When any new project is about to begin, resource and project managers face many challenges to identify employees with specific competencies for the project well in advance. At times, you may have skilled resources in your team, but you may be experiencing a lot of attrition. In some technical projects, it is also tough to find the right candidates. If you resonate with any of these challenges, it’s time for you to work on finding how to manage the risk of resources or how to mitigate risks in project management. Unless you do so efficiently, the resource risks could result in compromised quality of your deliveries, project delays, cost overruns, minimized profitability, etc. Though you may have heard of some common and traditional risk management approaches that could have helped businesses in the past, these risk mitigation strategies don’t succeed in assessing and prioritizing risks completely. But before diving deeper into how to mitigate risk, let’s understand what is meant by risk mitigation and resource risk.
Risk mitigation refers to a process aimed at reducing the chances of risk for a project or percentage of exposure to risk and striving towards decreasing the probability of any challenges arising during the lifecycle of the project. Risk mitigation essentially addresses the key or top risks that a project could face with the objective of safeguarding the project.
Resource risk includes any unexpected situations or scenarios that could have a negative impact on your projects and business in case they occur. For instance, prolonged absenteeism of an employee could impact the project schedule and contribute to delays in a big way.
Some of the key resource risks are:
Though organizations may typically have multiple projects in the pipeline, they could be using some legacy systems, or due to some delays or lack of complete visibility into details such as team and resource requirements, it may end up in a resource crunch. At times, project managers don’t have enough clarity on resource availability, and therefore, timely project initiation doesn’t happen. Consequently, it results in last-minute arrangements and looking for skilled team members which could be expensive.
In scenarios where project managers don’t have clear visibility into availability, bookings, or capacity, it could lead to either under or overallocation of resources. Imagine resources being free for half a day or your top writer’s skills not being optimally used as she is just performing some copy-paste tasks. Underutilization or not having enough allocations would result in resources being frustrated and having low morale. This, in turn, leads to losses or project delays. Whereas over-utilization is exhausting for employees and leads to stress and burnout. Thus, suboptimal resource utilization results in low productivity, poor quality output, lack of motivation, and delays in project schedules.
At times, employees may be assigned tasks or projects that they are not interested in or those that may not match their competencies, knowledge, or interest for an extended time period, which could lead to stress, boredom, or exhaustion. If this scenario continues, it could result in burnout or affect their capability to perform their day-to-day chores or meet project schedules. At times, when employees are stressed, they may start taking too many leaves to avoid responsibility or decide on a sudden job change.
Additionally, because of the dynamic environment or speedy technological advancement, the demands for skills and employees’ existing skills could become obsolete very quickly. Therefore, most employees are not prepared to work on any new requirement where they need advanced skills or some specific technological know-how, resulting in missed opportunities and delays in ongoing project schedules or workflows.
These days, organizations do not work in silos and have shared services and resources. This means that a pool of resources is shared across various verticals, departments, or teams. However, doing so requires real-time visibility into availability and different calendars, which can be tough. The lack of clarity in current allocations, availability, schedules, planned leaves, etc. results in scheduling conflicts. When such conflicts aren’t resolved on time, it leads to resource crunch, under or overbooking, project delays and budget overruns.
As there is a shortage of high talent and skilled resources because they are expensive, organizations try to utilize them on multiple projects. But imagine a scenario where there is a sudden demand for these niche or critical resources, and various project priorities could clash with one another. This reliance on a few niche-skilled or critical team members could lead to over-booking or working beyond their available capacity, hindering their output quality and overall productivity.
Usually, team members display less productivity when they are overly burdened with additional work, unrealistic timelines, competency mismatches, no interest, low morale, etc. There could also be work stagnation, which could cause lower morale and below-average performance. If project managers or business leaders are not successful in addressing these challenges, then employees may feel disengaged or exhausted, which may lead to attrition.
Subcontracting or outsourcing is also a huge resource risk. When the organization is unable to find the right resources with a certain skill set for a project, they may decide to replace their employees with either freelancers or may just outsource the entire project, which can be a risk for the in-house resources. This also needs efforts with regard to training, transfer of knowledge, and rapport-building, which may affect the timeline and project cost.
When the key tasks in a project are completed, many additional or non-critical resources could be de-ramped. This unexpected cut in the team size can result in a bigger bench size. Additionally, there are other reasons that can lead to this, including last-minute project cancellations or a project being struck due to budgetary constraints. If this happens, the firm risks losing its talent and finances significantly.
When a critical resource or some important person from a leadership position quits the organization, the business can feel a huge gap for some time. Especially when there is no succession planning, it can become a bigger problem as that can not only delay the projects they were aligned with but also halt them in some cases. There is also a risk of the work environment being affected, which can leave the other team members demotivated.
Here are 8 ways to mitigate resource risks:
It is important for the project managers to calculate and gauge the number and types of resources needed and start looking for them on time. The next step is to assess the demand and check the internal resource pool to see if the required number and type of resources are available to deal with any risk of resource shortfall or excess. Let’s take an example here. If resource requirements are assessed on time, the organization can get ready by training or up-skilling people, hiring additional resources as per the skills needed, or going for an out-rotation or backfill strategy. To avoid the risk of resource excess, the organization can pull forward the project schedule or give away the additional capacity to another function or team. This helps minimize unnecessary hiring or firing processes and enables the timely initiation of a project.
