Contributed by Mahindra Gupta, PMP
Human resources are the critical drivers of any project’s success. How do YOU know that you have the right resources and that your resource plan is as effective as possible? Project resource management includes tracking the performance of your resources to ensure the project is going as planned. This is where resource metrics come into the picture.
Resource metrics are the quantifiable and measurable indicators that help track and monitor performance and productivity. Reliable metrics enable managers to take corrective measures in case there is a mismatch between effort and expectations.
Why Track Resource Metrics?
No matter what your business’s size is, tracking resource metrics has numerous advantages, as follows:
- Allows you to analyze the project’s health, identify bottlenecks, and eliminate them.
- Provides insights into resources and teams’ utilization and productivity.
- Helps evaluate your team’s performance and keep it at par with expectations.
- Allows you to evaluate if project deadlines are being met.
- Enables you to identify risks and document lessons learned for other projects in the pipeline.
- Monitor and keep track of resource spending to avoid overshooting the budget.
Now that the significance of tracking resource metrics is clear, let’s understand which ones of them are critical for a project’s success.
Track These 5 Resource Metrics
- Resource utilization rate
Resource utilization measures how effectively resources are when compared to their total availability or capacity. As a project manager, you must optimize your resources to bring in the revenue or the desired ROI (return on investment). Resource management solutions can help gauge your project team’s overall productivity and see if too much time is spent on non-billable activities. If so, you can take appropriate measures and move them to billable work. A comprehensive overview of the utilization rate enables you to uniformly distribute the tasks and prevent the over/underutilization of team members.
- Forecast vs. actual time
Forecast vs. actual time is the variance between the time predicted for completing a project’s task and the actual time spent. Tracking this difference in real-time lets you detect any instances where resources exceed the initial forecasts. You can analyze factors like scope creep, lowered productivity, or resource crunch that may have led to the variance.
You can implement suitable corrective measures to mitigate delays and prevent project disruptions For example, if resource shortage is the reason, you can request more resources with requisite skills from the resource manager, or coordinate with HR to hire, Always, keeping the project budget in mind.
- Resource cost variance
Resource cost variance is the difference between forecasted resource costs and the actual cost of resources. Tracking this variance can give you a complete idea of the project’s profitability and margins. Forecast vs. actual financial reports on a resource management tool helps you monitor and control the project resource budget.
By capturing resource-related information on a unified platform, you can identify cost-effective global resources for your project. Analyze this report regularly and act proactively to prevent project budget overruns.
- Estimated vs. actual resources in use
Estimated vs. actual resources in use are the difference between the forecasted number of resources and the exact number utilized on a project. For instance, you estimated 4 resources for a particular task, but you ended up recruiting 2 more resources to accomplish the same job during the project’s course. As a result, it can escalate project costs and impact your budget.
This type of variance arises due to inaccurate resource forecasting, unorganized resource requisition workflow, sub-optimal resource utilization, and more. Analyzing estimated versus actual resources will help you create future resource plans for similar projects and improve your long-term planning.
- Revenue per employee
Revenue per employee is the company’s total revenue divided by its current number of employees. For individual billable projects, it can refer to the total charge-out rate of the team divided by its size. It helps determine how much average revenue each project team member generates for an enterprise.
This is an important metric to compare the actual revenue an individual generates against the average ratio. Management can, then, devise ways to maximize the revenue per employee and improve the project profitability.
Resource metrics give you visibility into your project’s performance. A resource management tool can help you track metrics in real-time to make informed decisions for your project.
It generates business intelligence reports like capacity-vs-demand, forecast-vs-actual time, and project financials that provide valuable insights. You can leverage this data and take the appropriate actions to keep every project on track, eliminate risks, and drive it to success.
About the Author
Mahindra Gupta is PMP certified with 20+ years of expertise in resource management & Planning. Presently working as Project Consultant at Saviom Software, where his experience has enabled multinational businesses around the globe to diversify their project portfolio. Follow his work here.