Saturday, August 6, 2005

Constrained Resource for Project Resource and Portfolio Planning

It is important to know what "constrained resource" is and how it affect the resource planning and project portfolio planning.

Resource Planning is about listing out the available resources and match it to the future project demands. It typically happens within a time window, such as a quarter, six months, or even a year. The result is to assigning the resources to each projects, identify the shortfall or surplus. If you are in the shortfall situation, you would need to do one of the following: add your resource supply by borrowing resources from a larger pool, train your resource to the required skills, hiring permanent employees, acquiring temporary contractors, subcontract out your work, or kill some of projects. If you are in the surplus situation, you would need to worry about your resource utilization, and the long term profitability. In a short term, you can think retooling your resource, sending them to training, etc. In a long term, you may want to adjust the size of your pool. Resource Planning is highly related to project scheduling in the way that both need to deal with the constrained resources, which will be discussed later.

<>Project Portfolio planning is a set of process for making sure you are working on the right set of projects, by evaluating, selecting, and approving projects into your portfolio. Your resource supply limits how much projects you can do in a given time frame. The trick is how do you define the "resource".

I think that the most important concept here is to think the "constraint" and use it as the criteria to determine how you categorize your resources.

Recently we discussed about the difficulty we are facing. While we do have a lot of engineering resources overall, we still feel we cannot take a new initiative, which we really want to do. They key resources with the deep knowledge are already assigned to a critical project. We do not want to jeopardize the critical project. Because of lacking these key resources, we feel that we may need to delay the new project, or even delay the entire release. We end up decided that we need to use"named resource" for project and resource planning.

<>The key factor is that there are constrained resources. The constrained resources are those resources that cannot be easily replaceable. The definition of resources for resource and portfolio planning need follow this principle - whether the resource can replace each other. If two resources can replaced each other, we can see them as "one" resource with double capacity. If there are a pool of resources that can easily replace each others, they can be seen as "one" resource with multiple capacity. If there are resources that like commodity that you can buy or borrow, in other word, you can adjust the supply any time, you may not treat them as a "resource" for portfolio planning. These resource are still need to be tracked for resource planning perspective since they are against the overall constraint - cost.

On the other hand, if the knowledge of a product area is limited to few, or maybe just one person. The named person is the constrained resource. The demand For these constrained resources should be expressed separately in the project proposal. The resource demand and supply need to be matched at this level. The project selection decision happening in a portfolio planning cycle need to be based the availability of the constrained resource.

It is important for management to know where are the constraints in the organization. I think that a good principle I learned from TOC (theory of constraint) is that the focus of management / process engineering is to remove or reduce the constraints. What you need to look at is the throughput, not the individually productivity.

A best portfolio planning and resource planning solution should help you to determine what are the constrained resources. It should use the constraints with the target and objective you have and come up anoptimal collection of projects.

Outside the system, you may want to ask: Why do we have such constraint? Can we use tools such as "job rotation" or "training", to reduce thedependency on the constrained resources?

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