When skilled resources are allocated to a project, you can be sure of successful project delivery and execution. Therefore, businesses should assign employees who are best suited to the right project tasks. This way, project managers can evaluate various factors like availability, competencies, capacity, knowledge, hourly rates, etc., to look for the best-fit employees. When you align the right people on the right activities and projects, you ensure improved productivity, fewer errors, and top-quality outcomes. Additionally, it eliminates the chances of under or over-competent or experienced employees being assigned to projects. Consequently, it enables project managers to execute their projects seamlessly and meet client expectations.
Depending on the requirements, project managers should strive to build a team with a blend of resources of various experience, skill sets, and expertise for successful project outcomes. Let’s take an example. Imagine a legal business needing a couple of lawyers and chartered accountants to study a case and draft a financial report. In this case, the project manager must first check the internal resource pool to find and assign resources who have a law background and also employees who have chartered accountancy background with analytics skills. However, if this competency is not available in-house, the next step would be to hire contractual or short-term employees for the specific requirement. Hiring permanent, full-time analysts or lawyers will be sensible in case such a demand is long-term or recurring. Hence, having the right employee mix enables businesses to fulfill their project demands while controlling overall costs and avoiding any delays.
It is important to monitor the resource utilization rate in real time to spot and resolve any cases of under or overutilization. Project managers must use the right resource optimization techniques, for example, resource leveling, smoothing, etc., for optimally scheduling the workforce and ensuring balanced workload distribution. They can also aim to ease the workload or stress on over-burdened employees by reallocating the workload among other staff members or aligning additional resources to be able to meet the project schedule. These resource optimization techniques help project managers avoid any scenarios where employees face burnout and also improve the overall resource health index.
In the development phase, projects can face unexpected challenges or situations even if you have planned very well. For example, an important resource may need to go on a sudden leave due to an emergency or some critical resource may quit suddenly, which may impact the project schedule. For instance, a software development project may have reached the final phase, and the project lead needs to go on a long leave suddenly, which could result in a project delay or getting derailed. To alleviate these issues like unplanned leaves or risks of attrition, project managers should find the best talent for the key and strategic roles. It’s important to have a succession plan in place including the right training and upskilling plan, hiring substitutes or replacements to prepare them for key roles.
If managers proactively plan for resources, organizations can find and align cost-effective global resources in case they are not finding them locally. By substituting high-cost employees with skilled resources from other low-cost locations, you can minimize the project costs in a huge manner without compromising the project quality. This strategy also enables businesses to utilize the top global talent available and diversify their employee base. Additionally, having cost-effective employees outside of the matrix boundaries helps companies offer 24/7 client services. This helps to improve operational efficiency and boosts customer satisfaction.
Companies should also be prepared to equip their employees with diverse competencies so that they can satisfy dynamic client and market demands. Therefore, the project managers should prioritize and plan a comprehensive training plan and other cross-skilling initiatives to resolve the current skill gaps and enhance their workforce’s skill levels. It is important to offer on-the-job training for giving hands-on exposure, up-skill, and plan cross-functional training, and shadowing opportunities to develop the portfolios of employees and prepare them with numerous competencies. This helps organizations take on various types of projects and enhance their profitability.
Effectively managing the bench helps organizations handle the sudden de-ramping of staff from various project phases. But how many project managers do this? By leveraging advanced forecasting techniques, project managers can forecast when their staff will be ramped down from a specific project. This helps to find existing project vacancies and have allocations planned for employees before they go on the bench. By assigning these team members to upcoming projects, project managers can make sure that there is continuous billability and the bench time is reduced.
Let’s now understand the five key risk mitigation strategies used in project management to minimize,reduce or mitigate the risk.
Once you know the possible risks in a project, the first step is to accept that risk. To do this, the team members should collaborate and communicate with each other to analyze the risks and then understand the consequences of the risks to gauge which ones can be accepted and which ones need to be avoided altogether. This activity helps to collate a list of possible outcomes so that all the resources gain a clearer understanding of the probable challenges or risks possible in the project and what can be the impact, which helps to calculate the cost impact of each risk. Accepting the risks also helps to see how much would be the impact on the schedule, which in turn, helps the project team to tweak it accordingly.
Risk avoidance is an approach where the team comes up with strategies with which they can prevent the possibility of the risk happening at all. Though you still have to consider the risks that you had accepted, their impacts, and the chances to avoid some risks become clear too. At times, managers can also create a plan for the possible risks that could occur and accordingly take preemptive steps to completely dodge those risks. Having said that, another type of risk that can be avoided is performance risk. In this case, a manager can distribute the workload in a balanced manner as per each resource’s skills and expertise. This way, even the team members can plan a little ahead and notify if they gauge any challenges that could happen with project scheduling and propose steps to resolve those issues before they occur. This also applies in terms of avoiding any extra costs. As all the expenses or costs are decided beforehand, every team member can easily stick to it and not deviate from the determined budget.
