In my experience, getting a small business off the ground is like managing any other project, except there are probably more constraints in small business startups. Entrepreneurs also typically over-allocate themselves to too many tasks, hitting resource constraints far more frequently because of the lack of formalized project management systems and procedures.
In this write-up, I’ll talk about what project management resource constraints are. I’ll give many examples of project constraints for easy visualization. I’ll then go over some of the methods you can use to handle resource constraints, particularly for allocating resources with competing demands and maximizing resource utilization. Then I’ll link you to the tools that will bolster your resource management strategies.
The Importance Of Understanding Project Constraints
Imagine you are the head of the COVID-19 vaccination program at your company. Your daily target is 96 doses. Since your company is 960 strong, you estimate that everyone will have the first dose in 10 working days.
Given an interval of 21 days between doses, you estimate that you will complete the project in 33 calendar days.
Great! You got your bosses to sign off on your project management plan and schedule.
But five days into your vaccination schedule, you are way behind your target vaccination rate, and this has you asking: what went wrong?
Well, a lot of things. You allotted 15 minutes to each person from arrival to vaccination, but it actually took 20 minutes. And you did not account for tardiness. You had three nurses available, but you needed at least one more on floating duty to manage incidents. And your venue was too small!
The long and short of it is: you forgot to identify and plan for your project constraints. And these constraints are the reason you are behind.
The Theory Of Constraints
In the context of the Theory of Constraints by Eliyahu Goldratt, constraints are the weak links in a system. According to this framework, you can strengthen constraints (or leverage them) to improve output or production.
In the Theory of Constraints, which originated from the manufacturing industry, constraints cause the bottlenecks that slow production down and, ultimately, the rate at which you make money.
To illustrate, in a box-making plant, the number of boxes a box-making machine can make per minute is a definite constraint. If a machine can make only 50 boxes per minute, your plant’s production is constrained to 3,000 boxes per hour and 24,000 in an 8-hour shift.
In project management, the Theory of Constraints provides a framework for looking at constraints as limiting factors that could be systematically handled or dealt with so they cease to be a roadblock to project success.
I am not saying that projects cannot succeed when project management constraints are present. But a project constraint will restrict you and limit your options.
Properly accounted for, project management constraints will not prevent a successful project outcome.
Thus, a good project manager always considers project management constraints in his project management plan and subsidiary plans (e.g., project scope management plan, project schedule management plan, human resource plan, resource management plan, etc.).
What Are Project Management Resource Constraints?
Project management resource constraints are what they seem: constraints that limit the resources available to a project.
Project management resources are the inputs you need to complete a project. They include but are not limited to people, equipment, time, and money.
A resource constrained project is the norm rather than the exception. A project is a temporary endeavor, so time is a constrained resource. It has a budget, so money is constrained.
There are specific staff and people involved – and adding more is not frictionless – so people, too, are constrained resources. Hardware, software, and other equipment – all of these resources are limited as well.
Types of Constraints (The Triple Constraint Theory)
The triple constraint theory is a popular framework for appraising the competing demands on a project.
From the perspective of the triple constraint model, the three constraints of time, cost, and scope comprise a triangle that defines project boundaries, thus the moniker project management triangle or iron triangle.
- The time constraint: Projects have a set time or schedule. How many days, weeks, months, or years will the project take? Projects need to have a definite beginning and end. Finishing on time is a success.
- The cost constraint: Projects have budget constraints. How much money will you spend on the project? The project budget accounts for wages, commissions, and the cost of raw materials, equipment, and software, among other things.
- The scope constraint: Projects have a definite scope. Describe the project deliverables. Outline the processes involved. These and more make up the project scope of work.
According to the triple constraint theory, the triple constraints of time, scope, and cost are interrelated.
A change in one inevitably leads to change in at least one of the remaining two. Change the project scope, adjust either schedule or cost. It is as project managers say. If you want it fab and fast, spend more.
This framework emphasizes the need to prioritize. Project managers can only satisfy one or two of the constraints simultaneously, never all three.
If you want to minimize costs (low cost) yet complete the project in the shortest time possible (short time), accept trade-offs in the project output (scope). You cannot have it big, fast, and cheap all at the same time.
