Project Cost Management: Resource Planning

To estimate, budget, and control costs, project managers and their teams must determine what physical resources (people, equipment, and materials) and what quantities of those resources are required to complete the project. The nature of the project and the organization will affect resource planning. Expert judgment and the availability of alternatives are the only real tools available to assist in resource planning. It is important that the people who help determine what resources are necessary include people who have experience and expertise in similar projects and with the organization performing the project.

• How difficult will it be to do specific tasks on this project?



• Is there anything unique in the project’s scope statement that will affect resources?



• What is the organizations history in doing similar tasks? Have similar tasks been done before? What level of personnel did the work?



• Does the organization have people, equipment, and materials that are capable and available for performing the work?



• Does the organization need to acquire more resources to accomplish the work? Would it make sense to outsource some of the work?



• Are there any organizational policies that might affect the availability of resources?

A project’s work breakdown structure, scope statement, historical information, resource information, and policies are all important inputs to answering these questions.

It is important to thoroughly brainstorm and evaluate alternatives related to resources, especially on projects that involve people from multiple disciplines and companies. Since most projects involve many human resources, it is often effective to solicit ideas from different people to help develop and address resource and cost-related issues early in a project.

The main output of the resource-planning process is a list of resource requirements, including people, equipment, and materials. In addition to providing the basis for cost estimates, budgets, and cost controls, the resource requirements list provides vital information for project human resource management and project procurement management.

What Went Right

Ford Motor Company had great success with its Taurus/Sable project. Ford excels in team product development and seeks to remove barriers among design, engineering, production, marketing, sales, and purchasing. However, the Taurus team went far beyond removing barriers by creating a car that excelled in design and quality at half the typical development cost. They brought together all the relevant disciplines as a team and took the various steps in designing, producing, marketing, and selling the cars simultaneously as well as sequentially. Ford even involved people outside the company for advice—car dealerships, insurance companies, and suppliers. One supplier even offered the services of its own drafting department to prepare initial designs for Ford’s approval. Bringing together all the key players pro vided extremely valuable ideas at the conceptual stage, the time when changes can be made without much extra cost. “Not only were there substantial savings in cost and design time, but major production contracts were being negotiated and set up some three years ahead of production, with the duration of the contract some five years. This also led to cost economies.” (6)

6. Pinto, Jeffrey K. and O. R Kharbanda, Successful Project Managers. New York: Van Nostrand Reinhold, 1995.