Putting the strategy in resource management - Part 2 of 3

Digital Project Management

If you didn't catch part 1 of this post you can read it here.

Portfolio modelling

Portfolio modelling is the process of looking at different proposed project mixes in order to understand the advantages and disadvantages of each and ultimately reach the optimal group of projects to make up the portfolio. That optimal mix maximises the ability to deliver successful initiatives that allow the organisation to achieve its goals and objectives. To achieve that mix, organisations need to do more than simply look at the claimed return on investment in the business case and then approve as many as they have funds for, the impact of that collective set of projects needs to be considered, and that’s where portfolio modelling, and in particular strategic resource planning, comes in.

One of the crucial considerations for effective annual planning is the ability of the organisation to effectively and efficiently execute the projects that are ultimately approved to be a part of the portfolio. That requires an investigation of where the proposed initiatives are going to have the biggest impact during execution – which parts of the business are going to be asked to do the most project work, and which areas are going to have a lower investment over the next twelve months. That mix will drive a need to move resources around the organisation to support that shifting of workloads, and that’s resource management.

Organisations like to think of a dedicated pool of project resources, but in reality there is only one resource pool – the organisation’s employees. Any increase in demand for resources to work on projects is going to pull people away from working on operational or support work, and that may impact the ability of that department to function effectively. The impact of that can be mitigated to a degree by moving people from other areas of the organisation, but that isn’t always possible, particularly if there are specialist roles involved. Resource management needs to find the right balance between the best set of projects based on ability to achieve corporate objectives (and also considering things like risk) and the optimal mix of projects based on ability to execute. It’s better to select a less than optimal set of projects that can actually be completed successfully, than it is to choose the ‘perfect’ portfolio but be unable to deliver many of the projects.

Two critical aspects of resource management in portfolio modelling are capacity and capability planning. This builds on the work done in developing the business cases and looks at the total resource needs for the proposed project mix based on two factors:

  • Capacity – do we have enough resources to do the work
  • Capability – do we have the right resources to do the work

Capacity deals with not just whether the people are in the organisation, but also whether they can be freed up from their current accountabilities and / or moved to the right part of the business to contribute to the project. This element also has to consider the impact on other work areas if people are redirected to a project and must also look at the cumulative effect of all of the proposed project impacts, not just individual initiatives.

Capacity then has to consider the ability to deal with any shortfalls – can additional staff and / or contractors be hired in the right location and within the timeframes needed to allow the project to be successful. In some cases capacity planning will also deal with plans to backfill resources – hiring people to replace others who may be redirected to a project.

Capability on the other hand considers whether the people we have are able to perform the functions that we need them for on our projects (or in a backfill role), and if not, how we address that shortfall. This may be solved through hiring as with capacity, but may also look at upskilling, training, experience, etc. programs – especially for projects within the proposed portfolio that aren’t scheduled to start immediately. Once the full scope of portfolio modelling is complete the organisation should be able to approve the suite of projects that provides the ideal balance between ability to deliver, and benefits to the organisation. The strategic resource management needs to move into the next phase and integrate with project execution.

Read more of this in part 3.

Andy Jordan

My name is Andy Jordan and my focus is on strategic and business transformation initiatives and PMOs, as well as assisting organizations with portfolio selection and management. I also teach project management and I'm never short of opinions. 

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