The Definitive Guide for Resource Planning and Forecasting

1

© 2016. Saviom Software. www.saviom.com

THE DEFINITIVE GUIDE FOR RESOURCEPLANNING AND FORECASTING

eBook byAakashGupta

2


This e-book will instruct you on how to improve your current resource planning and

forecasting methods and lend you the insight needed to ensure each one of your re-

sources (staff, vehicles, assets of any form, etc.) are properly utilized.

It delves into a variety of additional important aspects (in addition to basic resource

allocation) that are either forgotten or given very little attention in the current organi-

sational resource management process. These include aspects of the best practices for

forecasting, tentative project tracking and how to generate business intelligence.

3


CONTENTS

Contents

THEORY VS. PRACTICE 04

THE THREAT OF LOW-COST LABOR 09

HOW DO YOU MEASURE IN THE RESOURCE PLANNING AND FORECASTING SPECTRUM? 14

THE INFAMOUS SPREADSHEET 20

THE BEST PRACTICES FOR SUCCESSFUL RESOURCE PLANNING & FORECASTING 26

NEED TO REVISIT YOUR RESOURCE PLANNING AND FORECASTING PROCESS? 37

4


THEORY VS. PRACTICE

5


Resource Planning and Forecasting (also known as ‘Resource Management’). Where do you even begin explaining such a seemingly-complex concept?

To answer this as directly as possible, we at Saviom decided to see if the internet’s vast repository was able to come up with a good answer, and after sorting through a varied list of explana-tions, the definition from BusinessDictionary.com was the best we could find:

Resource Management - The process of using a company's resources

in the most efficient way possible. These resources can include tan-

gible resources such as goods and equipment, financial resources,

and labor resources such as employees. Resource management can

include ideas such as making sure one has enough physical resources

for one's business, but not an overabundance so that products won't

get used, or making sure that people are assigned to tasks that will

keep them busy and not have too much downtime.

Theory vs. Practice

6


On a basic theoretical level, this sums things up pretty well. As we all know, however, the way things go in “theory” and the way things go in “practice” generally lie at two VERY different extremes...

Most companies would LOVE the ability to constantly maintain employees at just the right capacity and appropriately allocate them to jobs based on skillset or desire as needed. But the truth is the majority of firms worldwide get overwhelmed trying to balance resources in the “most efficient way possible”.

And it’s not a problem companies in our current economic cli-mate can afford to take lightly.

In fact, most firms are still stuck managing resources with the notoriously cumbersome Excel spreadsheet approach - the most dreaded of adversaries for resource managers everywhere. Spreadsheets are far too often the weapon of choice and, even though they are easy to setup and can seem flexible with com-pany requirements, they very easily become outdated and un-willing to cooperate as your company grows.

Theory vs. Practice

7


And it’s a good way for your company to get fatally burnt in the process.

How about a definition a bit more compact with more clarity? Try this instead:

As you can see from this definition, resource management is not only far from simple but goes a long way to support the health and overall wellbeing of a company.

Resource Management - The process of allocating your employees

to the right work based on availability, role, skillset, location (and

whatever other criteria) at any given time, while given them enough

work to prevent the underutilisation and overbooking that decreases

worker satisfaction, productivity, and overall profitability.

Theory vs. Practice

8


Theory vs. Practice

Let’s Get Started!

Before you get started, we would like to make you aware of a few different terms to avoid any confusion. Throughout the book we refer to terms such as “resource planning and forecasting” or “resource scheduling” in replacement of “resource

management”. We do this since such terms often encompass the above definition a lot better than “resource management” does.

9


THE THREAT OF LOW-COST LABOR

10


To start, let’s explore the resource planning and forecasting problem faced by modern companies and examine how things end-ed up the way they are today. When trying to find a solution to a problem, the best way to begin is to zoom out and investigate at a more macro-level for some perspective.

The Threat of Low-Cost Labor

11


We live in a Globalized World In the last twenty years, globalisation has created dramatic, far-reaching effects on the economic structure of the world and gigantic shifts within the demand structure of the labour workforce everywhere.

The stats on the side shouldn't surprise you.

It’s no secret that countries like India, China, Indonesia, and the Philippines offer an abundance of low-cost resources the developed world simply can’t compete with. A lot of work is now being funnelled to these regions, and outsourcing has left manufacturing and IT service talent nearly obsolete in other parts of the world.

