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.

Life after project completion: Is a project complete without benefits realization?

In our day-to-day project management and PMO activities, the easiest and the most important thing missed is planning ahead for what happens AFTER we cross the finish line. So technically speaking, once project managers hand over the reins of the completed project to the business owner, their job is just half done. For a project to be considered complete, project managers must focus on the other half, which is “Benefits Realization”.

Benefit realization is the confirmation that the value a project was expected to generate really does get delivered.  In our everyday project management lives it is easy to get buried in details around task management, risk mitigation, resource capacity, balancing budgets and all the other moving parts.  We often forget why we set out to do the project in the first place:  the delivery of a product or service, an enhancement or improvement, or a capability.  For example to meet some new regulation, standard or market demand.  But what if, after we deliver the goods, and did exactly what the customer asked for, we realize that all the effort and resources we used to deliver the project don’t amount to what they were supposed to?  That’s exactly what benefits realization is all about.

We’ve all heard of ROI – return on investment.  It is the concept of an investment of some combination of resources (people, money, equipment, etc.) yielding a benefit to the investor.  A high ROI means the investment gains compare favorably to investment cost. As a performance measure, it is one of the best methods to evaluate the efficiency of an investment.  ROI does not exclusively have to be in financial terms.  It can easily be an operational advantage, an improvement in position, or other positive change.  In order to compare the efficiency of a number of different investments we need to compare like measures, which is why a financial ROI is one of the most commonly used.  Unfortunately, without benefits realization, our ROI is simply a guess.  And that is why benefits realization is so important.

I’ve discussed with   many of our clients about this and have found out that there is a need for a wide degree of maturity around the realization process.  This is an indication that while the concept of realization is gaining interest, it is still far from a mature practice.  Which presents a great opportunity for those organizations that are not doing it – now is a great time to implement this practice.

How to launch a benefits realization initiative?

One of the best approaches involves setting goals, tracking against those goals and including a ‘hand-off’ step, similar to the passing of the baton in an Olympic relay race.  Tactical steps you can take include:

  • Set your sights:  using whatever calculation available, combined with experience and validated by results from similar projects, come up with a target for what the value you think the project will deliver.  Set that as the initial estimate.  Enlist the help of a financial leader or controller to help set the original estimates.
  • Continual monitoring:  Using the initial estimates or targets as a first guess, continue to refine the success factors throughout the lifecycle of the project.  These are often called forecasts or committed values and are more accurate than the original estimates.  It is best to continue revising these figures throughout the lifecycle of the project.  The objective here is to have these forecasted numbers eventually match the actuals.
  • Start tracking actuals now:  some project can actually generate benefits even before the project is complete.  What a great win for the project team to be able to report these.
  • Put a plan in place: Add a milestone or stage beyond the Complete step called Close or ‘Realization’ and set a validation step 3, 6 or 12 months after the project is complete.  It sets the expectation that the work is not over at Complete.
  • It is outside of the project manager’s responsibility:  As the project comes closer to its Complete or End date, engage the financial sponsor and the process owner (the person who is benefiting or owning the project’s or product’s outcome, improvement or change) and have them start validating and “owning” the numbers.
  • Go back to the beginning:  how accurate were your original estimates compared with your forecasts and your actuals?  Take those learning and apply them to future estimates.  This is called continual improvement – applying lessons learned and best practices to improve the entire PMO.

One last point is that it isn’t always about the money.  Sometimes projects generate other value, such as an improvement in customer satisfaction, or increase market share by launching a game changing product.  It is important to be able to quantify the value of these types of projects even if they do not generate direct revenue or cost improvements.  Many organizations call these ‘Level 2” or “Indirect Benefits”.

Finally, is a project complete without benefits realization?  To the project manager who’s already run their marathon and marked the project as complete, I expect their answer to be ‘yes’, but common sense tells us otherwise.  As a best practice, one of the most important factors in a projects success isn’t “how we did it” – coming in under schedule or under budget – but “what we did” – that the project delivered what it set out to do.