Labor and cost

Resources affect almost all the main parameters of the project (cost, timing, quality), ultimately determining the possibility or impossibility of its implementation. Therefore, the management of resources necessary for their reasonable planning and expenditure is present in one form or another in most projects. But how to build a full-fledged resource management system for IT projects in an organization whose employees perform several tasks in parallel with minimal costs?

In IT projects, especially in software development projects, the main resource is the labor resource of the project participants. Typically, it projects manage this resource indirectly by assigning people to specific tasks and managing deadlines.

This approach is most simple and effective in cases where one person performs one task at a time. If a person is involved in performing several tasks (or in several projects), this approach does not actually allow you to manage resources.

Meanwhile, this situation is typical for high-tech development companies, in which specialization is high, as well as for IT services, in which often each employee participates in a number of activities.

Resources have a different nature: labor resources, materials, energy, finances. Planning, accounting and control of resources can be carried out both in terms of their quantity (pieces, meters, kilograms), and in terms of their value (rubles, dollars).

Both types of planning and accounting are important in the project. Natural indicators are needed for management at a detailed level, and cost indicators are needed to integrate information about individual resources into the overall picture. Indeed, the phrase "The work requires the participation of designers and economists in the amount of 50 thousand rubles" sounds vague.

A much more acceptable estimate of resources is contained in the phrase "Work requires 300 man-hours of a worker of the qualification of a designer and 400 man-hours of an employee of an economist's qualification." On the other hand, the information "Over the past week, energy was spent 500 kW more than planned, labor resources - 200 hours less, concrete - 4 tons less, and gasoline 100 liters more, while earthworks were performed 1000 cubic meters. m less, and concreted 100 square meters. m more" is much less useful for predicting the progress of the project, than, for example, the message "In terms of the pace of budget development, we are behind schedule by $ 40,000. (0.25% of the estimated cost)".

The article describes the method of project portfolio management, in which only labor and financial resources are used. This situation is typical for companies specializing in the provision of services (consulting, software development), as well as for management companies. It should be noted that labor resources are the most difficult to plan, control and account for type of resources, especially in companies with qualified personnel.

The author outlines an approach to managing the resources of the portfolio of projects for the provision of services, considers the organizational and information structures necessary for the implementation of changes in corporate culture, describes the processes of planning, accounting and control, gives an assessment of effectiveness.

The proposed approach is formed on the basis of experience in managing IT projects in consulting and software development and is used by several organizations of this profile, including the company in which the author works, as well as a number of its clients.

Approach

For clarity of presentation, consider a company specializing in the implementation of projects by its specialists. The initial situation usually has a number of characteristic features.

Some employees are involved in several projects, as well as in non-project activities (for example, on the formation of the company's knowledge base, personnel training, marketing).
An employee is not typically assigned to a single job (work package) in a project, and their work is distributed across multiple lines in the work breakdown structure.
The projects are conducted by technical leaders, highly qualified employees participate in them. Such professionals usually seek to avoid management reporting, so their labor costs for formal planning and reporting activities should be minimized.
The company has never kept records, so no corporate standards have been developed; there are no industry standards.
Checkpoint-based planning on the principle of "take time commitments - you are responsible for them" leads to large deviations from the original plan.
This situation is typical for high-tech, consulting, as well as management companies, many leading specialists of which have a unique set of knowledge and skills.

The proposed approach to building a project management system provides for the implementation of all project management functions, while the key function for the described situation is the function of resource and cost management based on labor costs.

This function requires the implementation of the function of managing the subject area, and on its basis the management of time parameters, quality, risks, changes, personnel (for example, motivation program), etc. is built.

Cultural change

First of all, it is necessary that project managers and employees learn to think in terms of the scope of work. Usually, specialists plan their activities on time, taking into account the current workload, without trying to estimate labor costs.

