Let me open this by saying resource management is an integral part of a successful program management system, especially one that incorporates Earned Value (EV). Knowing who is working on what is extremely important for the Program Manager and the Control Account Manager (CAM).
With that said your Earned Value Management tool is not the place to manage your corporate resources and their utilization. It is intended to integrate your schedule and cost information and generate EV metrics to support the PM in making management decisions.
Many companies struggle with how to manage an individual’s availability and utilization. It’s typical for many companies, particularly those just developing an EVM Systems, to want to budget, forecast and track actual costs by individual person.
It is how most people manage after all, we assign tasks to individuals, we assess individual’s performance, and we hold certain individuals responsible for the completion of specific work assignments. Who is assigned to what project? To how many hours per month are they committed?
Resource management is all about supply and demand and the key question here is how we identify both of those elements. Many folks think that if we forecast by individual we can easily track who is being utilized and therefore deduct who is not. There are many problems with this approach:
- Where is the demand coming from? How does the company know what skill sets are required to execute all programs across the organization?
- Responding to utilization based on EV forecasts in reactionary. What if two CAMs forecast the same individual to perform work at the same time? That means something will have to push to the right, by the time it is resolved. It is imperative that CAMs and PMs understand what skills are required, and who is available to fill those needs prior to laying in the forecast. This information allows CAMs to shift work accordingly depending on resource availability. Not knowing this in advance of the work could lead to schedule risk.
- Maintenance of individual resources in an EV system is cumbersome. Also an EV tool does not incorporate those resources who aren’t working an EV project therefore they are hidden and unaccounted for. You want to update forecasts on an as needed basis and not anytime someone resigns, transfers to a new project or is replaced for any reason. Your EAC updates should be based on performance and risk.
The majority of companies bid work based on labor categories, and as such should plan on developing time phased budgets, forecasts and collect actual costs by labor category or role. There are several benefits to this approach:
- You can forecast by exception. Rather than having to update your forecast for every change in resources, you can update depending on when your forecast falls outside the parameters or realism (usually 5-10% variance of CPI compared to TCPI). Also it eliminates the need to do bottoms up estimates monthly; rather CAMs can choose for a series of statistical forecasts that best represents their current environment.
- Maintenance of the Resource Breakdown Structure (RBS) is minimal. You will only need to update when changes to the labor categories occur.
- You can use corporate RBS across schedules and programs within the EV tool.
- There is consistency across all programs.
The most common argument against this method is the idea that actual resources and actual rates are more accurate. In a vacuum this is true, however, it overlooks a few things. For starters, most programs can’t forecast out who the individual working a task is beyond a couple of weeks or at most a couple of months. This results in a majority of the forecast being against labor category. Actual rates are extremely fluid with any fluctuations in individuals working the job, new hiring’s or changes in the employee salaries.
Considering these situations any benefits of greater accuracy of using actual people and actual rates are significantly diminished. On most programs the variance between actual rates and using provisional, negotiated labor category rates is minimal and typically offset by more senior and junior staff.
As stated earlier, resource management is an extremely important part of project management. However, the EV tool it is not best place to manage it in. The intent of the EV tool is to capture the major elements in order to generate EV data for cost and schedule performance, and to provide forecasts by skill set to identify demand for building of the project team and hiring purposes. Labor categories provide a more flexible environment that is easier to maintain and manage.