An integrated world market exposes you to a large number of competitive players you simply cannot ignore, whether you sell services or not. And with the initial outsourcing push within the manufacturing and IT services sectors, professionals with increasingly more valuable skills - such as auditing and law, for example - are starting to feel the pinch as well (refer to Figure 1.1).This trend will only pick up speed as newer, cheaper labour

$14,400,000,000211,700

Computer Programmers / Software Engineers

$8,500,000,000160,000

Accountants / Auditors

$4,300,000,00040,400

Lawyers

$591,000,00011,000

Insurance Sales Agents

$332,000,0006,700

Real Estate Brokers / Agents

$230,000,0003,700

Chemists / Physicists Wages Lost

Jobs Lost

Top Careers at Risk for Outsourcing in the US (2015)

(Figure 1.1)


12


markets continue to open up and grow more refined.

Aside from losing a large number of jobs, the implications go deeper to truly transform the way many companies use their workforces too. Top firms are increasingly treating wages as a variable cost in order to stay nimble and conserve expenses. This creates more flexible, leaner organizations but also reduces the need for “permanent” resources, and many are embracing the “on-demand” workforce concept (i.e. part-timers, contractors, freelancers) instead.

What companies need to doThis decision impacts firms that choose this route in multiple ways.

First, it requires maximising the output of company resourc-es. Organisations cannot afford to underutilize any of their re-source pool or reroute employees to lower-skilled work (i.e. ad-ministration, BAU activities, etc.). Doing so leads to spending more than you need to and not getting the level of output you expected.

Manufacturing

IT Services

Distribution

Call for Help Center

R&D

Breakdown of jobs lost within each sector in the US 2015

(Figure 1.2)


13


Second, these firms will need to forecast the requirements of their ever-changing

“on-demand” workforce better to avoid last-minute hiring costs or compromised

quality during slow-downs. Forecasting is crucial for effective resource planning

and will be covered further in future sections of this book.

Finally, this route requires maintaining resources at the lowest cost possible with-

out compromising to keep operating costs manageable during fluctuations.

Hopefully, you now understand the true gravity of this definition and why be-

ing “efficient” is so vital to a modern organization’s profitability. Proper resource

planning and forecasting is no longer just a good idea these days but has become

a necessity for surviving in the radically changed current economic climate.


14


HOW DO YOU MEASURE IN THERESOURCE PLANNING ANDFORECASTING SPECTRUM?

15


To evaluate how your company rates when it comes to plan-ning and forecasting, there are a number of questions you can ask. Take the time to go through the questions below, which can serve as a guideline to assess your current resource planning setup and identify areas for further focus and im-provement. It might be a good idea to keep your company’s resource manager or planner at your side during this process.

By the way, resource management is extremely complex, and for that reason, you might be thinking that with such a vari-ety of planning and forecasting processes from one company to the next, it would be impossible to generalize an accurate checklist. Actually, this idea is a bit flawed. If you focus on a particular set of core principles, the same guidelines should hold true for any company, regardless of industry.

How do you Measure in the Resource Planning and Forecasting Spectrum?

LET’S EXPLORE

16


1. An adaptable system that can change based on your constantly adjusting business demands

The demand and supply of your resources rarely remain static. For example, if market conditions change, projects that were once highest priority can suddenly go on hold as a new proj-ect moves to the forefront. Another challenge arises with the need to ensure such adjustments don’t delay the new project delivery date.

Regardless of the scenario, the show must go on – here are some related questions you can ask to dig a little deeper.

THE CORE QUESTIONS

Questions:

1 Can you easily change your plan when someone goes on vacation or resigns?

2 Will you be able to easily change your plan when the project timeline shifts or goes on hold?

3 Are you able to account for non-project activi-ties in your plan (i.e. support activities, BAU, train-ing, meetings, etc.)?


17


2. Identifying the right resources for the right job with a click of a button

Selecting the appropriate person for a specific job is one of the most crucial elements of planning and forecasting, but when you’re dealing with large pools of people, this task swells considerably. The following questions can help you ascertain whether you’ve got efficient systems in place for identifying the appropriate resource within your company at any given moment. This is especially relevant for those who need to plan for more than twenty resources at a time or need to forecast the people required for a significant project coming up.

Questions:1 Are you able to identify the right person among a variety of departments throughout the organiza-tion?

