow, but necessary.  I’m not going to elaborate on the Steering Committee; its role is well documented in project methodologies like the Project Management Institute’s Project Manager Book of Knowledge (PMBOK).
  • Project Manager or Program Manager or Initiative Manager or Investment Manager – They all fulfill the same role – Investment Steward, one of the most important roles in the governance.  The investment steward is accountabledelivering on investment outcomes.  Againthis is a well-documented role.
  • Project Members – Yes they are considered as part of the governance and are sometimes left out. Their role in the governance is to deliver capability as prescribed by the investment steward and communicate progress on that delivery.

Those are the primary roles, however in more mature organizations there exists two more roles, they are:

  • Portfolio Manager- In highly evolved governances the Portfolio Manager is accountable for the performance targets or outcomes of the portfolio. The Portfolio Manager is part of the decision board and advises the decision board on investment scenarios and portfolio adjustments.
  • The Architecture Review Board – In conjunction with the Steering Committee this board is counseled for any impact to the enterprise architecture. Now wait, this not the standards police! The architecture board is made up of enterprise architects and is accountable to ensure that an investment does compromise the direction of the enterprise architecture.  Enterprise Architecture is a topic in of by itself and there is much written but in no means is the scope of the blog post.

This post is about Building and Maintaining a Lean and Effective IT Governance Board, I’ve touched on mostly the building part, but maintaining?  I’m not going to fool you that is the hard part. But the key to remember, this is a continuous improvement process.  People are likely to move on, especially in the leadership, that’s why keeping the governance going is not one person responsibility.  How does that saying go…? “It takes a village…” and change is good!

By keeping up with the rhythm of the business you are always ensure the portfolio is working on the Right things, the Right way, things are getting done, and the governance is realization the full benefit and potential.

Planning the Portfolio: Part II – THE PITFALLS

This is part two in a three-part series discussing the importance of portfolio planning. This series provides insights on portfolio management best practices in process, metrics and reporting.  

When organizations set a budget they typically go through a process to essentially build lists of things that they need or would like to get accomplished during the budget cycle, assign a cost to that activity, and go through some prioritizing to get to the total assigned number. Whether you know or not, if this sounds like a process you have then you are executing a non-structured portfolio activity.

This old-school process has been successful for decades, but with today’s pace of business and the impact of macro-environmental change, organizations need to build processes that are more responsive to that change. 

Recognizing this, organizations are beginning to evolve and adopt portfolio concepts. However, these efforts tend to lag, mostly due to a focus on improving the prioritization process and fall into some classic pitfalls: 

  • We’re overworked.” A tendency to focus on capacity first. Although I argue that capacity is one of the constraints in portfolio management, initiating planning exclusively to focus on managing capacity is froth with errors. Organizations focused exclusively on workload have a tendency manage resources at a micro level and that just isn’t sustainable. I once had a client that when he moved his focus from matching capacity to demand and focused on the right things, the dialog changed and he became more connected to the business. Dialog between the organizations ensued that actually increased the quality of business outcomes.  
  • Emotional” I call this prioritization without principles. Without a framework to evaluate an investment, it always ends up that the individual who screams the loudest, has the best presentation (sales skills), or was the last one in with the bosses won.  
  • We’ve already spent the money.” It’s OK to hold or cancel and investment when change happens – It just makes good business sense. When an organization doesn’t hold or cancel a project, when it’s not the “right thing” and the investment resources are tied up in the wrong projects, that’s a lost opportunity. 
  • “We don’t revisit the evaluation criteria.” This is the one that really frustrates me. Just because it worked three years ago doesn’t mean the criteria is still valid. In reality this criteria not only reflects current business climate, it also represents the decisions we made in the past. Good governance always validates the criteria before anything in the portfolio.  
  • Lack of Investment Selection Cycles. Once a year (budget time) really is no longer valid. An organization needs to match their investment selection cycles with the velocity of their executing projects. In other words, if the majority of your projects are short term, then more frequent cycles are required. If, however, the majority of your projects are multi-year then a minimum of four times a year should be sufficient to just validate the investment outcomes are still desirable.  
  • No Formal Investment Governance. Governance provides transparency. We now know (during the recent economic crisis) without proper transparency, investment chaos ensues.  
  • Everything in the Same Bucket. If we only work on the highest priority projects, then quality/value of lesser priority assets will erode to a point of being a liability to the organization. Having a well thought out diversified project portfolio insures that organization remains healthy. 

Non-structured portfolio activity is unavoidable, but knowing what to expect and understanding the potential pitfalls related to portfolio planning will help you plan for and address them in advance, keeping your portfolios on track—and  saving valuable time and resources.  

In Part III of Portfolio Planning, I will demonstrate the portfolio lifecycle and the key characteristics of the framework.


