RESOURCE ALLOCATION IN A BUDGET CRISIS BY JULIE RODGERS, PMP
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1 RESOURCEALLOCATIONINABUDGETCRISIS BYJULIERODGERS,PMP Introduction Thecurrenteconomicsituationdemandstoughdecisionsbemadequickly. Managersfaceshrinkingbudgetsrequiringacrosstheboardcuts.Maybeyour budgethasbeencut,yetdemandforyourservicesremainsunchanged.youmay havefewerresourcestoperformthesameamountofwork.orperhapsyoumust deliveronpromisesmade,assumingcertainstafflevels,andnowthereisahiring freeze.decisionsregardinghowtoallocateyourresourcesneedtobemade,but how,where,andwhen?resourcedecisionsaren tnew,buttheyaremoreurgent todayduetotheuncertaineconomy. Makingrashdecisionswithoutconsideringthelong termimplicationsisacommon mistakeformanagersduringtimesofuncertainty.asystematicapproachtomaking humanresourcedecisionsismoreprudent,butmayrequireexcessivetimeand moneyyousimplycan tafford.theresourceallocationprocessdescribedherecan helpguidehuman resourcedecisionmakingintheshortterm,inacosteffective, productiveway,usingminimalresourcesfromyourorganization. ResourceAllocationProcess TheResourceAllocationProcessisdesignedtoenableexecutivestomakeinformed decisions,quickly,withoutmajorinvestmentintime,moneyorresources.this processwillhelptoquicklydeliverbenefitsinashorttimeframedrivenbylimited budgets. TheResourceAllocationProcessalignstheavailableresourceswiththe organization smission criticalprocesses.intimesofshrinkingbudgetsbutsteady orincreasingdemands,somethinghastogive.theprocesshelpsyoudecidethe areasthatcangive.theprocessinvolvesfoursteps: 1. DefineYourMission(ifyouhaven talready), 2. InventoryYourResources, 3. InventoryYourProjects,and 4. ReallocateResourcesusingaResourceAllocationMatrixdesignedtohelp youanalyzeofyourprojectsintermsofcriticalityandproductivity. 1.DefineYourMission Doesyourorganizationhaveadefinedmissionstatement?Missionstatementsare vitaltocommunicatethepurposeofyourorganizationandprovideafoundationfor yourstafftomakedecisionsalignedwithyourpurpose.intheresourceallocation Process,yourMissionisusedtodeterminehowwellcurrentinitiativesarealigned withthegoalsofyourorganization.ifyourorganizationdoesnothaveaclear missionstatement,nowisthetimetodevelopone Julie Rodgers, PMP Page 1 of 5
2 RESOURCEALLOCATIONINABUDGETCRISIS BYJULIERODGERS,PMP WhendefiningaMission,itisessentialtoreceiveinputfromvariouspeople throughouttheorganization.amissionstatementcanbedevelopedquickly, throughfacilitatedsessionswithstafffromvariousdepartmentsandlevels. 2.InventoryYourResources OftentheHolyGrailofmanagement,itisimperativetohaveanunderstandingof whereyourstaffisspendingtheirtime.whattimeisbeingused keepingthelights on versusdeliveringnewinitiatives?aquickemployeesurveycanprovideinsight intothelevelsofhumanresourcesavailable.thisisn trocketscience,nordoesit havetobepainful.atool,suchasthefollowingtable,canbedistributedtoyour staff.askyourstafftocompletethetableeverydayforaweek.givethemadeadline torespondanddon tforgettorecognizetheresourcesthatrespondontime.a simplemsexcelfilecanmakethiseasiertocomplete. DayofWeek: TotalHoursinDay/ EveryDayTasks Description Hours/%ofDay Administrative Support AdHoc ProjectSpecificTasks Description PercentofDay Project1 Project2 Project3 3.InventoryYourProjects Aquicksurveyofcurrentprojectsprovidesinsightintothehealthoftheprojects.A surveyshouldincludeinformationsuchas: Purpose/Goals Budgetandstatus(Within,Over,Under) Resources Duration Scheduleandstatus(OnSchedule,Late,Early) Status(Planned,InProgress,OnHold);ifInProgress percentcomplete IftheProjectManagercannotprovidethisinformation,quickactionmaybe requiredasthelackofinformationistellinginitself.ifresourceinformationis unavailableforaproject,evenwithyourhelpinacquiringit,considerthisprojectat thetopofthelistwhenreallocatingresources Julie Rodgers, PMP Page 2 of 5
3 RESOURCEALLOCATIONINABUDGETCRISIS BYJULIERODGERS,PMP 4.ReallocateResources Throughdefiningyourmission,andsurveyingyouremployeesandprojects,the groundworkhasbeenlaidtoassesswhereyourresourcesarebestutilized.evaluate yourcurrentinitiativesintermsofcriticalversusoptionalandproductiveversus non productive.amission criticalinitiativeishighlyalignedwithyour organizationsmissionorhasbeenmandated(throughlegislation,regulation,or executivefiat).aproductiveinitiativeisonethatismeetingexpectationsintermsof budget,scheduleandscope(andquality,ifmeasurable). MeasureProjectCriticality Analyzeallprojectsagainsttheorganization smission.aretheyaligned?canyou explainhowaprojectsupportsyourmission?don tbesurprisedtofindthatmany ofyourprojectsarenotinlinewiththegoalsofyourorganization.aprojectclosely alignedwithyourmissioniscritical.aprojectnotalignedwithanygoalsshouldbe consideredoptional. Additionally,considertheimpactofaprojecttoevaluatethecriticalityofaproject. Usethefollowingcriteriatodefineaproject simpact: Willalargenumberofpeoplebepositivelyaffectedbytheproject? Canthebenefitsoftheprojectberepeatedinotherareas? Willtheprojectdelivercostsavings,eithermonetarilyorthrough streamliningofbusinessprocesses? Cantheinformationgainedinthisinitiativebere usedinfutureinitiatives? Ifyouansweryestooneofthesequestionsregardingaproject,theprojectcanbe consideredsomewhatcritical,ifyouansweryestoallfour,thisprojectisvery critical.iftherearenoaffirmativeanswers,theprojectisoptional. Oftenaprojectisundertakenbecausethelawrequiresitthroughlegislative mandates.managershavelittledecisionmakinginfluenceovertheseprojects. Becauseoftheirinflexiblenature,theseprojectsarecritical. AssessProjectProductivity Usingtheinformationgatheredfromyourprojectsurvey,determinetheproject productivity.aproductiveprojectisonethatismeetingcustomer sexpectations throughthetimelydeliveryofmilestoneswithintheplannedbudget.resource productivityshouldalsobeconsidered.cantheprojectmanagerarticulatehow manyresourcesarecurrentlybeingusedandwhatresourcesareneededinfor futureefforts?iftheansweris No,it slikelythisprojectisnotproductive. ResourceAllocationMatrix Usingthecriteriaoutlinedabove,scoreyourinitiativesonascaleof1through10for criticalityandproductivity.forexample,aninitiativethatisalignedwithyour missionandhasaconsiderableimpactwouldbeconsideredhighlycriticaland receiveacriticalscoreof10.ontheotherhandaprojectthatisnotalignedwithany 2009 Julie Rodgers, PMP Page 3 of 5
4 RESOURCEALLOCATIONINABUDGETCRISIS BYJULIERODGERS,PMP ofyourorganizationsgoalsandonlydeliversminimalimpactshouldbeconsidered optionalandreceivealowcriticalscore. Aprojectdeliveringcustomerexpectationsontimeandwithinbudget,butisnot usingresourcesefficientlymaybeconsideredsomewhatproductiveandreceivea productivityscoreof5or6.aprojectwheretheprojectmanagercannotarticulate whethertheprojectismeetingexpectationsorwhetherresourcesareefficiently allocatedshouldisnotproductiveandshouldreceivealowscore. Thisprocessmaybeviewedassomewhatsubjective.Forthisreason,afacilitated workshopinvolvingthestaffmemberswhowillbedirectlyaffectedbytheoutcome isthebestmeanstoperformthemeasurement.themeasurementcriteriashouldbe clearlyarticulatedandthescoringprocesstransparent. Afterscoringyourinitiatives,placethemontotheresourceallocationmatrix.The followinggraphicprovidesasampleof15projectsscoredforcriticalityand productivity. Thematrixprovidesatoolforvisualizingtheimportanceandhealthofyour projects,supportingdecisionsregardingwheretoreallocateyourresources.when consideringhowtoreallocateresources: 2009 Julie Rodgers, PMP Page 4 of 5
5 RESOURCEALLOCATIONINABUDGETCRISIS BYJULIERODGERS,PMP 1. Leaveyourcritical/productive(quadrant1)initiativesalone. 2. Abandonyourunproductive/optional(quadrant3)initiatives. 3. Movetheresourcesfromtheabandonedprojectstoshoreupyour critical/unproductive(quadrant2)projects. 4. Considerextendingtheproductive/optional(quadrant4)projectsto reassignresourcesfromthoseprojectstoshoreupyourmusthaves. Obviouslyresourcescannotsimplybereallocatedtoprojectswithoutconsideration ofwhetherskillsaretransferrable.hardchoicesneedtobemadeaboutresources whoseskillsnolongersupportyourorganization.atthesametime,opportunities existtoredefinerolestogivetalented,highperformingstaffnewresponsibilities. Conditionsarefavorabletoaskmoreofstaff,suchasdevelopinganewskillor takingonanewchallenge. KeySuccessFactors Thisprocesscanbequicklyandeasilyimplemented,butnotwithoutmaking difficultdecisions.thereareoftenvalidreasonsforprojectstobecontinued,evenif theprojectisnotcriticalorproductive.differentstaffmemberswillhavevarious perspectivesregardingwhatprojectsarecriticalandhowtodefineproductive.the followingkeyfactorswillhelpdeliversuccessinthisprocess: ExecutiveSupport:Ensurethereisexecutivesupportbehindthedecisions thatcomeoutofthisprocess. Transparency:Intheabsenceofinformation,peoplewillcreatetheirown versionofevents.communicatetheprocessgoalsandpurpose.keepstaffup todatewithprogressanddecisionsmadethroughregularstatusmeetings andinformal s. Involvestaff:Changeisscaryandresistanceisnatural.Expectresistancein everystepinthisprocess.tomanageresistanceandensurebuyin,involve yourstaffinthedecisionmakingprocess.facilitatedworkshopsare importanttoolstokeepstaffinvolvedinthecollectionofinformationandthe resultingdecisions. Conclusion Inthecurrenteconomicclimate,difficultchoicesmustbemaderegardingwhich investmentstocontinue.theresourceallocationprocessisasystematicapproach tomakethesedecisionsinaquick,methodicalway.theprocessisdesignedto involvekeystaffmembers,guaranteeingtransparencyindecisionmaking.the criteriatomeasureprojectswithregardstocriticalityandproductivitycanbeeasily defined.finally,theresourceallocationmatrixprovidesaclearvisualofthe projectswhereinvestmentshouldcontinueorbeincreased,andthosethatshould bediscontinuedorsidelined Julie Rodgers, PMP Page 5 of 5
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