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At Stage 3, the focus shifts to the individual project, with the objective of optimizing the efficient use of resources to successfully complete individual projects. In this sense, the focus of Stage 3 is more specific than that of either preceding stage, for in Stages 1 and 2 the focus is on resource management across all projects. Assignments and needs are collected at a high level (Level 1) from all projects and used to manage all resources. The objective is optimization of resources across all projects (short-term optimization in Stage 1 and medium-term in Stage 2), with little concern for how much resource any project consumes.

With a Stage 3 level of capability, companies gain significant benefits: If a project can be completed with 20 percent fewer resources, then the return on investment will increase dramatically. Although we used this illustration earlier, it's worth repeating here. Take a project with a $6 million development cost, including a $5 million cost for developers, and an expected $9 million profit contribution (50 percent ROI above the development cost). Through improved resource requirements planning and management, the resource cost can be reduced to $4 million, and the project cost can be reduced to $5 million. As a result, the project ROI improves to 80 percent [$9M - $5M / $5M].

For some projects, reduced resource costs through resource requirements planning can be the difference between being below or above the hurdle rate required for project approval. With lower project costs, a company can develop more projects. Stage 3 capabilities confer project portfolio benefits as well. A 20 percent lower resource need by all projects means that 20 percent more projects can be completed with the same total resources—with a resultant overall output increase of 20 percent as well.

In this chapter, we'll explore the DCM systems and project resource planning techniques that can help project managers achieve these benefits.

Stage 3 has four major practices, illustrated in Figure 7-1. Project resource requirements planning (RRP), which is the planning aspect of Level 2, enables project managers to effectively plan resource requirements. Generally, this is done by providing each project manager with a tool set to make preliminary resource estimates in person-days for each project step. These estimates could come from the project manager's personal experience, they could be based on standards, or they could be derived from a detailed workplan for each project step. The project manager can then balance these resource estimates by comparing them to resource availability, by time-phasing steps differently, or by balancing the estimates among skills.

Rtsouree Needs

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Rtsouree Needs

Trari staler project resource requirements tp pifljegt rwp^? needs

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Workload Reconciliation

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Workload Reconciliation

Reconcile wprfc f?s'irn:stnii (0 resource requirements

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' Hecwiello task dfflall it> step estimator ' Reconcile sLizp assortment 10 work estimate

Figure 7-1: Overview of Stage 3 Practices

The second practice associated with Stage 3 is the ability to translate resource requirements into needs for purposes of establishing resource plans and requesting assignments. This is the operational end of resource management. Tools like the ones described earlier help the project manager translate resource estimates in person-days into FTEs for resource needs. A project manager may adjust these estimates based on the number of workdays in the months being planned, and may round off the needs. For example, the need for 22 person-days in a 20-day month computes to 1.1 FTEs, but it's more practical to request a single person (1.0). Finally, the project manager may find it useful to adjust her needs estimates to fit the availability of specific individuals being requested for their skill sets. To do this, she must have the information created at the earlier stages of capability we've described.

The third practice is project resource requirements management (RRM), shown on the right side of the framework (Figure 7-1). RRM enables project managers to effectively manage resource assignments by allocating assignments to project steps. This allocation may be similar to the original resource-requirement estimates, but could be different, depending on how needs were filled and the specific developers assigned to a project. Typically, a project manager finds it helpful to make adjustments in order to make the best use of the abilities and interests of those actually assigned to projects. At this point, the project manager also has the opportunity to create a resource contingency by allocating some of the assigned resource time to a buffer, instead of fully allocating it to all steps. This enables the project manager to implement some of the resource aspects of critical chain planning.

The fourth and final practice associated with Stage 3 development resource management is workload reconciliation —the reconciliation between Levels 2 and 3. This practice enables project team members to reconcile detailed work scheduling estimates to their step assignments. It also enables the reconciliation of work estimates from detailed step workplans to step resource requirements. Without such tools and visibility, managers cannot possibly manage time frames, tasks, steps, etc.

To better understand each of these components of project resource requirements planning and management, we'll look at how Anne Miller applied them when she did the Phase 1 planning for the Fast-Food Robot project at our hypothetical company, CRI.

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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