Good project managers know that resources are their most valuable assets. But that doesn’t mean that enough emphasis is placed on the practice. In fact according to PMI’s Pulse of the Profession 2018, 21% of failed projects from the last 12 months were due to limited or taxed resources. And another 18% was blamed on poor resource forecasting.
Project failure is just one outcome of a shoddy resource management process. And one of the main reasons this practice is so important for your organization. But, the domino effect of your failed projects can lead to more serious company-wide issues. Impacting one place in particular: your finances.
Here’s a few ways in which poor resource management can cause your company to hemorrhage money.
Can’t Plan Ahead
Ineffective resource management can really put a damper on your long-term organizational goals. If you spread your resources too thin, you won’t have the capacity to carry out projects. This in turn leads to missed deadlines, overworked teams, and inaccurate forecasting for your clients and stakeholders. On the flip side, there could be a lot of potential projects you’re missing out on if you aren’t scheduling your resources as efficiently as you could be.
Improper management can prevent your teams from hitting their benchmarks. And putting a limit on your potential growth. If it’s impossible to tell when or how your projects will be completed, it’s impossible to plan ahead.
Small Issues Can Snowball Into Avalanches
Poor resource management can turn minor oversights and bottlenecks into a force majeure for your project and maybe even organization. Missed milestones and resource overbooking prolong projects and eat into budget costs. And this problem is only compounded when you have multiple projects running simultaneously. Creating more setbacks for your entire project portfolio.
Health Related Costs
Let’s put aside the global pandemic that’s raging right now, and how the office environment plays a large role in its transmission. Instead, let’s focus on another workplace killer: stress. A lot of which is due to poor human resource management.
When you have a PMO that neglects to put the time into proper resource planning, you end up with projects staffed with the wrong resource for the job. Or an uneven distribution of tasks to actual capacity. And this puts stress on those teams. Leading to burnout, health risks, and even death.
In fact, it’s been estimated that 120,000 deaths per year can be attributable to how U.S. companies manage (or mismanage) their work forces.
In addition to the immeasurable cost of a life, organizations can estimate how stress impacts their teams by measuring their turnover rates. Stressed workers are more likely to quit, with 16% of people saying that they’ve quit a job because of the associated work stress. A high turnover can eat into the time and effort of your HR team and is equally negative for team dynamics and productivity. In 2018, US employers lost more than $617 billion to employee turnover.
Manage Your Resources And Take Back Control
Successful PMs need to manage a number of processes, so it’s normal to skimp on a few. But resource management shouldn’t be one of them. Learning to properly allocate resources and monitoring their utilization is an integral part of maintaining project control and ensuring success. Choosing the right strategies and tools is more than an investment. It’s a necessity.