The Definitive Guide For Resource Planning and Forecasting

1
THE DEFINITIVE GUIDE FOR RESOURCE

PLANNING AND FORECASTING
eBook
by
Aakash
2016. Saviom Software. www.saviom.com
Gupta
This e-book will instruct you on how to improve your current resource planning and
forecasting methods and lend you the insight needed to ensure each one of your resources (staff, vehicles, assets of any form, etc.) are properly utilized.
It delves into a variety of additional important aspects (in addition to basic resource
allocation) that are either forgotten or given very little attention in the current organisational resource management process. These include aspects of the best practices for
forecasting, tentative project tracking and how to generate business intelligence.
Contents
CONTENTS
THEORY VS. PRACTICE
04
THE THREAT OF LOW-COST LABOR
09
HOW DO YOU MEASURE IN THE RESOURCE PLANNING AND FORECASTING SPECTRUM?
14
THE INFAMOUS SPREADSHEET
20
THE BEST PRACTICES FOR SUCCESSFUL RESOURCE PLANNING & FORECASTING
26
NEED TO REVISIT YOUR RESOURCE PLANNING AND FORECASTING PROCESS?
37
THEORY VS. PRACTICE
Theory vs. Practice
Resource Planning and Forecasting (also known as Resource

Management). Where do you even begin explaining such a
seemingly-complex concept?
To answer this as directly as possible, we at Saviom decided to
see if the internets vast repository was able to come up with a
good answer, and after sorting through a varied list of explanations, the definition from BusinessDictionary.com was the best
we could find:
Resource Management - The process of using a company's resources

in the most efficient way possible. These resources can include tangible resources such as goods and equipment, financial resources,
and labor resources such as employees. Resource management can
include ideas such as making sure one has enough physical resources
for one's business, but not an overabundance so that products won't
get used, or making sure that people are assigned to tasks that will
keep them busy and not have too much downtime.
Theory vs. Practice
On a basic theoretical level, this sums things up pretty well. As

we all know, however, the way things go in theory and the
way things go in practice generally lie at two VERY different
extremes...
Most companies would LOVE the ability to constantly maintain
employees at just the right capacity and appropriately allocate
them to jobs based on skillset or desire as needed. But the truth
is the majority of firms worldwide get overwhelmed trying to
balance resources in the most efficient way possible.
And its not a problem companies in our current economic climate can afford to take lightly.
In fact, most firms are still stuck managing resources with the
notoriously cumbersome Excel spreadsheet approach - the
most dreaded of adversaries for resource managers everywhere.
Spreadsheets are far too often the weapon of choice and, even
though they are easy to setup and can seem flexible with company requirements, they very easily become outdated and unwilling to cooperate as your company grows.
Theory vs. Practice
And its a good way for your company to get fatally burnt in the
process.
How about a definition a bit more compact with more clarity? Try
this instead:
Resource Management - The process of allocating your employees

to the right work based on availability, role, skillset, location (and
whatever other criteria) at any given time, while given them enough
work to prevent the underutilisation and overbooking that decreases
worker satisfaction, productivity, and overall profitability.
As you can see from this definition, resource management is not

only far from simple but goes a long way to support the health and
overall wellbeing of a company.
Theory vs. Practice
Before you get started, we would like to make you aware of a few different terms
to avoid any confusion. Throughout the book we refer to terms such as resource
planning and forecasting or resource scheduling in replacement of resource
management. We do this since such terms often encompass the above definition
a lot better than resource management does.
Lets Get Started!
THE THREAT OF LOW-COST LABOR
10
The Threat of Low-Cost Labor
To start, lets explore the resource planning and forecasting problem faced by modern companies and examine how things ended up the way they are today. When trying to find a solution to a problem, the best way to begin is to zoom out and investigate
at a more macro-level for some perspective.
11
We live in a Globalized World