2 Are you able to select the appropriate person from across multiple countries or cities?

3 Are you able to search for the appropriate per-son based on skill, experience, and training?

4 Are you able to to easily track and assess an in-dividual’s current and past work assignments?


18


3. Accurately predicting your future resource requirements

Tracking future resource supply and demand is also critical when planning for your upcoming projects. The following questions can help assess your company’s forecasting capabilities.

4. Plans for Projects in the Pipeline

“Projects in the pipeline” refers to those your company could potentially win but has not yet definitely secured. Even if there is no guarantee of these projects going through, it’s still crucial to have a rough idea of who will be placed on them and how (if they do occur).

Questions:1 How many people do you require over the next three to six months?

2 How long will you require use of these resources?

3 What type of skills and capabilities should these resources have?

Questions:1 Can you plan for projects that aren’t yet con-firmed or are scheduled for a distant future?

2 Can you assign a generic role (or set of roles) to your tentative project instead of needing to assign it to a specific person?

3 Can you forecast overall capacity and demand on projects that are still in the pipeline?


19


5. Real-time business intelligence on resource planning and forecasting

These final set of questions concern your reporting capabilities and whether you can generate appropriate reports to satisfy seniors or managers within the company. Possession of re-al-time data is imperative to keep your company flexible and can allow you to reflect on whether you have the right type and amount of work placed onto your staff.

Questions:1 Do you have the business intelligence to gener-ate the specific resource forecasting information you need?

2 Do you later later compare plans to actual results to monitor effectiveness of efforts?

3 Have you ever attempted to maximise the utili-zation of your current talent?

4 Are you able to assign the most cost-effective resource from your company pool?


20


THE INFAMOUS SPREADSHEET

21


Your answers to the questions in the previous section are deter-mined by a variety of elements, including company structure and company culture. However such results often boil down to your tool of choice.

As mentioned before, the most common tends to be the Excel spreadsheet, and as we all know they often fall short of the re-sponsibilities that we assign onto them. In honesty, its not its fault, spreadsheets weren’t built for the complex scheduling we strain them under and when we do, it can frequently lead to devastating consequences.

But can Excel spreadsheets ever do the job appropriately? Let’s take an honest look to paint a picture of both the benefits and the disadvantages.

The Infamous Spreadsheet

22


PROS

Yes, believe it or not, there are some pros to the spreadsheet as a resource planning and forecasting tool.

First of all, spreadsheets provide you flexibility, allowing you to set up your resource schedule however you please, formatted in the manner best suited for you and the company. This is one of the major plusses to using Excel, and it’s a core reason so many companies hesitate to replace this primitive system for more advanced tools, which they may perceive to be too “rigid”.

Spreadsheets also rate highly for ease of use. Training anoth-er resource manager or project manager to understand your scheduling doesn’t require significant time or budget expendi-ture. They are also easy to distribute, so all relevant parties can hold a copy of the latest version of their resource schedules.

The low cost of spreadsheet planning is another major advan-tage (at least in the short run). This is a prominent benefit for smaller, boutique firms that want to set up their own scheduling process but lack the funds to invest in a more robust scheduling system.


23


CONS

As your team expands and company dynamics shift, the useful-ness of an Excel spreadsheet quickly begins to wane. The larg-er the number of people to schedule, the harder it becomes to maintain your spreadsheet (or multiple spreadsheets), and the more difficult it becomes to make efficient management decisions.

Some of the common challenges facing spreadsheet users in-clude:

• Simple Schedule Changes in Excel Drag You to a Halt.In Excel, the simplest baseline data changes often require de-leting, adding new cells, switching colours, merging/unmerg-ing, and other small tweaks depending on format. Schedul-ing becomes laborious and error prone and bulk changes for shifting projects or resource replacements can suck up hours of time.


24


• Spreadsheets Force You to Manage Multiple Silos of Schedules Across Departments.Excel leaves a myriad of silo schedules for different depart-ments and locations; integrating and merging these sched-ules when you need to get an enterprise view is a huge hassle. Coupled with today’s lightning-fast data changes, the end re-sult is a constant state of outdated enterprise-level manage-ment reporting.

• An Inability to Quickly Search for the Perfect Person for the Job.A disorganized Excel system makes it painful to search across multiple layers of schedules, and there’s a huge time lag to get the imperfect results for your search. If you can’t immediately identify the best person for the job, or if you just skip that step because it’s a nuisance, you lose the edge that comes with hir-ing and managing the right talent.