Planning the Portfolio: Characteristics of Successful Portfolio (Part 1)

“If anything is certain, it is that change is certain. The world we are planning for today will not exist in this form tomorrow.” – Philip Crosby (Quality Guru)

In this three-part series, I’ll attempt to discuss the importance of portfolio planning and provide some insights on portfolio management best practices in process, metrics, and reporting. I’ll attempt to provide an understanding of why we do portfolio planning, introduce a framework to plan the portfolio and discuss some techniques and guidelines to plan a portfolio.

I have had a number organizations tell me “just give me the process and I’ll execute it,” but portfolio planning is more of an art than a process. Tools like spreadsheets, metrics, scorecards, and investment maps can provide insight based on past experience, but you still need to make the decisions.

Today an enterprise has (or should have) a well-defined strategy that outlines its performance objectives and how it plans to reach them. In order to deliver on those objectives the enterprise organizes into multiple business units or organizations with their own unique operational objectives that contribute to the enterprise. Classically these organizations are focused around the operation of a specific asset type of the organizational value chain.

Portfolio planning is unique to the asset type, the distribution of assets, and to the performance objectives of the portfolio – not all portfolios are the same. For example:

  • Enterprise portfolio versus organizational portfolio
  • New product development versus IT
  • Initiative versus program versus project
  • Management of assets versus management of delivery

All of these are important portfolios for an organization; however, for the purpose of this discussion I will focus on an organizational portfolio of projects to manage delivery.

There have been a number of books, whitepapers, vendors and consultants that have provided us the benefits of having a portfolio, but for project portfolio management it boils down to three major points:

  1. Capital constraints – we’d all like to have a blank check, but we know that’s not practical;
  2. Resource constraints – not enough or overworked staff;
  3. Or both.

One of the best references for portfolio management has been the Coopers and Edgett book on portfolio management. Besides the outstanding examples on metrics and other tools for portfolios, the authors were successful in conducting a syndicated study on portfolios and metrics. The study covered 205 companies in North America; mean size of company was $6.4 billion in annual sales.

The conclusion they came to was that companies exceed business performance when the portfolio processes possessed these characteristics:

  • Projects are aligned with business objectives
  • Portfolio contains very high value projects
  • Spending reflects the business strategy
  • Projects are completed on time
  • No “gridlock”
  • Portfolio has a good balance of projects
  • Portfolio has the right number of projects

So that’s when it works smoothly. What happens when things go off track?  In my next post, I’ll discuss the pitfalls of portfolio planning and address how to keep portfolios on track when dealing with non-structured portfolio activity.


At What Risk?

News sources everywhere are streaming reports on the state of today’s economy. There is plenty of speculation, conversation and hyperbolae on the need to invigorate the economy with investment. Businesses and government organizations are being pressured to spend more to create jobs and boost the economy.

But the fundamental question to ask is “At what risk?”

I get this question all the time. Project investments are being made continually. Maybe not at the pace we would like to see, but it’s happening and the state of project execution remains high within organizations.

A colleague of mine and I were recently discussing whether there is a void or opportunity to introduce new thinking in addressing the “at what risk?” question. Let’s examine.

First, let’s examine the statement itself.  What does “At what risk?” really mean? We can look at it in multiple dimensions.

Project execution is a common place where we look at risk and risk management, where risk is anything that could potentially adversely affect the schedule, cost, quality or scope of a project. Basically, how does risk impact your project objectives? PMBOK outlines many processes and techniques for managing risk such as the ‘Probability and Impact Matrix for Qualitative Risk Analysis’ and quantitative risk analysis techniques such as ‘Sensitivity Analysis and Decision Tree Analysis’.

Another perspective to view risk and risk management is from the finance angle. We can look at how cost benefit analysis (CBA) can present a financial perspective of risk and we get that from ROI, NPV, etc. But these dimensions are only at the perspective of the project and the projection of potential value.

There are other dimensions of risk we can discuss, but those have specific vertical applications, like the risk of entering a market or the risk of applying a particular technology.
These all are very valid methods and processes, but can we answer our earlier question “At what risk?”?  I think so and we can simply address this by asking a simple question: “Are we working on the right things?”

Drawing on portfolio management techniques helps identify “At what risk.” But, you may say that risk is already defined as a dimension of portfolio management, and you would be right. Organizations have struggled with implementing portfolio risk models and maintaining them.

I prefer something simpler. Can I answer our question early in the project lifecycle without spending a lot of energy? Yes. Simply put: alignment , through the identification of what is important at the portfolio level and defining the alignment dimension of your portfolio solves our problem.  Why would we ever want to spend any energy at all on a project proposal if it doesn’t fit within the performance objectives and investment goals of the portfolio?

From my perspective, answering the “At what risk” question can be a simple top-down exercise that can deliver great value to the organization. But the first question we should always answer is, “Does it fit?”  Then we can focus on evaluating and managing risk in the financial and project execution domains.