Triple Constraint Example
Let me paint you a picture.
Imagine you are leading a cake-making project. The project constraints in this scenario include:
- how soon you need the cake (time or project schedule),
- how much you can spend on making it (cost or project budget), and
- what flavor, color, height, design, and diameter it should have (project scope).
If the stakeholder wants a simple, two-tier chocolate cake, you can finish the project in about four hours. If they fancy a:
- two meters at the base,
- chocolate-and-vanilla flavored,
- geode cake
You will need more ingredients and components (increase cost) and need a week (extend time).
If the stakeholder needs the cake in 10 hours (schedule compression), you will need to hire extra people, and they will have to work for ten hours straight.
You will also need to provide efficiency-boosting tools (multiple ovens, a blast freezer, and a couple or more industrial-grade mixers, among others).
The above example demonstrates, albeit a bit simplistically, an indisputable fact of project management. Project constraints compete with each other, and they limit project execution options.
Not to put too fine a point on it, this cake-making project example demonstrates the interrelatedness of project constraints.
A simple cake means a shorter project schedule. A complex cake requires more time. A complicated cake and a short time to completion mean a higher cost due to project crashing (adding more workers and tools) or project fast-tracking (the cake supports, the cake decorations, the filling, and the frosting, are made while the cakes are baking).
The reverse is also true. If you cannot amend the project budget, you need to adjust the cake complexity and the project schedule.
Managing project resource constraints, therefore, means balancing project trade-offs. You have to sacrifice something for something you want more.
Thus, a five-layer, gravity-defying, chocolate-and-vanilla geode cake two meters in diameter at the base ready in 10 hours on your initial, shoestring budget is incredible! But it is also impossible.
An Example Of Constraints In Projects: Ecommerce Apps
Our company developed a mobile app. It is nothing groundbreaking—a simple eCommerce app. Unlike big e-commerce platforms, it is hyper-locally focused and provides an eCommerce platform for local merchants: farmers, groceries, online sellers, stores, and restaurants.
The app has two competitors: another locally developed eCommerce app and an international eCommerce platform. The first provides consumers access to 150 merchants, while the other provides access to 450.
Our goal is to catch up with the bigger platform by opening at least 450 merchant stores on our app as soon as possible.
We are a lean start-up, so we have only one business development officer, Janjan. On any given day, he presents to four merchants, and he signs three of them.
However, one month into his business development activities, our app had a dismal 12 stores open. An analysis of his activities revealed why.
- He presents to a target merchant.
- He signs the merchant.
- He helps the merchant prepare his app listing collaterals.
- He assists in listing down the products that would go on the app.
- He takes pictures of the products.
- He shows the merchant how to use the app and upload his products on his online store. Or Janjan does it himself.
- He teaches the merchant the rules of the app – how he gets rated, ranked, etc.
- He teaches the merchant how to process customer orders: accept orders, get a rider for delivery, accept payments, and monitor delivery status.
- After the store opening, Janjan also resolves issues such as when a merchant fails to accept orders within acceptable timeframes, has difficulty uploading or updating his products, or closes his store without permission.
Janjan is doing too many tasks. He is working within capacity, but the rate of onboarding was too slow.
His workflow means Janjan has at least three encounters with a merchant. And his onboarding follow-up tasks are eating all of his time. As such, even if he has a conversion rate of 75%, he is not onboarding merchants quickly enough.
Given the current onboarding rate, we would have to wait more than a year to open 150 stores and more than three years to open 450 stores. To be profitable, we must open 450 stores as soon as possible.
So what should we do? What we did was to combine project crashing and fast-tracking. Specifically, we:
- hired two onboarding support staff,
- left Janjan his critical task of presenting to and signing merchants,
- split the remaining onboarding tasks between the new hires
- shortened the duration of the onboarding support tasks
Under the new system, Janjan kept his critical tasks of presenting to and signing merchants. His consistent 75% batting average will let us sign more merchants faster. We split the onboarding support tasks, which depended on Janjan signing merchants, between the two new hires.
Therefore, after Janjan presents to and signs three merchants on the 19th, he will hand off the merchants to the two onboarding support staff. On the 20th, Janjan presents to and signs more merchants. And he will do the same on the following days.
