The Yearly Budgeting Round
Every year, when it’s time to define the budgets, capacity planning comes to slap you in the face. Teams and departments are requested to list their future projects and resource needs. Forecasts are made. Some guesses are made. Some figures are “tweaked”. Et voilà. We need x people (FTEs) to complete our projects successfully, while keeping the business up and running. But what’s the foundation of these estimations? Based on my experience: the gut feeling of a highly conservative newly baptized resource manager.
Reinventing The Wheel
When it comes to planning, Excel is probably the most commonly used tool. The problem though: we mostly reinvent the same Excel file. Always new, but mostly slightly better. To be frank, at Threon, we used to do that too. But time is money, and reinventing eats money for breakfast! That’s why we decided to approach things differently and found a sustainable solution (find out more here). But now, let's dive deep into the wonderful world of resource management and see what’s what.
Don’t want to be bored with the different types of resource management? Then skip to "Back To Reality: Being A Firefighter".
The Different Types Of Resource Management
First things first. According to us, capacity planning has three main types. They differ in various ways, but most importantly in approach and time.
Long-Term Capacity Planning (Up To 5 Years Or Longer) → Strategic Thinking
- Provides a simulation related to generic resources (skill/quality and quantity)
- Is aligned with and is in function of your strategic goals (up to 5 years)
- Supports your budget forecast
- Forces you to conduct project selection in function of reaching your strategic goals
- Supports long-term measures/strategies of the organization’s divisions (e.g. HR) to ensure the availability of the required resources
- Is the favorite pastime of CEOs, the employees of the financial department, HR managers, program managers and portfolio managers
Mid-Term Resource Management (4 Weeks - 12 Months) → Anticipate And Prioritize
- Covers planning of upcoming projects and programs to be kicked-off within the fiscal year
- Is in contrast with short-term, a proactive planning of resources on functional level (“generic”)
- Includes identification of critical resources
- Is typically the natural habitat of project managers and program managers
Short-Term Resource Management (0 - 6 Weeks) → Resolve Conflicts
- Includes decision-making processes for prioritization and solving resource conflicts for ongoing projects...
- or for upcoming projects
- Focuses on the next 6 weeks
- Translates generic resources into named resources
- Can be roughly translated as ‘Calendar Management’
- Is basically the main reason why project managers, line managers and resource managers turn grey so young
Back To Reality: Being A Firefighter
In reality most of us struggle with capacity planning on the short term. It's where resource issues pop up like mushrooms in autumn. My colleague (project manager) told me she feels like a firefighter. Putting out fires left and right. Fighting to hold on to the resources she was promised... It's clear that it shouldn't be like this. Things can be different. We should think different (instead of dying our hair).
Build A Brick House, Not A Wooden Shed
In order to help the firefighters (a.k.a. resource managers, project managers, line managers, program managers....) of the corporate world, a strong and sustainable long-term capacity planning exercise can do wonders. When you build a brick house, would you like your contractor to skip the foundation or ignore the quality of the foundation? The same thing applies for executing an excercise as important as capacity planning. Start with a solid foundation (long-term capacity planning) to ensure the quality and sustainability of the two upper tiers (mid-term resource management and short-term resource management). I truly believe conducting resource management for all three tiers in a well-founded way is indispensable for any company. Big, medium and small! And management that is willing to invest, will only benefit. Build a brick house, not a wooden shed.