Project Selection: Resource Allocation

Projects can go forward only with adequate resources to sup port them. Ordinarily, an organization has limits on resources and must make choices about which projects to support.

Project selection, non-selection, termination, or adjustment is dependent, ultimately, on the availability of resources- personnel and financial-to support projects. Consequently, considerations for allocation of the organization's resources are an integral part of the Project Selection practice area.

Conceptually ...

The Resource Allocation Practice provides the project manager, the executives and senior management team, and the organization with the means to specify and examine staff requirements as a basis for allocating resources to each project.

The purpose of this practice is simply to ensure that the organization's finite resources and their availability to per form project work are considered as an aspect of business case preparation and as part of the ultimate project selection decision. Tools used for developing staff requirements and a staff management plan, which are prepared during the Plan Phase, will also be used to provide the necessary examination for early and recurring resource allocations. Therefore such tools can be incorporated into the business case as information for review by executives and senior managers who must decide the specific allocation of resources for the project at hand and across all projects.

Resource Allocation is first performed during project initiation (Profile Phase), when used in preparing the business case and for project selection. Along with the business case, staff requirements and the staff management plan are also reviewed and updated (as necessary) throughout the project.

Review Project Resource Financial Impacts

Each project opportunity must be examined for anticipated resource needs and related financial impacts. This warrants a review of the following items.

Resource Requirements -- Initial resource estimates may be available to provide a preliminary list of resource requirements. However, the more detailed examination of staff requirements prepared in the Plan Phase will be a primary source of information that can be used to facilitate early resource allocation decisions.

Decision makers should review that information for confirmation or adjustment, and to examine ...

• What resources are currently required?



• What is projected for the future?



• What personnel can be assigned to this project?

What is the cumulative impact of all personnel requirements? Is resource availability within our current capability? Are external resources needed? Are financing and partnering capabilities needed and available? Are resources available to achieve the current project scope? Are scope adjustments needed to better utilize resources?

How will project schedules impact workload? Are adjustments needed?

Are personnel over-utilized or underutilized? Are certain resource skill types overburdened? Do cur rent personnel need additional training to meet anticipated project requirements?

Again, the development of project staff requirements may be done in conjunction with resource allocation examination activities, using tools prescribed for process steps in the Plan Phase. The results of this examination will also provide some insight into financial impacts resulting from the resources required for the project.

Project Cost and Schedule Impacts--Costs for specific skills, unique specialties, or turnovers during the project-all of which raise the costs of projects over time-should be evaluated. Information to be examined includes:

Are all necessary skills available within the company, or is external resource acquisition necessary? Are the skills necessary to complete the project part of the core competency, or is this a new business area?

What is the time dimension for the project under evaluation and for all projects using the same resources? Will the deadline or the cumulative impact of all affected projects require funding of outside assistance?

Quality Management--Both anticipated and unexpected changes in the quality factors of the project and in the people required to ensure quality may incur cost adjustments as the project goes forward. This warrants examination of What quality specifications in the project might generate staffing costs? Will a different level of product or service quality expectation require a new level of effort that will affect resource allocations and costs? Does the required resource level for quality expectations exist within the organization? Vendor, Supplier, Contractor, or Subcontractor?

Agreements--External agreements and arrangements may affect pricing over time. Identifying and accessing external resources can save costs in some instances:

What agreements have been made with external organizations? Are firm external organization commitments needed early in this project? What external vendor, supplier, contractor, or subcontractor costs for products and services stay the same or increase over the life of the project? Costing Methods--The use of different costing methods can produce different results, and must be normalized or must use standard methods across all projects. A review of methods helps to ensure costing method accuracy: What cost methods have been used? Hours versus dollars? Are the methods consistent across the period of project work? Will the skill mix required on the project change over time? Will that change affect costs and internal or external personnel utilization? Have all costs been accounted for in each project? ( For example, have administrative and support costs, as well as costs to perform project management activities, been included in all projects?) Have previous projects' cost data been used to estimate costs here? The financial and staffing requirements deliberated and developed in this step should be considered when preparing the listing of staff requirements.

Review Organizational Resource Availability Impacts

Resource requirements for the current project opportunity should be evaluated against the total portfolio of projects.

This examination can be presented using a spreadsheet or other tool contained in this methodology. It includes an examination of other projects' resource allocations (or extracted summaries) and provides for a review of the total resource commitments and staffing requirements tallied across all projects. The following considerations can be deliberated to assess resource availability impacts.

Are the required resource projections within the capability of the organization if this project is added to the portfolio? Are changes to project scope or outside financing needed to do this project?

Is the pending resource utilization commitment financially sound? Is there flexibility to handle unanticipated changes? What is the total impact on personnel relative to the number and types of particular skills available? Do interests in applying resources to this project make any other projects stand out to be adjusted or eliminated? Relative to resource skill and availability, is this project too big? Too risky? Too unknown? Of marginal benefit? Can project schedules be adjusted or the scope scaled to have a different impact on financial resources or on resource utilization? Can personnel be grouped or clustered so that several projects can be supported simultaneously? The results from this examination of the impact on organizational resource availability should be considered as a part of the business case recommendation.

Specify Resource Allocations for the Project

Using either information attached to the business case or the selection recommendation document itself, it’s prescribed that a written statement or indication of the approved resource allocations be included in the business recommendation for the project that has been selected.

A document that can be used for this purpose is the Resource Allocation Plan, which is one of the optional project support plans that can be prepared during the Profile Phase.

This plan can be used to provide a more detailed examination of resource requirements and availability, and to specify and record executive and senior management resource allocation decisions and the associated approvals for the allocations made. If prepared, this plan should be monitored by the project manager throughout the project and reviewed by executives and senior managers at decision gateway points.