The onboarding staff will deal with three merchants every day. And within three days of signing the first three merchants under the new workflow, on the 22nd, three new stores will open on our app. We will then launch three new merchants every day after that.
To sum up, in five days (from the 19th to the 23rd), Janjan will sign 15 merchants. And within eight working days (from the 22nd to the 28th), all 15 stores will be open on the app.
Our combined fast-tracking and project crashing approach will gain us 78 new sign-ups in one month (26 working days). And we will catch up with our local app competitor in less than two months and with our international app competitor in approximately six months.
To further increase our onboarding rate, we could hire another business development officer like Janjan. For every business development officer hired, we would add two new onboarding support staff.
NCG, an outside provider, might also have to hire additional staff to create promotional materials and promote our stores on their platform.
How Do Resource Constraints Differ From Assumptions And Risks?
Resource constraints, assumptions, and risks all contribute to the success or failure of a project. But how do you tell them apart?
Resources are the project inputs and tools you need to complete your project. They include but are not limited to human resources, financial resources, and material resources.
Resource constraints are factors that limit the supply of these resources. For instance, in a software development project, the number of engineers on payroll is a resource constraint. The availability of workflow automation tools and powerful computers is also a resource constraint.
Resource constraints are real-world limiting factors. You know how many people you have in your project team, what skills your team has, what tools and software you can use, the ready materials you have at your disposal, and how much money you can spend.
Resource constraints affect how you map out activities, task durations, and project dependencies on a project schedule network diagram. For instance, if you have one DevOps engineer in charge of two concurrent tasks, you have a resource constraint.
And what happens if you are a contractor in charge of simultaneously implementing multiple construction projects?
You probably have a limited number of excavators, backhoes, pile boring machines, graders, and loaders. You also probably have a limited number of engineers, site managers, foremen, and surveyors.
While you can rent more equipment and hire more people, you cannot do so without pushing your budgetary constraints.
In this case, resource allocation and project scheduling are complicated even more by the need to allocate constrained resources across multiple projects in a way that will minimize average project delay and will not excessively inflate the budget.
Resource constraints, in a multi-project context, affect not only resource allocation but also project selection decisions. A contractor has to decide whether or not to accept another project while several other projects are ongoing.
Assumptions are things you surmise to be true. They are truths you take for granted based on your experience or information given by consultants, stakeholders, or team members.
Assumptions are untested, and their truth is assumed. However, based on these assumptions, expectations for project milestones, deliverables, and costs, among other things, are created.
In other words, project managers build assumptions into project management plans without first testing whether they are true. Assumptions may very well be invalid, and when they are, projects could get delayed, and costs could increase.
For instance, suppose you had to build a two-story, five-room house. Your project management plan indicated you would finish the project in two months. In the end, however, you needed three months.
Upon inspection of your schedule management plan, you would realize that you made the following assumptions beforehand:
- that you had all the human resources (engineers and skilled labor) you needed,
- that the cost of labor would not increase,
- that the equipment you had will never break down, and
- that there would be good weather throughout.
As it was, the equipment broke down, and you needed a replacement. That took a week. There was also a typhoon, which delayed the work further.
I am not saying you cannot and should not make assumptions. It would be impractical to wait until you know everything before starting a project. Expert project managers, moreover, will have enough knowledge to make valid assumptions.
However, you must identify and log all assumptions made to mitigate potential effects if your assumptions turn out to be false.
If resource constraints are real and assumptions are things you believe are true, risks are things you are unsure will transpire but will affect your project if they do.
Risks may have either a positive or a negative effect. Opportunities affect projects positively, while threats have a negative impact.
Suppose you have an ongoing construction project, and a building code amendment is pending. If approved, you can cut expenses on parking construction. That is an opportunity.
But what if a bill that raises the minimum wage is pending approval? If approved, your labor costs will rise. That is a threat.
You plan for risks, but you cannot be sure they will occur. Project planning considers risks (through a risk management plan) so that, if they do arise, you will have risk mitigation measures in place to minimize or maximize their effects.
Why Is It Important To Predict Potential Resource Constraints?
Benjamin Franklin called it. “By failing to prepare, you are preparing to fail.”
