Building a business case for resource management software

There is a proliferation of project management tools out there and making a case for resource management software as a separate investment can look challenging. However, by focusing on the benefits of maximizing the utilization of your expensive skilled resources, building a successful business case can be quite straightforward

Managing a portfolio of projects with a limited pool of resources is an exciting ride. No sooner do you have the skills capacity in balance with the resource demand than a new project or change order arrives, causing disarray. Getting the right balance is not easy. Too few resources can cripple your ability to plug unexpected resource gaps and put key milestones at risk. However, too many just sitting on the bench will quickly erode utilization levels and can seriously impact operational profits.

In a recent survey, the UK Association of Consulting Engineers (ACE) found that ‘if fee earners could increase their billable time by 10 minutes per day, the average ACE member would generate 2.3% extra revenue….which could raise their profits by 33%’. In other words, a utilization improvement of about 2% can improve the organization’s profits by a third; a rich financial reward for a modest improvement in productivity.

It is also important to regularly measure progress on each project and update their resource estimates as variances appear. Earned value techniques, which are supported by good resource management software, provide the basis for consistent and objective project performance measurement.

This is the nub of the business case argument. If resource management software can help to improve resource utilization levels, within the constraints of committed project dates, then it can easily pay for itself within 6 months. The business case can be built around 3 headings:

Cost savings

Improved resource loading views that highlight periods of overload and underuse should produce measurable improvements in utilization levels. For staff with an average loaded cost of only $75k per year, a modest 2% increase in utilization should give annual cost savings of $150k, for a resource pool of 100. A payback period of only a few months can therefore be expected.

Substantial improvements in profitability

For services organizations, the UK Association of Consulting Engineers survey indicates that such a saving can significantly leverage their operational profits; their members claimed by a third for a 2-3% increase in utilization levels.

Improved performance on individual projects 

Improved management information also substantially reduces the risk of committed dates being missed, due to project resourcing issues. The cost of damage to client relations can be incalculable if key project dates are missed.

Barry Muir is a Director of Innate Management Systems Ltd. We have been implementing resource management software in a wide variety of professional services organizations for more than 20 years.
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