The timing information obtained in this way, used in the planning, requires a reassessment with the involvement of a specialist in any change in the plan. Planning in terms of volumes allows you to get an estimate independent of the calendar and employment of a specialist, on the basis of which the plan can be adjusted almost without the involvement of a specialist.

The next fundamental change in corporate culture is that labor costs are considered as a resource, and the management policy is not to allocate an employee to the project and use it in an arbitrary mode, but to allocate the employee's working time.

In other words, labor costs are not just taken into account after the fact, but are allocated by analogy with financial resources.

Finally, another fundamental change is that the concept of a plan (budget) is introduced. Deviations from it lead to changes that must be made in accordance with certain procedures, and not in a notification order.

Organizational structure

The roles of the project director, who manages the resources of the entire project portfolio and allocates resources between projects, and project managers who manage the resources of the projects entrusted to them are distinguished (see Figure 1).

Possible organizational structure

In addition, a project office is being formed responsible for the implementation of technical work on project management. The effectiveness of the organization of the project office depends on the possibility of implementation and the expediency of applying the described management method. If the project office fails to relieve project managers, project directors, and employees of much of the technical planning, accounting, and control work, resource management will not work.

Structure of information

Resource management requires a special information structure that includes an employee's timesheet, project books, and a portfolio book, which contain information about labor costs in either physical (usually man-hours) or cost (see Figure 2). Such workbooks can be conducted, for example, in MS Excel.

Elements of the information structure

The employee time sheet contains information about the actual work of the project employee, work structure elements, and reporting periods (usually a week). The time sheet is set up for a year for each employee, maintained by the employee, checked by project managers and archived by the project office.

A project book is created for each project for the year or for the project as a whole, maintained by the project manager and contains several components.

Budget (maintained by the project manager). Shows the distribution of planned work by employees participating in the project and by period (usually months). The following are indicated: labor costs for the previous period in relation to the planned period (year), and the balance for subsequent periods. Also given: total, minimum, maximum values, risk level and recommended reserve, calculated on their basis.
Fact (maintained by the project office). Shows the distribution of actual work costs by employees and by periods (months).
Evaluation (conducted by the project manager). At the close of each period (month), an estimate of the work costs of the project as a whole for each employee is entered and a summary estimate is calculated. A history of assessments is kept.
Indexes (calculated automatically). Traditional indices are used, calculated according to the method of mastered volume with the difference that instead of monetary units, natural indicators (man-hours or man-days) are used. Descriptions of the indices and formulas for calculating them are given in the sidebar.

Charts (built automatically). Depict the BCWS (by budget), BCWP1 (calculated), BCWP2 (calculated), ACWP (by fact) indices in the coordinate system of work-periods.

In addition, the project book includes logs of risks, issues, and changes. For any change, the change log records, among other parameters, its impact on time and cost (project effort). In this case, the difference between any two estimates should be equal to the sum of the impact of all changes made during the period between them.

A similar approach can be used to control the relationship between the identified risks and the overall level of risk. The Project Book serves as an interface between the project and the project portfolio within the resource management function. In addition to the project book, a calendar plan is maintained, in which the distribution of resources is prescribed in detail (according to the elements of the structure of the work decomposition and by works).

A portfolio book is created for a year, maintained by the project office, supervised by the project director, and contains the following information:

Working time fund (information is collected by the project office with the participation of the personnel service). Information about the time that employees will spend on projects, in the context of employees and periods (months).
Budget (employees - projects for the period and projects - employees for the period; filled in by the project office based on the budgets of the projects). Summary tables for all projects.
Fact (employees - projects for the period and projects - employees for the period; filled in by the project office on the basis of timesheets). Summary tables for all projects.
Evaluation (carried by the project office from the project books). Summary tables for all projects.
Indexes (calculated automatically).

Examples of charts of some indices.