In the last twenty years, globalisation has created dramatic,
far-reaching effects on the economic structure of the world
and gigantic shifts within the demand structure of the labour
workforce everywhere.
The stats on the side shouldn't surprise you.
Its no secret that countries like India, China, Indonesia, and
the Philippines offer an abundance of low-cost resources the
developed world simply cant compete with. A lot of work is
now being funnelled to these regions, and outsourcing has left
manufacturing and IT service talent nearly obsolete in other
parts of the world.
An integrated world market exposes you to a large number of
competitive players you simply cannot ignore, whether you sell
services or not. And with the initial outsourcing push within
the manufacturing and IT services sectors, professionals with
increasingly more valuable skills - such as auditing and law, for
example - are starting to feel the pinch as well (refer to Figure
1.1).
This trend will only pick up speed as newer, cheaper labour
Top Careers at Risk for Outsourcing

in the US (2015)
Computer Programmers /
Software Engineers
Accountants / Auditors
Lawyers
Insurance Sales Agents
Real Estate Brokers /
Agents
Chemists / Physicists
$14,400,000,000
211,700
$8,500,000,000
160,000
$4,300,000,000
40,400
$591,000,000
11,000
$332,000,000
6,700
$230,000,000
Wages Lost
3,700
Jobs Lost
(Figure 1.1)
12
markets continue to open up and grow more refined.

Aside from losing a large number of jobs, the implications go
deeper to truly transform the way many companies use their
workforces too. Top firms are increasingly treating wages as a
variable cost in order to stay nimble and conserve expenses. This
creates more flexible, leaner organizations but also reduces the
need for permanent resources, and many are embracing the
on-demand workforce concept (i.e. part-timers, contractors,
freelancers) instead.
Breakdown of jobs lost within each

sector in the US 2015
Call for Help Center
Manufacturing
Distribution
What companies need to do

This decision impacts firms that choose this route in multiple
ways.
First, it requires maximising the output of company resources. Organisations cannot afford to underutilize any of their resource pool or reroute employees to lower-skilled work (i.e. administration, BAU activities, etc.). Doing so leads to spending
more than you need to and not getting the level of output you
expected.
R&D
IT Services
(Figure 1.2)
13
Second, these firms will need to forecast the requirements of their ever-changing
on-demand workforce better to avoid last-minute hiring costs or compromised
quality during slow-downs. Forecasting is crucial for effective resource planning
and will be covered further in future sections of this book.
Finally, this route requires maintaining resources at the lowest cost possible without compromising to keep operating costs manageable during fluctuations.
Hopefully, you now understand the true gravity of this definition and why being efficient is so vital to a modern organizations profitability. Proper resource
planning and forecasting is no longer just a good idea these days but has become
a necessity for surviving in the radically changed current economic climate.
14
HOW DO YOU MEASURE IN THE

RESOURCE PLANNING AND
FORECASTING SPECTRUM?
How do you Measure in the Resource Planning and Forecasting Spectrum?
15
To evaluate how your company rates when it comes to planning and forecasting, there are a number of questions you
can ask. Take the time to go through the questions below,
which can serve as a guideline to assess your current resource
planning setup and identify areas for further focus and improvement. It might be a good idea to keep your companys
resource manager or planner at your side during this process.
By the way, resource management is extremely complex, and
for that reason, you might be thinking that with such a variety of planning and forecasting processes from one company
to the next, it would be impossible to generalize an accurate
checklist. Actually, this idea is a bit flawed. If you focus on a
particular set of core principles, the same guidelines should
hold true for any company, regardless of industry.
LETS EXPLORE
16
THE CORE QUESTIONS

1. An adaptable system that can change based on your
constantly adjusting business demands
The demand and supply of your resources rarely remain static.
For example, if market conditions change, projects that were
once highest priority can suddenly go on hold as a new project moves to the forefront. Another challenge arises with the
need to ensure such adjustments dont delay the new project
delivery date.
Regardless of the scenario, the show must go on here are
some related questions you can ask to dig a little deeper.
Questions:
1 Can you easily change your plan when someone
goes on vacation or resigns?
2 Will you be able to easily change your plan when
the project timeline shifts or goes on hold?
3 Are you able to account for non-project activities in your plan (i.e. support activities, BAU, training, meetings, etc.)?
17
2. Identifying the right resources for the right job with a