However, there may be cases where you cannot avoid or get rid of certain risks completely. In such scenarios, the manager and the employees can think of ways to control the influence or effect of the risk. To do that, they need to consider all the recognized risks, determine which ones need to be accepted or avoided, and then determine an action plan to minimize or mitigate the influence or completely remove it. In case there are any probable challenges with the budget or any faults in the plan, the employees can accommodate the available costs and design a plan in a way that all extra costs can be eliminated. When it comes to project deadlines, accurate scheduling will help eliminate any chances of delay. Tracking the project quality and monitoring daily tasks can also remove any obstacles to the performance.
Another approach is the transfer of risk, where you pass on the responsibility of the particular risk and its impact to some other party, for example, insurance. In case the project is to design a product and everything goes fine except for some minor defects, the organization can own the responsibility or maybe transfer it to some other concerned party like a vendor who may have added a defective part or not reviewed the final product. In terms of scheduling risks, it is not a good idea to hold the whole team responsible for project delays. It is better to transfer the risk to the specific employees who may be responsible for it. Transferring the risks helps to shift the focus to the relevant finance teams that could be responsible for budgeting.
After you identify a possible risk, it could go through some changes too. For example, when you identified that risk, it could have been considered substantial but at a different milestone in the project’s lifecycle, it could either be bigger or smaller. If these changes are ignored, it can impact the project’s delivery and overall health in a big way. This is why tracking all the risks on a continuous basis is important. The entire team including the manager must own the responsibility to keep tracking the project for any variations in the risks and be alert for any new possible risks that may crop up during the project lifecycle. Tracking all the projects for any probable risks and their impact includes looking out for and spotting any changes that could influence the risk impact. It’s recommended to include this approach in the project review plan so that all important aspects like budget, allocations, and project performance can be tracked regularly.
Why is an Advanced Resource Management Tool Required for Managing the Risk of Resources?
To avoid any risk of resources, businesses must utilize advanced resource management software such as eResource Scheduler. Read on to know how to mitigate risk with this and what are the benefits you gain.
The software offers a 360-degree visibility of various resource attributes, such as availability, experience, expertise, competencies, schedule, allocations, etc. This information helps the project managers choose the right person for the right activity or task and allocate the most competent resources to their projects.
The skills matrix helps businesses plan and execute training and design a backup strategy or succession plan for critical positions or key roles, which helps to minimize or eliminate scheduling risk.
Forecasting and capacity planning allow project and resource managers to foresee the future pipeline and project demand, and accordingly spot any resourcing, hiring, or skill gaps. This further enables taking remedial steps to cover those gaps on time.The availability reports help to find which team members are available for a specific project and on what dates as per the skills and other parameters required. It also helps to find their allocations, schedules, leave plans, etc. to be able to create feasible plans.
The detailed resource utilization reports and the tool’s color-coded heatmaps help the project managers to find which team members may be over or under-booked resulting in frustration and poor-quality output. These reports and analyses help to take necessary steps accordingly to prevent frustration and burnout.
Analytics from the tool provide information about the bench size, staffing requirements, resourcing gaps, and project vacancy data to help assign resources who are on the bench to billable and more strategic projects.
The simulation technique aids the managers in designing and comparing different possible scenarios in a resource-crunched environment and figuring out the best-fit plan.
A resource management software like eResource Scheduler enables avoiding and mitigating any possible risks of resources. By saving all your important data and information about your employees and projects, it becomes your online central repository that offers easy accessibility at any time and from anywhere. The tool’s advanced filters allow the leads or project managers to look for the best staff members based on the project’s requirements of skills, roles, experience, etc. The availability and other reports help to prevent over or under-allocating any team members.
It helps prevent schedule delays and budget overruns and keeps your employees satisfied as they get to work on projects as per their competencies and interests. Such cloud-based project resource management software also offers valuable insights in real-time along with reports and dashboards that help make data-driven decisions. Additionally, this software is the best choice for risk mitigation and performs the What-If analysis enabling the creation of a simulation environment to check pre-established parameters and evaluate the project’s performance. Gantt charts provide a visual snapshot of the status of various projects in a single view. So, if you are on the lookout for mitigating or preventing risks completely, implement eResource Scheduler.
This resource management tool is also the best choice for time-tracking and enhancing your team’s utilization rate. You can plan your resources on projects as per the capacity available and not shoot an arrow in the dark. You will be aware of what you need to scale, by how much, and when. The tool also enhances collaboration and communication between your distributed team or remote employees. A productivity management tool such as eResource Scheduler also offers a shared calendar, which helps your managers organize meetings or events very easily. It also sends alerts and notifications for all important events and lets you know in case a team member is on leave. Before investing, try it with a free trial and streamline your processes in project management to enhance productivity and profitability.
Also read:
The Future of Remote Work: Navigating Resource Management Challenges in a Hybrid Workforce
Explore Strategies for Increasing Employee Engagement and Motivation
Performance by the Numbers: Navigating Employee Efficiency Metrics
Beyond Calendars: Empower Your Team with Resource Scheduling Software
Foster Team Cohesion in the Workplace for Enhanced Collaboration and Productivity
