Project Management Tips – Committing Resources
ByBefore starting to implement a project, you must study resource requirements and budgets. The feasibility of the project depends on you and your team being able to justify the expenditure by comparing it favourably with the proposed benefits.
Estimating Manpower
Think about who needs to be involved in each activity and for how long in actual worker days. A team member may need to work on a project for a period of 10 days, but if he or she has to work on it for only 30 minutes per day, the total commitment is just five hours. If the member can usefully work on other projects for the rest of the time, the cost to your project will be a fraction of the member’s 10-day earnings or charge. But if he or she can make no contribution elsewhere, then your project’s budget must bear the full cost.
Identifying Other Resources
While the major cost of a project is generally the people, there are other resources that will have an impact on the budget. For example, you may have to commission market research. Facilities, equipment, and materials may also involve expenditure. Failure to identify all the costs will mean that you lose credibility when others examine the project to balance its costs against its benefits. A comprehensive estimate of costs at this stage also reduces the risk that you will have to request extra funds once the project is up and running.
Questions to Ask Yourself
- Can I estimate costs or resources more accurately by asking someone with relevant expertise for advice?
- Is there another way to achieve the goals that would not require expenditure on particular resources?
- Is the cost estimate that I have drawn up realistic rather than optimistic?
Examining the Details
It is not enough to know that the team will need a training room for a month during the project, you will also need to know how large that room needs to be and what kind of equipment you should install in it. The better the detail at this stage, the more likely you are to avoid problems during the implementation. This will enable your team to focus on achieving objectives rather than on fixing matters that were poorly planned.
Choosing a Costing Method
Whatever resources you consider, you can calculate their cost in one of two ways: absolute costing or marginal costing. Absolute costing means calculating the exact cost of the resource. If, for example, a new computer is essential for the project, the amount you pay for it becomes a project cost. If you can use an existing computer, allocate a proportion of its cost to the project. Marginal costing means that you only allocate costs to the project if they would not be incurred if the project did not take place. For example, if an existing computer, which is not being used, is required, the marginal, or extra cost, of the computer is nil. The cost of the computer should not be in the project budget. With practice, marginal costing is easy to calculate and is generally a more accurate measure of the cost of a project to an organization.
Making Compromises
In an ideal world, you would gain approval for all the resources you need. In reality, you will probably have to cope with less. The person you most want for a certain task may be unavailable, or the best premises for the project occupied, and you will have to make compromises. Look for compromises that will not threaten the overall aims and objectives of the project. For example, you may be able to recruit a highly skilled worker part-time and allocate the remainder of the work to a less experienced, yet able, team member.
Documenting Resources
The key to ensuring that the resources you require will be available when you need them is to produce a document that all the stakeholders can agree to. This is known as a commitment matrix, because it can be used to remind people of their commitments. Check that the matrix is complete and that every group of activities is comprehensive so that you can be sure that you have identified all the necessary resources.
Using Outside Resources
While many resources will come from within your team or organization, you will need to go outside for others. Make sure that you get competitive quotes from potential suppliers and reach an agreement on costs and performance that makes it easy for both parties to monitor progress tightly. You may need to brush up on your negotiating skills beforehand to ensure that you can win the best deal. While it may seem unnecessary to go into such detail at the outset, the tighter the agreement, the more likely you are to avoid conflict.
Getting Sign-off
Before you can obtain the official go-ahead for a new project, it must be proven that it is still a business priority and that its benefits to the organization considerably outweigh its costs. This is known as investment appraisal, or cost-benefit analysis, and it is a discipline used widely in many organizations which often have formal systems for the process. If the costs are the same or more than the benefits, the sponsors have three alternatives: they can proceed with the project regardless (although this is seldom desirable unless the strategic value of the project is very important to the long-term aims of the organization); they can modify the objectives and change the activities in a way that reduces costs; or they can cancel the project because it is considered unfeasible.
Points to Remember
- If your organization has an official system for obtaining sign-off for a project, this should be followed.
- Finance departments can provide useful feedback on your estimates by comparing your project’s costs with others.
- The benefits of a project should never be exaggerated – promises will be expected to be delivered.
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