“If you don’t invest in risk management, it doesn’t matter what business you are in. It’s a risky business”. Gary Cohn.
In the project management landscape, resource risks are the biggest threat. These include talent shortages, skill gaps, lowered productivity, and more. If not managed well, this will adversely affect the project resulting in delays or failure.
Therefore, the onus is on managers to effectively manage these resource risks and prevent them from ruining the project. Thereby ensuring successful project completion and delivery.
This blog gives you an overview of resource risks and the strategies that can be used to mitigate them. Let’s get started.
What are Resource Risks?
Resource risks can be defined as any unexpected events that can negatively affect the project. For instance, prolonged absenteeism of a critical resource can halt the project and lead to delivery delays.
Some common types of resource risks include:
1. Lack of Resources
One of the significant resource risks is the shortage of resources for any pipeline projects. This usually happens when resources are already allocated to projects and cannot commit to a new project. It may also occur due to unplanned hiring resulting in mismatched skillsets. This leads to last-minute firefighting for resources leading to wrongful hiring, which can significantly compromise the project quality.
2. Productivity Issues
When the resources are not utilizing their skills optimally, it lowers employee morale and decreases productivity. Besides, allocating over or under-qualified resources, unrealistic deadlines, inadequate training, etc., are common reasons for productivity issues.
3. Cost Overruns
In the project management landscape, the acquisition of high-cost resources can cause an unexpected increase in the budget. Additionally, assigning over-skilled resources and frequent hiring/firing also increases overheads and project costs.
4. Employee Burnout
Allocating the resources without having complete visibility of their schedule can result in work overload. As a result, the resource experience stress at work. Silos of data cause double-booking, resulting in employee burnout and decreased employee engagement.
These are some primary resource risks encountered by managers in an organization. Now, let’s explore some best practices to mitigate them effectively.
How to Reduce Resource Risks in Project Management?
As mentioned, resource risks negatively affect project progress, resulting in its failure. Therefore, it is necessary to implement techniques to reduce resource risks.
Below are some ways to do the same.
Foresee Project Demand to Identify Skill Shortage
Once a pipeline project reaches a certain probability of closure, project managers must estimate the requirements and initiate the resource requisition process well in advance. Accordingly, the resource manager can assess the resource pool and identify if the required resources are available or if there is any skill shortage.
In case of a shortage of resources, managers can take suitable resourcing measures like – training, upskilling, and out rotation/backfilling to fulfill the resource demand. It also helps avoid unnecessary hiring/firing cycles and ensures successful project delivery.
Allocate Competent Resources for Improved Productivity
To maximize work productivity, one should ensure the right resource is working on the right project. The managers must consider employees’ skills, cost, availability, and interests.
According to a study, employees who work on projects of their choice are likely to be more productive. This means competent resource allocation is the stepping stone for enhanced workforce productivity and timely delivery.
Optimize Resource Utilization to Eliminate Employee Burnout
Due to a lack of effective workload management, the employees can be under or over-utilized. When the resources are overloaded – it leads to stress, poor morale, and low-quality work. To overcome this risk, managers should first prepare project schedules and plot how much time is required to complete the project.
Based on this, they can allocate tasks to their team. They should also constantly monitor the resource utilization rate and check signs of burnout. Accordingly, they can implement optimization techniques such as leveling and smoothing to complete deliverables with minimum obstruction and maintain the resource health index.
Implement Succession Planning to Mitigate Attrition Risks
Employee attrition is one of the common resource risks that can put your business into a serious problem – if the levels are relatively high. As a result, the organization may lose high-performing employees, leaving the most competent positions unoccupied.
Succession planning ensures there are skilled employees to fill such critical roles and prevent adverse effects on the project/business. Managers can develop a backup or replacement plan by providing necessary training/upskilling and cross-training. This will prepare multiple individuals to perform the functions of a critical resource.
Manage Bench Effectively to Ensure Optimum Billability
The ‘bench’ is one of the dreaded words in organizations. When a project comes to an end, the employees have to serve the bench time until there is a suitable job. These resources don’t generate any revenue, which adds to the bottom line. It also affects workforce morale and engagement.
Managers can use forecasting techniques and stay informed of the ramp-down activities in advance. Accordingly, they can check the project vacancy reports and allocate these resources. If there are any skill gaps, the resource manager can also provide training or shadowing opportunities to these resources that partially match the requirement.
Thus, it is necessary to implement the proper techniques to reduce resource risks. Advanced resource management software helps to do the same.
Let’s see how!
How Does Resource Management Software Help Mitigate Risk?
Resources are the critical assets that drive the project to success. It is vital to keep the performance and efficiency at their best. Saviom’s enterprise-grade resource management tool provides insights into real-time data for optimal management of the available resources. The following are the ways in which it helps mitigate resource risks –
- Enable forecasting of pipeline project demands to identify resource shortages or excess from the capacity vs. demand reports and take appropriate measures to bridge the demand gap.
- Gives a 360-degree view of the enterprise’s workforce for competent resource allocation to the projects.
- Facilitate the identification of over and underutilized resources from forecast vs. actual reports, thus enabling managers to take necessary measures and ensure optimal utilization.
- Provides project vacancy and bench reports to reduce bench time of resources between projects and improve billability.
- Help managers schedule training, reskilling, and upskilling programs for talented resources and mitigate the risk of skill gaps, etc.
Resource risks are detrimental to projects and continuously evolve – if not addressed in advance. However, the techniques mentioned above, paired with appropriate resource management software, can help managers reduce resource risks. Hence, businesses should perform resource risk management diligently to recognize potential risks and deliver projects successfully.
So, what strategies do you implement to mitigate resource risks?