Management procedures

Portfolio resource management procedures that govern resource planning, accounting, and resource control should be organized in such a way as to minimize the amount of technical project management work performed by project leaders and employees. Resource planning involves the following sequence of steps:

Step 1. The project office forms a working time fund, templates for time sheets, project books and portfolio books.
Step 2. Project managers develop a work structure and estimate of the project's labor costs, which is approved by the project director and transmitted to the project office. Estimates collected throughout the portfolio are entered into the portfolio book and compared with the working time fund. If necessary, projects are reviewed or additional resources are raised.
Step 3. The project office enters into the time sheets of employees the project and the work in which the employee participates (according to which he takes into account his labor costs).
Step 4. Project managers develop project budgets, which are approved by the project director and submitted to the project office. Budgets collected throughout the portfolio are entered into the portfolio book and compared with the working time fund. If necessary, projects are reviewed or additional resources are raised.

Accounting and control of resources is carried out as follows.

Step 1. Periodically (weekly or monthly), employees fill out time sheets and submit them to the project office.
Step 2. The project office summarizes the information from the time sheets into project books and into a portfolio book.
Step 3. Project managers monitor the implementation of budgets, if necessary, change the status of risks, problems, initiate changes, change plans, and carry out other corrective measures.
Step 4. The Project Director supervises the implementation of the budgets of the project portfolio.

In this accounting and control procedure, two strategies are possible to ensure the quality of accounting for labor costs by employees - optimistic and pessimistic. An optimi stic strategy assumes that first the project office integrates the information into the project books, and then project managers check them and, if necessary, make adjustments. The pessimistic strategy assumes that project managers should check the time sheets, and only then they are transferred to the project office. The first strategy is more effective when there are few errors in accounting, the second - when there are many of them.

Introduction

When implementing the described method of labor management, it should be borne in mind that only forms and procedures without appropriate changes in corporate culture will not give an effect. Neither will planning without control. In this regard, the following implementation procedure can be recommended.

Step 1. Introduction of the role of project manager and project director and implementation of domain management, which involves the development of work breakdown structures for projects.

Step 2. Organization of the project office and implementation of accounting for labor costs, time sheets, working time fund and portfolio book (in terms of accounting for actual costs). Experience with time-taking will help teach employees and project managers to think in terms of workload.

Step 3. Introduction of planning (budgeting). Scheduling is introduced as a tool for the project manager to estimate the resources needed before the end of the project. At this stage, the project manager changes the plans in a "notification" manner; there is no formal change management procedure.

Step 4. Introduction of a change management system. Approval of budgets for projects is introduced, and all changes are made according to formal procedures.

Efficiency issues

The effectiveness of the proposed labor management system is achieved by minimizing the distraction of employees and project managers from the main work, transferring most technical functions to the project office and standardizing reporting forms.

The proposed methodology can be implemented both by fairly simple means (say, MS Excel for the implementation of timesheets, project books and portfolio books and MS Project for project planning), and on the basis of more powerful tools like OpenPlan or Primavera.

In addition, the described approach allows you to manage labor costs according to the method of mastered volume, as well as when accumulating information and standardizing fragments of the structure of work breakdown, create a planning reference base.

In conclusion, in order to demonstrate that even small enterprises can afford the introduction of this technique despite the complexity of the management methods used, we will give estimates of the costs of its application to a small portfolio of 8-10 projects in which labor costs are accounted for by 25-30 specialists, after the implementation of the methodology.

This takes into account the labor costs not only for resource management, but also for managing risks, personnel, deadlines, contracts and other functions. With weekly accounting of labor costs, each employee spends 20-30 minutes a week (less than 1.25%) on filling out the time sheet.

The project office spends 40-60 man-hours per month (i.e. one person is engaged in this work for a third of the time, which is less than 1.25% of the total working time).

Project managers' effort to manage project resources is 1-2% of the total project work (an estimate based on the increase in management effort when implementing resource management, since the overall project management effort, which represents 2-5% of the total project work for different projects, was objectively taken into account).