And in project management, failure conventionally means overshooting the project deadline, exceeding the project budget, underdelivering on project scope, underwhelming on output quality, and delivering a poor customer experience, among other things.
You are likely to fail when you do not account for potential resource constraints. Project managers agree. According to the Pulse of the Profession 2017 by PMI, the organizations surveyed attribute recent failures primarily to:
You will find efficient and effective allocation and utilization of resources difficult. You will be unable to create workaround plans for constraints you never even realized were or could be there.
A Few Strategies For Managing Resource Constraints In Your Projects
The work breakdown structure is a good approach. At its core, it is a scope control tool. It makes a good foundation for the application of the critical path method in project management. And you can use it as a basis for resource allocation and utilization.
After identifying all of the individual tasks that make up your project, you can determine the human and non-human resources each activity or phase requires. You will get a clear picture of your resource requirements and thus procure, allocate, and manage them effectively.
How To Allocate Project Resources With Competing Demands
Resources with competing demands are typical at the organizational level.
If a construction company has multiple projects with overlapping schedules, there would be competing demands on personnel and equipment. If an app development company manages several projects simultaneously, there would be competition for developers and adjunct roles.
So how should you allocate project resources with competing demands?
1. Utilize an Automation Tool
Allocating project resources amidst competing demands is a complex task. Leveraging a project scheduling software can simplify this process, allowing for more effective resource management. Thus, you can allocate and manage your resources effectively.
Project managers are short-sighted and can see only their project requirements. There is a need for a broader and longer view.
At the organizational level, rank projects according to priority and allocate resources accordingly. Resource managers may have to prioritize a project which is part of a program with high business value over a stand-alone project with a lesser impact on the bottom line.
In like manner, when project managers face competing resource demands at the project level, they must subordinate resource allocation decisions to the priorities indicated in the project charter, whether they be timely completion, quality standards, budget, or something else.
To illustrate, if the primary goal is timely completion, the project manager will have to prioritize allocating resources to critical path activities.
3. Decide Early
Organizational managers should be decisive about allocating resources across projects, and project managers should be just as keen when allocating resources across project tasks. And both must decide early enough to prevent issues.
Thorough project planning is therefore essential. A good project plan will tell a project manager what resources he needs, when. He can then look at historical resource requirements and available resources to create a resource forecast.
Based on this resource forecast, he can hire extra people or procure equipment to avoid over-allocating available resources.
Use a project planning tool to simplify project planning.
4. Establish SOPs For Managing Competing Demands On Resources
Especially at the organizational level, a manager cannot randomly commit resources to a project. There must be a system in place for handling resource requests.
Such a system must have clear and established standards on
- prioritization of projects (as well as prioritization of tasks),
- what constitutes resource under- and over-allocation,
- what qualifies as resource under- and over-utilization, and
- the thresholds/triggers for the procurement of additional resources, among other things.
5. Resource Optimization
Resource optimization is at the heart of managing constrained resources, matching resource demand as closely as possible to resource availability.
There are two main resource optimization techniques: resource leveling and resource smoothing.
Resource leveling is the process of keeping resource demands fairly level by adjusting activity start and finish dates. Resource leveling could alter the critical path to resolve a resource scheduling problem.
In the above example, both Reese and Diana are over-allocated. They have to work on activities scheduled for the same day – a definite project scheduling problem. To finish both activities that day, Reese would have to work 12 hours, while Diana would have to work 16 hours.
Since Diana and Reese can work only eight hours each (that is their resource capacity), resource leveling is applied, adjusting the schedule so that Reese and Diana work only on Activity 1 on Day 1. They then work on Activity 2 on the second day, and Diana works on Activity 3 on the third day. The project ends one day later than planned.
In resource leveling, therefore, resource availability or capacity takes priority over schedule.
Resource smoothing minimizes resource peaks and dips without changing the critical path and without delaying project completion. Resource smoothing is a resource optimization technique for time-constrained projects.
To illustrate, suppose Reese, Diana, and George are resources for a project that ends in 5 days. There are three activities in the project. Activity 2 succeeds Activity 1, while Activity 3 succeeds Activity 2. Activity 3 will commence on Day 5 because the necessary equipment is available only on that day.