25


• Becomes Nearly Impossible to Perform Effective Fore-casting and Other Reporting.Many companies completely lack the ability to forecast capac-ity and demand. Excel isn’t built for this type of process at all, so they cannot generate regular or ad hoc reports for different levels of management – or they waste a ton of time and effort doing it manually. There’s no question that a lack of forecast-ing costs your business a giant competitive edge.

• Excel Confines Information Exchange to a File-Based Schedule System.It’s not possible to generate a user-specific view of info from a spreadsheet, and so you have to distribute the information through individual files. This is just asking for mistakes and miscommunications.


26


THE BEST PRACTICES FOR SUCCESSFUL RESOURCE PLANNING & FORECASTING

27


We’ve spent a significant amount of time setting the scene and highlighting the dif-

ferent issues that a resource manager faces, but what are the solutions to these prob-

lems? Below you’ll find an extensive list of solutions based on SAVIOM’s years of expe-

rience in the industry.

They appear in no particular order; feel free to apply your own priorities based on the

objectives of your organization and industry dynamics.

The Best Practices for Successful Resource Planning & Forecasting

28


Setting up a centralized system

A common issue arises when companies store their sched-ule, resource, and project information in different locations. Whether these files sit in a list of Excel spreadsheets, in the company project management system, or with HR, maintain-ing and tracking information becomes a time-consuming task, especially when multiple players are involved.

It is far more efficient to set up a single centralised system to streamline the scheduling of your resources against various project or non-project related activities. This establishes a sin-gle source of data and enables easy management and faster decision-making. It also allows multiple stakeholders to stay on the same page in real time.


29


Visibility of Your Resource Capacity Many companies put all their focus on current resource capacity levels, which only provides a partial view of actual resource supply. Gaining a more com-plete understanding requires tracking past and future capacities as well.

For example, tracking your medium to long-term future resource supply en-sures better decisions on the amount of project work that you decide to take on. If you plan to grow your team in the next six to nine months, you ought to know the potential resources you’ll have at the later date before agreeing to any new contract work.

A record of past capacity level trends can help your present decision-making abilities as well. If your resource capacity historically stands at 30% during the end of year Christmas period, you know not to take on any critical work with-in that time frame.

Companies also tend to track only full-time and part-time equivalents, but for a complete resource capacity view, it’s better to track all resource types, including the following:

• Permanent full-time and part-time employees• Contractors, temporary staff, freelancers• Employees who will join the team at a future date• Non-human resources (i.e. equipment, machinery, vehicles)


30


Visibility of Work Demand Tracking your resource capacity is never complete unless you track your resource demand as well. Much like with capacity tracking, you need a complete view of your past, current, and future work demand levels to ensure you allocate the appro-priate number of resources.

All your different types of work should be recorded as well. Companies often neglect recording ongoing non-project relat-ed work. This leads to inaccurate measurements of forthcom-ing work and last-minute overloading of company resources.

Be sure to record:

1 Workload generated from internal and external projects

2 Workload generated from unplanned activities (i.e. support, BAU, admin, etc)

3 Vacation, holidays, training, etc.


31


Estimate and Forecast your Future Projects in the Pipeline Unconfirmed projects or project work that is sitting in the pipeline needs to be maintained and tracked as well. Companies often fail to foresee the number of resources that will be required for a job that hasn’t been won yet. Since there’s no guar-antee the project will even happen, managers don’t bother to evaluate the required number of resources to take on the job.

And when this happens, the managers often resort to last-minute scheduling activities, creating various hurdles and ineffi-ciencies with resource capacity and availability.

Placing even a rough estimate on the number and overall type of people required for pipeline projects does wonders for your resource planning. Just imagine if you knew you were going to need seven consultants and twelve engineers for a project set to start two months from now – this data would prepare you to allocate the necessary talent as fast as possible once the project was confirmed.


32


Track Up-To-Date Information on Individual Competencies and CapabilitiesMaintaining a real-time list of employee skills and details makes it much easier to decide who to place where in a moment’s no-tice. You can keep lists of various work-related categories, or even non-industry abilities like language, VISA status, and personal work preferences.

For example, recording the linguistic abilities of each staff member allows you to allocate a Mandarin-speaking resource for a client in China. Or by making allocations based on staff work preferenc-es you increase the likelihood of them to be more productive and place more effort into their activities.

Industry-relevant skills should also be recorded in greater detail. Examples in this area include different qualifications, certifications, and education levels. Experience and performance records from past jobs should be documented as well, since they are often the strongest measure of a resource’s value.