click of a button
Selecting the appropriate person for a specific job is one of
the most crucial elements of planning and forecasting, but
when youre dealing with large pools of people, this task swells
considerably. The following questions can help you ascertain
whether youve got efficient systems in place for identifying
the appropriate resource within your company at any given
moment. This is especially relevant for those who need to plan
for more than twenty resources at a time or need to forecast
the people required for a significant project coming up.
Questions:
1 Are you able to identify the right person among
a variety of departments throughout the organization?
2 Are you able to select the appropriate person
from across multiple countries or cities?
3 Are you able to search for the appropriate person based on skill, experience, and training?
4 Are you able to to easily track and assess an individuals current and past work assignments?
18
3. Accurately predicting your future resource requirements
Questions:
1 How many people do you require over the next
three to six months?
Tracking future resource supply and demand is also critical when

planning for your upcoming projects. The following questions
can help assess your companys forecasting capabilities.
2 How long will you require use of these resources?
4. Plans for Projects in the Pipeline
Questions:
1 Can you plan for projects that arent yet confirmed or are scheduled for a distant future?
Projects in the pipeline refers to those your company could

potentially win but has not yet definitely secured. Even if there
is no guarantee of these projects going through, its still crucial
to have a rough idea of who will be placed on them and how (if
they do occur).
3 What type of skills and capabilities should these

resources have?
2 Can you assign a generic role (or set of roles) to

your tentative project instead of needing to assign
it to a specific person?
3 Can you forecast overall capacity and demand
on projects that are still in the pipeline?
19
5. Real-time business intelligence on resource planning

and forecasting
These final set of questions concern your reporting capabilities
and whether you can generate appropriate reports to satisfy
seniors or managers within the company. Possession of real-time data is imperative to keep your company flexible and
can allow you to reflect on whether you have the right type
and amount of work placed onto your staff.
Questions:
1 Do you have the business intelligence to generate the specific resource forecasting information
you need?
2 Do you later later compare plans to actual results
to monitor effectiveness of efforts?
3 Have you ever attempted to maximise the utilization of your current talent?
4 Are you able to assign the most cost-effective
resource from your company pool?
20
THE INFAMOUS SPREADSHEET
The Infamous Spreadsheet
21
Your answers to the questions in the previous section are determined by a variety of elements, including company structure and
company culture. However such results often boil down to your
tool of choice.
As mentioned before, the most common tends to be the Excel
spreadsheet, and as we all know they often fall short of the responsibilities that we assign onto them. In honesty, its not its fault,
spreadsheets werent built for the complex scheduling we strain
them under and when we do, it can frequently lead to devastating
consequences.
But can Excel spreadsheets ever do the job appropriately? Lets
take an honest look to paint a picture of both the benefits and the
disadvantages.
22
PROS
Yes, believe it or not, there are some pros to the spreadsheet as
a resource planning and forecasting tool.
First of all, spreadsheets provide you flexibility, allowing you to
set up your resource schedule however you please, formatted in
the manner best suited for you and the company. This is one of
the major plusses to using Excel, and its a core reason so many
companies hesitate to replace this primitive system for more
advanced tools, which they may perceive to be too rigid.
Spreadsheets also rate highly for ease of use. Training another resource manager or project manager to understand your
scheduling doesnt require significant time or budget expenditure. They are also easy to distribute, so all relevant parties can
hold a copy of the latest version of their resource schedules.
The low cost of spreadsheet planning is another major advantage (at least in the short run). This is a prominent benefit for
smaller, boutique firms that want to set up their own scheduling
process but lack the funds to invest in a more robust scheduling
system.
23
CONS
As your team expands and company dynamics shift, the usefulness of an Excel spreadsheet quickly begins to wane. The larger the number of people to schedule, the harder it becomes
to maintain your spreadsheet (or multiple spreadsheets), and
the more difficult it becomes to make efficient management
decisions.
Some of the common challenges facing spreadsheet users include:
Simple Schedule Changes in Excel Drag You to a Halt.

