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Resource management (sometimes called capacity planning) is the process of managing your billable team to deliver projects. Delivery management (sometimes called project management) is the process of managing project timelines and fulfilling client obligations. Both are deeply related and integral to maximizing profitability and minimizing risk of employee burnout and project failure. It's a balancing act that can be difficult to get right, but it's essential for success in the professional services industry.
A quick note on the term resource: When thinking about your business through a functional lens, the term resource is the commonly accepted word for your billable team members. However, it's important to remember that a resource in a professional services business is a person, and you won't get a lot of buy-in from your team by calling them "resources". Success as a business owner is finding the balance between the function of the business and the empathy of a human being.
When you sign an agreement with a client, you are committing to a set of deliverables or services that are most often called a project. You assign members of your team to perform activities that get you to the final delivery of that project. Doing this right means your business will be successful: projects are profitable, team members are happy, and clients come back for more and refer you to other opportunities. Doing this wrong means your business will struggle: projects are late, invoices don't get paid, team members are stressed and quit, and clients go elsewhere.
Tactically, this means organizing the workstreams of your projects so that the delivery dates are predictable, and assigning your team to these workstreams in a way that keeps them engaged and productive. As you often have more than one project and more than one employee, this ends up being a game of Tetris, often requiring reshuffling as your sales pipeline and client needs shift.
An important metric to monitor is resource utilization. This is the percentage of your team's time that is spent on billable work. A full-time employee that is billing 40 hours/week is 100% utilized; if they are only billing 20 hours/week, they are 50% utilized. This is measured on both a per-person and organization level. Time not spent billing is often called bench time.
A good resource utilization target is 80-90%. If you're under this, you likely are losing money and your team is disengaged. If you spend too much time over this (and yes, it is possible to be over 100%!), you risk burning out your team and missing delivery deadlines. If you aren't tracking this at all, you will consistently be surprised when clients and employees leave, or your company loses money.
An effective tool in managing resources is breaking down a project's workstreams into smaller pieces. This allows you to more granularly assign the right members team to the tasks that make up a project. For example, if you're building an app, you might break it down into discovery, design, development and testing. These activities will be more active during certain parts of the project and require different skill sets to deliver.
Additionally, breaking a project into smaller pieces is essential to managing delivery timelines. Some tasks are dependent on one another - so if a task runs late, the dependent task is also running late, and this impacts overall delivery timelines. This needs to be resolved and/or communicated to the client. It's normal for a project to run late sometimes, but being aware of it and coming up with solutions is vital.
Understanding your project timelines and resource utilization is one of the most important things you can do as a business owner to ensure your business is successful.
Treya is built to help you grow your business. We offer intuitive and integrated project and resource management tools for professional services businesses that are aligned with the advice here. Learn more about how Treya can help you manage projects and manage resources.
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