After resource smoothing, Reese finishes Activity 1 in two days and Activity 2 in another two days. George, too, is spread out a little more evenly, performing his tasks for Activity 2 in two days. Even Diana’s Activity 2 work is spread out over two days.
How To Maximize The Utilization Of Resources
How effectively are you using your resources? Their utilization rate will tell you. Resource utilization is the percentage of available hours spent on billable activities. Billable activities directly earn money, lead to business value, or directly impact project objectives.
To illustrate, an app developer is working on billable activities when he is working on code. It is the opposite when he is answering emails or on personal breaks.
Maximizing resource utilization means getting as much productivity or value as you can from your resources without overloading them.
More on resource utilization metrics here.
Calculate Your Resource Utilization
The first step to maximizing resource utilization is calculating how many hours your resources spend on work that earns you money or benefits (i.e., productive work). Conversely, you can compute how much time they are losing on routine administrative tasks, personal breaks, and other activities.
Now, divide the number of hours the resource spends on productive work for a given time interval by the available resource capacity, then multiply the result by 100.
You can measure yearly, monthly, weekly, or daily resource utilization.
For example, our business development officer, Janjan, works 40 hours a week or eight hours a day. Every day, he uses six hours on the money-making, critical task of presenting to and signing clients.
He spends the remaining time on emails, team meetings, reports, other administrative tasks, and personal breaks. Janjan’s daily resource utilization rate, therefore, is 75%.
Ideal Resource Utilization Rate
An ideal resource utilization rate is 80%. Beyond that, it is over-utilization. You risk burnout, demotivation, disengagement, and ultimately project delays and costly remediation measures.
A significantly lower figure (e.g., lower than 70%) is under-utilization. You are not using your resources in the best way possible, so you are not getting as much value from your resources as you should. Underutilized resources are also at risk of demotivation and disengagement.
What can you do to keep your resource utilization levels at around 70-80%?
1. Track Activities
A full-time employee gets paid for 40 hours a week, 2,080 hours a year. However, an employee is not working on money-making or business-value tasks all the time.
Deduct absences, personal breaks, and administrative tasks from the total available time to come up with productive hours.
This can be a bit different if you’re working with independent contractors who are paid according to their output. If you have people in your team where you’re not sure if they’re regular employees or freelancers, tests like the ABC test (if you’re in California) can help you out.
2. Allocate Resources According to the Ideal Resource Utilization
Under-utilized resources need to be assigned to more money-generating tasks to fill the gap in utilization. Conversely, over-utilized resources must be “smoothed out” to prevent burnout.
3. Guard the Project Scope
When the project scope becomes bigger than initially anticipated, your resources will be overloaded and over-utilized. Avoid project scope creep by starting with a clear project scope statement and plan.
4. Resource Forecasting
Anticipate future resource demands and resource capacity, so there would be fewer instances when you have to under-utilize or overload resources. These capacity planning reports will help.
5. A Holistic View of Resources
A resource manager should have a holistic view of resource capacity and utilization. Keep utilization at ideal rates, and maximize their corresponding business values.
By assigning a resource to a higher-value project, you can realize more business value from it than if you let it languish at a lower-value project.
Tools For Managing Constraints
You can flex your mental prowess and use pen and paper to write out a plan by hand. Calculate resource demands and capacities and plot out your network diagrams and Gantt charts, also by hand. Use MS Excel or Google Sheet for some help on calculation.
But the better way is to use any of the many project management tools available. A specialized project management software will have all the features you need for managing projects and working around project constraints. For example, a digital marketing PM software will have more focus on features that unlock remote collaboration, approvals, and certain marketing resource-specific workflows like involving freelancers and other external stakeholders.
A good resource management software will give you a comprehensive view of resource capacity, allocation, and utilization for your company. Just what resources do you have, and how are they being utilized? Resource management software will give you the answer.
The best resource planning tools enable effective resource allocation decisions. Quickly fulfill or decline requests for resources. Expedite resource reallocation to maximize utilization. Make data-driven hiring decisions based on current and forecasted resource requirements.
And sophisticated project management software and tools have functions that go beyond resource scheduling and management. Use them for estimation, project planning, and even budget management.
Check out our list of the best resource scheduling software here.
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