In Excel, the simplest baseline data changes often require deleting, adding new cells, switching colours, merging/unmerging, and other small tweaks depending on format. Scheduling becomes laborious and error prone and bulk changes for
shifting projects or resource replacements can suck up hours
of time.
24
Spreadsheets Force You to Manage Multiple Silos of

Schedules Across Departments.
Excel leaves a myriad of silo schedules for different departments and locations; integrating and merging these schedules when you need to get an enterprise view is a huge hassle.
Coupled with todays lightning-fast data changes, the end result is a constant state of outdated enterprise-level management reporting.
An Inability to Quickly Search for the Perfect Person for

the Job.
A disorganized Excel system makes it painful to search across
multiple layers of schedules, and theres a huge time lag to get
the imperfect results for your search. If you cant immediately
identify the best person for the job, or if you just skip that step
because its a nuisance, you lose the edge that comes with hiring and managing the right talent.
25
Becomes Nearly Impossible to Perform Effective Forecasting and Other Reporting.

Many companies completely lack the ability to forecast capacity and demand. Excel isnt built for this type of process at all,
so they cannot generate regular or ad hoc reports for different
levels of management or they waste a ton of time and effort
doing it manually. Theres no question that a lack of forecasting costs your business a giant competitive edge.
Excel Confines Information Exchange to a File-Based

Schedule System.
Its not possible to generate a user-specific view of info from
a spreadsheet, and so you have to distribute the information
through individual files. This is just asking for mistakes and
miscommunications.
26
THE BEST PRACTICES FOR SUCCESSFUL

RESOURCE PLANNING & FORECASTING
27
The Best Practices for Successful Resource Planning & Forecasting
Weve spent a significant amount of time setting the scene and highlighting the different issues that a resource manager faces, but what are the solutions to these problems? Below youll find an extensive list of solutions based on SAVIOMs years of experience in the industry.
They appear in no particular order; feel free to apply your own priorities based on the
objectives of your organization and industry dynamics.
28
Setting up a centralized system

A common issue arises when companies store their schedule, resource, and project information in different locations.
Whether these files sit in a list of Excel spreadsheets, in the
company project management system, or with HR, maintaining and tracking information becomes a time-consuming task,
especially when multiple players are involved.
It is far more efficient to set up a single centralised system to
streamline the scheduling of your resources against various
project or non-project related activities. This establishes a single source of data and enables easy management and faster
decision-making. It also allows multiple stakeholders to stay
on the same page in real time.
29
Visibility of Your Resource Capacity

Many companies put all their focus on current resource capacity levels, which
only provides a partial view of actual resource supply. Gaining a more complete understanding requires tracking past and future capacities as well.
For example, tracking your medium to long-term future resource supply ensures better decisions on the amount of project work that you decide to take
on. If you plan to grow your team in the next six to nine months, you ought
to know the potential resources youll have at the later date before agreeing
to any new contract work.
A record of past capacity level trends can help your present decision-making
abilities as well. If your resource capacity historically stands at 30% during the
end of year Christmas period, you know not to take on any critical work within that time frame.
Companies also tend to track only full-time and part-time equivalents, but
for a complete resource capacity view, its better to track all resource types,
including the following:
Permanent full-time and part-time employees
Contractors, temporary staff, freelancers
Employees who will join the team at a future date
Non-human resources (i.e. equipment, machinery, vehicles)
30
Visibility of Work Demand

Tracking your resource capacity is never complete unless you
track your resource demand as well. Much like with capacity
tracking, you need a complete view of your past, current, and
future work demand levels to ensure you allocate the appropriate number of resources.
All your different types of work should be recorded as well.
Companies often neglect recording ongoing non-project related work. This leads to inaccurate measurements of forthcoming work and last-minute overloading of company resources.
Be sure to record:
1 Workload generated from internal and external
projects
2 Workload generated from unplanned activities
(i.e. support, BAU, admin, etc)
3 Vacation, holidays, training, etc.
31
Estimate and Forecast your Future Projects in the Pipeline