33


Optimising the Utilization of your Resources While it’s necessary to select the appropriate person for each job, you must also avoid repetitive allocations to the same set of peo-ple. This is a common occurrence, in which highly performing and reliable employees can consistently be given high priority for up and coming jobs, leaving a large number of other employees left with menial and ‘administrative’ type of work. Having the ability to track utilization levels of each employee ensures no one falls through the gap and work is spread across evenly.

The best way to track such information involves generating reports periodically; on at least a monthly basis (utilization can be calcu-lated by dividing the booked hours by the fixed number of hours the employee is supposed to work over a given period). This will allow you to make decisions on if you need to reallocate work from specific resources onto underutilized resources. By maintaining a utilization range of 90% to 100% you ensure greater productivity and job satisfaction, directly improving your bottom line.


34


Compare Actual Performance Against ForecastedIt’s appropriate to schedule your resources over a specific timeframe, but is the allocated time accurate? Resources often spend either more or less time than is booked; creating a gap between actual hours spent and forecasted time.

Frequently comparing the two can increase accuracy in future booking allocations and free up unused time for other proj-ects and activities. For example, in the scenario that you had an engineer that completed and clocked in a job at 120 hours (over a span of 15 days) as opposed to the 150 hours that you had booked him, the gap between the actual and booked time spent is 30 hours. Such information allows you to make increasingly accurate predictions for your future bookings en-suring you don’t place unnecessary extra hours on your staff.

In the opposite scenario, where your booked hours are lower than the actual time spent you make future readjustments and increase the time needed for certain jobs.

FORECASTED

ACTUAL


35


Selecting a Cost-Friendly Resource When on a tight budget, selecting cost-effective resources really help you out. These resources will generally include younger members in your division (i.e. graduates and in-terns) or even people from a disposable external workforce (i.e. freelancers). Such options are perfect for completing lower skilled (or in the case of freelancers) or specialised tasks (i.e. article writing, minor design work) that higher skilled resources often end up doing.

On the more technical side of things, a methodology is re-quired that ensures you select such resources. You will need a system that helps recognize your low-cost resources, lo-cally or in different parts of the world which will then allow you to take advantage of the low-cost modern labour pool and avoid paying too much for unskilled talent.


36


Real-Time Business IntelligenceResources are often the largest expense of an organization. And achieving success in the fast-changing modern business environ-ment, with its ever-growing market demand volatility, requires high levels of business intelligence…so you can foresee the future in time to respond accordingly.

This means you need systems for generating and analysing informa-tion in real time and a single bird's eye view so management can put the data to use accordingly, slicing and dicing from different angles and drilling down to what is most necessary.


37


NEED TO REVISIT YOUR RESOURCE PLANNING AND FORECASTING PROCESS?

SEE HOW SAVIOM CAN HELP YOU.

38


Now that you’ve had a chance to consider some of the different criteria that makes

resource scheduling “efficient,” you should have a clear idea of the complexity within

a perfect resource and scheduling process.

If you are dealing with only a handful of resources, Excel spreadsheets may prove to

do the job, but when managing anything more than a dozen, it’s time to invest in a

more powerful, comprehensive system.

SAVIOM Resource and Scheduling can provide the tools you need to seamlessly in-

tegrate the practices discussed in this book into your current workplace and resolve

resource planning and forecasting challenges that currently cost your firm a lot of

time and money.

Visit Saviom Resource Planning and Scheduling at www.saviom.com to learn more

Need to Revisit your Resource Planning and Forecasting Process? See how Saviom can help you.

39


Saviom Software develops and provides Resource Management and Workforce Management solutions that help

firms around the world to improve their resource allocation and staff utilization levels. Saviom provides an easy-

to-use, highly visual scheduling gant chart allowing you to quickly create and change your bookings. We also pro-

vide a number of powerful reports giving you complete analytics and information on your resources and their work.

Saviom’s enterprise solutions are trusted by hundreds of companies world-wide including PWC, Siemens, Fujitsu,

Honeywell, Grant Thornton, Schneider Electric and Konika Minolta.

To see how one of our solutions can work for your team, department or organisation and improve your productivity

and bottom-line, visit us through the following:

www.saviom.com +612-8221 8883 [email protected]

Date post:	10-Jul-2016
Category:	Documents
Upload:	aakash
View:	15 times
Download:	4 times

The Definitive Guide for Resource Planning and Forecasting

Documents