Optimizing the utilization of your skilled resources How to balance skills demand with capacity Innate: Resource Management Software author 20 years experience 100 active clients across IT, Professional services and, increasingly, Engineers Seminar draws on recent experience with Petrofac & Micron Barry Muir Managing Director

The challenge ‘To continuously optimize the utilization of geographically dispersed, multi-disciplinary workforces, …where each project has its own timeline, priority and competency requirements’ Steve Major, Petrofac Steve is VP Eastern Operations of Petrofac. 5,000 Engineers from 3 continents assigned to 60 projects & proposals Neatly defines the tension between 2 contrasting objectives: Minimize numbers on the bench vs need for sufficient skills available to staff up new projects ‘Continuous’ because situation constantly changing

Striking the right balance The consequences of too much or too little spare resource are equally unpalatable Re-assess whenever a change occurs in demand or supply Consequences Too much means people on the bench and costs that are not being met Too little jeopardizes appropriate staffing levels on projects, substantially increasing risks of delay. Situation is in constant flux – Optimization requires re-assessment whenever there is a change in demand or supply. Skills Flexibility & productivity are key goals. They create space to manoeuvre.

Striking the right balance ‘If fee earners could increase their billable time by 10 minutes per day, the average ACE member would generate 2.3% extra revenue. Assuming no increase in costs/overheads are incurred, that could raise profits by 33%’ Association of Consulting Engineers Benchmarking, 2011 This is the prize! ACE Benchmarking - members survey that provides performance based benchmarking information. Within Profitability section is this conclusion For Fee earners, a 2% increase in billable hours per day for fee earners could mean a 33% increase in profits

Agenda The challenge What do you need to know? What needs to be in place? Roles Processes How well do you score? Successfully bridging the gap Information must be based on data that is: Credible Current & complete The importance of the key roles and processes

1. What do you need to know? Forecast demand v capacity Where are the bottlenecks and under utilization? Scenarios to show the impact of project awards & change Productivity & Utilization How effectively are our teams working? Track outstanding requests for resource. Managing the resource allocation process Resource performance on each project Is the resource plan still realistic?

Forward loading 1

Forward loading 2

Forward loading 3

Forward loading 4

Scenarios

Move projects to minimize bottlenecks Importance of maintaining realistic resource plans – Avoid the house of cards Take Project snapshots Run Comparison reports to show the impact

Productivity

Outstanding requests 1

Outstanding Requests 2

Resource performance on each project Could require another 40 days! Explain If performance to date is not improved……

If individual plans are unrealistic….. The source data must be credible, current & complete So the underlying processes and systems must be effective

2. What needs to be in place? Key Roles Demand management Resource allocation Progress tracking Roles & Processes

2.1 Key Roles Line managers – Project managers Senior managers maintaining the supply Ensure the right skills mix is available Project managers Defining the demand Senior managers Assign priorities and resolve disputes Line Managers: Maintain details of skills & competencies Hire & termination dates, impact of holidays Identify skills shortages in good time for recruitment by HR Provide career paths Set aside sufficient resource for BAU & departmental projects Ensure balanced workload for their team and that everyone reaches their utilization targets Project Managers Resource planning at generic skill level, using templates Stipulate experience and competency requirements Visibility of spare capacity so plans will be feasible New plans generate resource requests, updated plans create change requests. Search for appropriate staff and request individuals Senior managers There will be excess demand for some skills and insufficient demand for others Prioritise each piece of new work - how far down the list can you get? When one team gets overloaded, are there similar skills elsewhere? Looking at the longer term trends in demand, do you have the right skills mix going forward?

2.2 Demand management Change comes from: Require scenarios to: New projects and proposals Client delays free up resources unexpectedly Changes in project scope, or poor estimating Key resources leave Require scenarios to: Assess the impact – new bottlenecks or underutilization Explore alternatives….whilst preserving the live data WHAT NEEDS TO BE IN PLACE 3 Changes in demand can be unexpected and arrive from many quarters. Scenario management, as previously shown, is the way to handle it Response depends on priority of the new work - EXPLAIN Explore alternatives Scenario reports when assessing the likelihood of new projects, as shown immediately see the resource effects of date changes – interactive Gantt Chart

Impact of changes Re-baseline the plan, as necessary Importance of maintaining realistic resource plans – Avoid the house of cards Take Project snapshots Run Comparison reports to show the impact

2.3 Resource allocation Track each assignment Many variations: Requested Proposed Accepted/declined Confirmed Date changes Many variations: the dating agency approach Where teams are role/skill based Requests can be directed to appropriate team Otherwise, dating agency approach.

2.4 Tracking effort & progress Actual performance will affect the resource plan So, measure the performance of resource effort Establish performance baseline – the project budget Track actual effort – timesheets Assess progress – value of work done Re-estimate to completion Can performance to date really be improved? Individual resource plans must be maintained and updated As an example…….

Earned value Explain Without EV, you are comparing Apples with Oranges Schedule Variance Cost Variance Explain Without EV, you are comparing Apples with Oranges SV & CV show current performance/productivity Positive Cost Variance, Negative Schedule Variance Schedule variance = Budget – Earned value Cost variance = Earned Value – Actual Effort

Forecast to completion based on continuance of actual cost & schedule performance Could require another 40 days! Here is the example that we previously looked at. Negative Cost & Schedule Variances Shows the degree of risk in not maintaining a plan Avoid the house of cards

3. What needs to be in place? Roles & responsibilities of the key stakeholders. Demand management - assessing the impact of new projects and other changes Resource allocation process Tracking effort & assessing progress on each project. To summarize…. Maintaining this is primarily about Organizational culture ….. And effectiveness of system support tools

4. How well do you score? Projects often centrally registered, with financial parameters defined Multiple spreadsheets for resource planning, often department or regionally based Resource allocation process is often poorly defined, inconsistent procedures & communication Roles and responsibilities can be inconsistent in large organizations Tracking effort often done, measuring progress less so. Here is what’s typically in place

5. Bridging the gap Build on what’s in place Review business processes Minimise cost, risk & disruption Review business processes Appropriate software tools Take logical next steps, rather than a step change Appropriate tools Give key stakeholders the operational tools for the job – for credible, current & complete data Configure data screens & reports Provide navigation links that reflect the process steps

The potential rewards Cost savings Impact on profit levels If the improved quality of Information gains only 2% productivity improvement …. Annual cost savings could exceed £1,000 per resource: Impact on profit levels Improved performance on individual projects 1 Savings assume an average loaded salary of £50k. I know – you all pay much more than that 2 Restate ACE Benchmarking conclusions – A 2% increase in utilization of fee earners improves profit by 33% 3 Knowing that the correct skills and experience are available will reduce risk of delay and avoid client disappointment.

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