Unconfirmed projects or project work that is sitting in the pipeline needs to be maintained and tracked as well. Companies
often fail to foresee the number of resources that will be required for a job that hasnt been won yet. Since theres no guarantee the project will even happen, managers dont bother to evaluate the required number of resources to take on the job.
And when this happens, the managers often resort to last-minute scheduling activities, creating various hurdles and inefficiencies with resource capacity and availability.
Placing even a rough estimate on the number and overall type of people required for pipeline projects does wonders for your
resource planning. Just imagine if you knew you were going to need seven consultants and twelve engineers for a project
set to start two months from now this data would prepare you to allocate the necessary talent as fast as possible once the
project was confirmed.
32
Track Up-To-Date Information on Individual Competencies and

Capabilities
Maintaining a real-time list of employee skills and details makes
it much easier to decide who to place where in a moments notice. You can keep lists of various work-related categories, or even
non-industry abilities like language, VISA status, and personal work
preferences.
For example, recording the linguistic abilities of each staff member
allows you to allocate a Mandarin-speaking resource for a client
in China. Or by making allocations based on staff work preferences you increase the likelihood of them to be more productive and
place more effort into their activities.
Industry-relevant skills should also be recorded in greater detail.
Examples in this area include different qualifications, certifications,
and education levels. Experience and performance records from
past jobs should be documented as well, since they are often the
strongest measure of a resources value.
33
Optimising the Utilization of your Resources

While its necessary to select the appropriate person for each job,
you must also avoid repetitive allocations to the same set of people. This is a common occurrence, in which highly performing and
reliable employees can consistently be given high priority for up
and coming jobs, leaving a large number of other employees left
with menial and administrative type of work. Having the ability
to track utilization levels of each employee ensures no one falls
through the gap and work is spread across evenly.
The best way to track such information involves generating reports
periodically; on at least a monthly basis (utilization can be calculated by dividing the booked hours by the fixed number of hours
the employee is supposed to work over a given period). This will
allow you to make decisions on if you need to reallocate work from
specific resources onto underutilized resources. By maintaining a
utilization range of 90% to 100% you ensure greater productivity
and job satisfaction, directly improving your bottom line.
34
Compare Actual Performance Against Forecasted

Its appropriate to schedule your resources over a specific
timeframe, but is the allocated time accurate? Resources often
spend either more or less time than is booked; creating a gap
between actual hours spent and forecasted time.
Frequently comparing the two can increase accuracy in future
booking allocations and free up unused time for other projects and activities. For example, in the scenario that you had
an engineer that completed and clocked in a job at 120 hours
(over a span of 15 days) as opposed to the 150 hours that
you had booked him, the gap between the actual and booked
time spent is 30 hours. Such information allows you to make
increasingly accurate predictions for your future bookings ensuring you dont place unnecessary extra hours on your staff.
ACTUAL
FORECASTED
In the opposite scenario, where your booked hours are lower

than the actual time spent you make future readjustments and
increase the time needed for certain jobs.
35
Selecting a Cost-Friendly Resource

When on a tight budget, selecting cost-effective resources
really help you out. These resources will generally include
younger members in your division (i.e. graduates and interns) or even people from a disposable external workforce
(i.e. freelancers). Such options are perfect for completing
lower skilled (or in the case of freelancers) or specialised
tasks (i.e. article writing, minor design work) that higher
skilled resources often end up doing.
On the more technical side of things, a methodology is required that ensures you select such resources. You will need
a system that helps recognize your low-cost resources, locally or in different parts of the world which will then allow
you to take advantage of the low-cost modern labour pool
and avoid paying too much for unskilled talent.
36
Real-Time Business Intelligence

Resources are often the largest expense of an organization. And
achieving success in the fast-changing modern business environment, with its ever-growing market demand volatility, requires high
levels of business intelligenceso you can foresee the future in time
to respond accordingly.
This means you need systems for generating and analysing information in real time and a single bird's eye view so management can put
the data to use accordingly, slicing and dicing from different angles
and drilling down to what is most necessary.
37
NEED TO REVISIT YOUR RESOURCE

