Project resourcing is a puzzle professional services firms must solve every single day. This is no different at Craftsman Technology Group than it was at any other firm I have worked for or partnered with on a project. It must be solved every day, every week and must be forecast for each month and quarter.
The goal of this post is to describe how firms typically approach solving this puzzle and describe potential impacts to your project.
We hope this post will provide valuable background to any organization considering hiring a professional services firm. If you understand a key pressure point for your vendor you are more likely to create a plan that helps offset that pressure, more fully understand decisions being made by your vendor, and ultimately offset a critical risk area.
1. Professional Services require resource efficiency
Efficiency is critical to running a professional services firm. If a firm’s people are busy with billable work, the firm is likely profitable. If not, the firm is probably losing money or minimally profitable. This is a fundamental driver to decisions made around when projects can start, how they will be resourced, how peak activity will be addressed and how slow periods are navigated.
A need for efficiency is why resources are suddenly redistributed to other projects should your project pause unexpectedly. Even the best organized firm is unlikely to have the work waiting on-hand to immediately redistribute an entire project team on short notice. If possible, discuss with your services firm the impact of a pause on the resourcing scenario.
A need for efficiency is also why some firms overcommit resources. A reasonable assumption is that some project work will slow down – and therefore additional hours are needed to offset the slowdown. Long nights and weekends for consulting teams and developers are the result of inaccurate forecasting.
Efficiency and resource constraints on the vendor-side are important topics to bring into risk identification and management sessions. Needing more consulting resources during a peak period deserves considerable scrutiny and assurances the peak can be adequately navigated. Identifying those points in the project plan where vendor dependency is limited also warrant discussion to ensure the team can quickly be reconstituted if a slowdown in vendor involvement occurs.
2. Utilization is a key performance metric
Utilization is a term used to describe the percentage of billable hours against available working hours for the week. For example, a consultant that was 80% utilized during a typical week was able to bill 32 hours of their time. The other time was likely spent on admin, professional development, travel, contributions to the project, non-billable contributions to the firm’s intellectual property, or other non-billable activities.
Most firms have a requirement that consultants maintain 70-80% utilization. This is typically adjusted for paid-time-off and allows for ramp-up time for new resources. Resources that manage people or have other internal functions typically have a lower utilization or may have no utilization target at all.
A good firm has performance metrics beyond utilization for measuring staff performance. SMART goals may be established to ensure professional development, maintenance of certification or even volunteerism. This can help ensure that utilization targets are not the measure of performance. That being said, a consultant that significantly exceeds all goals but falls short of utilization is unlikely to have a long career in professional services.
Utilization is not necessarily a bad thing. It again speaks to the importance of efficiency for professional services. However, it is important to recognize that the individuals on your team are ultimately measured by the volume of project (e.g. billable) hours they are able to execute in a given week.
As a client, it is worth having a candid discussion around resource utilization with your vendor. Seek opportunities to leverage this as it relates to schedule. If your partner has available resources and your project plan allows, it is worth looking at how to get ahead on the schedule by putting those resources to work. Downstream you are likely to run into resource constraints – best to take advantage of a resource glut when it presents itself.
3. Lead time is to be anticipated for resource availability
Once contracts are signed, you immediately turn to your vendor and ask – “when can we get started?” I would be wary of the firm that immediately says “today.” As we have discussed, efficiency and utilization are critical to a firm’s survival. If your vendor is able to start immediately it is possible they either have a critical efficiency problem (e.g. no work) or utilization problem (e.g. under-utilized resources – such as new staff – are the only available immediately).
There is no gold standard that would indicate a vendor is optimally in demand though not over-extended. In general, it is reasonable to expect a 4-6 week lead time for resource availability. Project planning resources such as your Project Manager may be available immediately to help make good use of this lead time. But, aggressively pushing back on this lead time is not necessarily to your benefit as you run the risk of forcing your vendor to populate your project with whomever happens to be available at the moment.
Your best bet is to have the resource conversation early in the process. Realize that your vendor is only likely to resource those projects that have been signed. But, if you have a project that is simply awaiting a signature you might be able to secure resources – or at least start the resource “clock” to reduce the wait time prior to resource availability.
4. What offshore represents
Using offshore resources such as teams in India have become a widely accepted practice in systems implementation projects. Offshore represents the potential for a massive resource-mitigation strategy as it can provide a large volume of low-cost resources. Firms that have perfected use of offshore resources may still experience significant resource constraints but they are more apt to be contained to highly specialized or local resources.
Offshore also represents an opportunity to leverage all 24-hours of a day. Domestic resources for large firms may take advantage of time zones to allow for work to roll across the country while still staying within the general parameters of a workday. But, offshore is a game-changer. There is the potential to deliver specs on a customization at the end of the workday and wake up in the morning to have the work completed.
However, offshore operations can present significant challenges around quality assurance and general oversight of external, international resources. I would ask your vendor early about whether they use offshore, how long they have used them and what quality controls they have in place. If well-managed, this should benefit both the client and vendor.
Summary & Conclusions
Most projects will require retention of an external consulting partner. Understanding the pressures your vendor is experiencing day-to-day should help you work more effectively together. Efficiently managing resources is critical to their very existence as a viable firm. Recognizing this, planning for it, and managing this critical constraint throughout the project life cycle is essential to mitigating the risks it represents.