Whilst there are several types of resources that can be managed in “resource management” (equipment, money, technologies, materials etc.), the one most companies focus on is people. This is because people and skills is the primary area of tension that companies have to contend with. You’ll know that’s the issue you are facing when you hear people say: “We don’t have enough people for this task.” “The right people are not available at the right time.” “[Name of resource] was supposed to be assigned to our project, but he’s been yanked to work elsewhere.” etc.
So, one of the key aspects of resource management is to ensure that the right people with the right skills are available at the right moment for each (active) project in the portfolio.
People are special
People are a distinctive category of resources: unlike other types such as equipment or money, they cannot be productive or available 24/7. This introduces a set of constraints which eventually causes a 10-day task to balloon into a 62 day one. And it these constraints are not properly taken into account, your resource plan will inevitably fail.
Let’s look at how a person’s work is defined in resource management.
A person is accounted for in resource management in FTE (Full Time Equivalent), where 1 FTE = the number of hours worked by one person on a full-time basis. At first glance, this definition appears quite straightforward: we all have an immediate sense of what a day’s work is. The key problem is that each of us has their own idea of what that represents. This includes departments within the same organization: finance will not have the same interpretation of an FTE than the PMO, or the Functional Teams. And there lies one of the important stumbling blocks that trips many organisations.
What’s in a day’s work? Defining the FTE
Depending on the industry and line of business, the fundamental unit for counting work-time can be either the day or the hour (in some rare cases, we’ve also seen the minute). In our exploration of the concept of a “day’s work”, we will use the day. But this breakdown is equally valid using the hour.
A standard work year is usually defined as 52 weeks x 5 days = 260 days of actual work. But in the real world, nobody is actually going to work those hours.
For one thing, there are working days when the person is not going to be at their workplace at all: bank holidays, personal vacations, or sick days. The actual number of worked days depends largely on the country in which you operate. When expressed as a percentage of the total standard work time it is often referred to as the resource’s “Utilization Rate”.
Example of utilization rate calculation with 12 days of public holidays, 20 days of vacation, and 4 sick days.
Standard working days in a year: 52 weeks x 5 days = 260 days
Actual working days = 260 days – (12 + 20 + 4 days) = 224 days
Utilisation rate = 224 / 260 = 0.86
There are also going to be moments when a person is going to be at work, but not involved in productive work: coffee and bathroom breaks, office parties and other social activities, etc. The proportion of non-productive time is unique to each individual. It represents at least 10% of a person’s in-company time, and can be much higher, especially if the company is undergoing major structural changes (for instance a merger, an acquisition or internal reorganisation). We will call this the non-productive discount, and will almost always be the same for everybody.
Then we have to account for the time spent on trainings, education sessions, company-wide events and administrative overhead (department meetings, HR/admin work) etc.
If come back to our example above, and factor in a 15% non-productive discount, one week of training per year and 2 hours of administrative overhead¹
Non-productive time = 224 days x 15% = 33.6 days
Administrative overhead = 2 hours x 52 weeks = 104 hours = 13 days
Total available productive time = 224 days – (33.6 + 5 + 13 days) = 172.4 days
Productivity factor = 172.4 / 224 = 0.77
How available the remaining total productive time will be will largely depend on the structure of the organisation. Projectized organizations, i.e. companies where resources are dedicated to a single project and non-project operational work is minimal, will have few conflicts between project and non-project work, which in turn makes the planning of resources fairly straightforward.
Things however will be more complicated for organizations where resources work on several projects concurrently, or on a mix of projects and operational work. The latter especially may struggle to maintain an effective plan, because operations (being a profit centre) often trump project work (that tends to be more innovation focused) for priority over resources, and people with key skills may find themselves unexpectedly yanked from projects.
Let’s go back to our example resource, and allocate 30% of her productive time to functional initiatives and 70% to project work. Within the project work, she is staffed 50% of her time on Project A, 35% on Project B, 15% on Study C.
Time allocated to functional initiatives = 172.4 days x 30% = 51.7 days
Time allocated to project A = 120.7 days x 50% = 60.35 days
Time allocated to project B = 120.7 days x 35% = 42.25 days
Time allocated to study C = 120.7 days x 15% = 18.10 days
In the end, a person's actual work profile would rather look like this:
How long will it take to perform task X?
Let’s say that your 10-day task is for Project B above. How long will it take to perform the work? Your first reflex would be to say “Two weeks”.
But we’ve seen in our example that a resource receives a lot of competing demands on his or her time. So, supposing that the breakdown above is maintained throughout the year, how long will it actually take her? The answer is to divide the number of hours required by the different factor identified above.
Lapse time = 10/(0.86 × 0.77 × 70% ×35% ) = 61.6 days = a little over two months
What this means for resource management
This exercise shows that the FTE, the fundamental unit of work in Resource Management, is a useful but flawed concept:
- The concept of FTE is very useful because it converts into a common, numerical unit, the whole range of employee situations inside the organisation. For instance, a person working part-time may be translated as 0.5 FTE. This in turn enables resource management teams to effectively compare and plan people-as-resources.
- But, it’s an imperfect tool because an FTE mean different things to different people. And even if these people did agree on what an FTE means, variations in each state’s requirements for off-work time means that you cannot accurately use a single calculation for everybody’s FTE.
So to answer the question: your 10-day task takes 62 days to complete because your task is not the only thing the resource has to do in her 8-hour day. And when you account for all the concurrent demands on her time, the actual amount of time she can devote to your task is much smaller than what the word “day” suggests.
So no: it’s not because she’s lazy.
¹We’ll assume an 8 hour day.