PLANNING AND FORECASTING PROCESS?
SEE HOW SAVIOM CAN HELP YOU.
38
Need to Revisit your Resource Planning and Forecasting Process? See how Saviom can help you.
Now that youve had a chance to consider some of the different criteria that makes
resource scheduling efficient, you should have a clear idea of the complexity within
a perfect resource and scheduling process.
If you are dealing with only a handful of resources, Excel spreadsheets may prove to
do the job, but when managing anything more than a dozen, its time to invest in a
more powerful, comprehensive system.
SAVIOM Resource and Scheduling can provide the tools you need to seamlessly integrate the practices discussed in this book into your current workplace and resolve
resource planning and forecasting challenges that currently cost your firm a lot of
time and money.
Visit Saviom Resource Planning and Scheduling at www.saviom.com to learn more
39
Saviom Software develops and provides Resource Management and Workforce Management solutions that help
firms around the world to improve their resource allocation and staff utilization levels. Saviom provides an easyto-use, highly visual scheduling gant chart allowing you to quickly create and change your bookings. We also provide a number of powerful reports giving you complete analytics and information on your resources and their work.
Savioms enterprise solutions are trusted by hundreds of companies world-wide including PWC, Siemens, Fujitsu,
Honeywell, Grant Thornton, Schneider Electric and Konika Minolta.
To see how one of our solutions can work for your team, department or organisation and improve your productivity
and bottom-line, visit us through the following:
www.saviom.com
+612-8221 8883
info.au@saviom.com

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1

THE DEFINITIVE GUIDE FOR RESOURCE

2016. Saviom Software. www.saviom.com

THE THREAT OF LOW-COST LABOR

HOW DO YOU MEASURE IN THE RESOURCE PLANNING AND FORECASTING SPECTRUM?

THE INFAMOUS SPREADSHEET

THE BEST PRACTICES FOR SUCCESSFUL RESOURCE PLANNING & FORECASTING

NEED TO REVISIT YOUR RESOURCE PLANNING AND FORECASTING PROCESS?

2016. Saviom Software. www.saviom.com

THEORY VS. PRACTICE

2016. Saviom Software. www.saviom.com

Theory vs. Practice

Resource Planning and Forecasting (also known as Resource

Resource Management - The process of using a company's resources

2016. Saviom Software. www.saviom.com

Theory vs. Practice

On a basic theoretical level, this sums things up pretty well. As

2016. Saviom Software. www.saviom.com

Theory vs. Practice

Resource Management - The process of allocating your employees

As you can see from this definition, resource management is not

2016. Saviom Software. www.saviom.com

Theory vs. Practice

Lets Get Started!

2016. Saviom Software. www.saviom.com

THE THREAT OF LOW-COST LABOR

2016. Saviom Software. www.saviom.com

The Threat of Low-Cost Labor

2016. Saviom Software. www.saviom.com

The Threat of Low-Cost Labor

We live in a Globalized World

Top Careers at Risk for Outsourcing

2016. Saviom Software. www.saviom.com

The Threat of Low-Cost Labor

markets continue to open up and grow more refined.

Breakdown of jobs lost within each

Call for Help Center

What companies need to do

2016. Saviom Software. www.saviom.com

The Threat of Low-Cost Labor

2016. Saviom Software. www.saviom.com

HOW DO YOU MEASURE IN THE

2016. Saviom Software. www.saviom.com

How do you Measure in the Resource Planning and Forecasting Spectrum?

How do you Measure in the Resource Planning and Forecasting Spectrum?

THE CORE QUESTIONS

2016. Saviom Software. www.saviom.com

How do you Measure in the Resource Planning and Forecasting Spectrum?

2. Identifying the right resources for the right job with a

2016. Saviom Software. www.saviom.com

How do you Measure in the Resource Planning and Forecasting Spectrum?

3. Accurately predicting your future resource requirements

Tracking future resource supply and demand is also critical when

2 How long will you require use of these resources?

4. Plans for Projects in the Pipeline

Projects in the pipeline refers to those your company could

3 What type of skills and capabilities should these

2 Can you assign a generic role (or set of roles) to

2016. Saviom Software. www.saviom.com

How do you Measure in the Resource Planning and Forecasting Spectrum?

5. Real-time business intelligence on resource planning

2016. Saviom Software. www.saviom.com

THE INFAMOUS SPREADSHEET