The resource allocation syndrome in multi-project environments

Introduction

In many organisations, employee workloads consist of a mix of project and operational assignments.  Due to endemic shortfalls in staffing, such folks – particularly those who have key skills and knowledge – generally have little or no spare capacity to take on more work.   However, soon comes along another “important” project in urgent need of staffing and the rest, as they say, is tragedy:  folks who are up to their necks in work are assigned to work on the new project. This phenomenon is a manifestation of the resource allocation syndrome, discussed at length in a paper by Mats Engwall and Anna Jerbrant entitled,  The resource allocation syndrome: the prime challenge of multi-project management?. The present post is a summary of the paper.

Background

Scheduling and resource allocation is a critical part of project planning in multi-project environments. Those who work in such settings know (often from bitter experience) that, despite the best laid plans, it is easy to be over-allocated to multiple projects. Engwall and Jerbrant’s work delves into the factors behind resource over-allocation via a comparative case study involving two very different environments: the contracts department of a railway signalling equipment firm and an R&D division of a telecoms company.

Specifically, the work addresses the following questions:

1.  Are there any (resource allocation) issues that are common to multi-project / portfolio environments?
2. What are the mechanisms behind these issues?

As they point out, there are several articles and papers that deal with the issue of resource allocation on concurrent projects. However, there are relatively few that tackle the question of why problems arise. Their aim is to shed light on this question.

Methodology and the case studies

As mentioned above, the authors’ aim was surface factors that are common to multi-project environments. To this end, they   gathered qualitative data from a variety of sources at both sites. This included interviews, studies of project and technical documentation, company procedures and direct observation of work practices.

The first study was carried out at the contract division of a mid-sized railway signalling equipment firm.  The division was well-established and had a long history of successful projects in this domain. As might be expected given the history of the organisation, there was a mature project management methodology in place. The organisation had a matrix management structure with 200 employees who were involved in executing various projects around the world. The work was managed by 20 project managers. Most of the projects were executed for external clients. Further, most projects involved little innovation: they were based on proven technologies that project teams were familiar with. However, although the projects were based on known technologies, they were complex and of a relatively long duration (1 to 5 years).

The second study was done in the R&D division of a telecom operator. The division, which had just been established, had 50 employees who worked within a matrix structure that was organised into five specialist departments. Since the division was new, the project management procedures used were quite unsophisticated. Projects were run by 7 project managers, and often involved employees from multiple departments.  Most of the projects run by the division were for internal customers – other divisions of the company. Also in contrast to the first study, most projects involved a high degree of innovation as they were aimed at developing cutting-edge technologies that would attract new subscribers. However, even though the projects involved new technologies, they were of relatively short duration (0.5 to 2 years).

Important, from the point of view of the study, was the fact that most employees in both organisations were engaged in more than one project at any given time.

For those interested, the paper contains more detail on the methodology and case studies.

Results

As might be expected from a study of this nature, there were differences and similarities between the two organisations that were studied.  The differences were mainly in the client base (external for the contract division, internal for the other), project complexity (complex vs. simple) and organisational maturity (older and mature vs. newly instituted and immature).

Despite the differences, however, both organisations suffered from similar problems. Firstly, both organisations had portfolios with extensive project interdependencies. As a consequence, priority setting and resource (re)allocation was a major management issue. Another issue was that of internal competition between projects – for financial and human resources.  In fact, the latter was one of the most significant challenges faced by both organisations. Finally, in both organisations, problems were dealt with in an ad-hoc way, often resulting in solutions that caused more issues down the line.

From the common problems identified, it was clear that:

In both organizations, the primary management issue revolved around resources. The portfolio management was overwhelmed issues concerning prioritization of projects and, distribution of personnel from one project to another, and the search for slack resources. However, there were no resources available. Furthermore, when resources were redistributed it often produced negative effects on other projects of the portfolio. This forced the management to continuous fire fighting, resulting in reactive behavior and short-term problem solving. However, the primary lever for portfolio management to affect an ongoing project in trouble was resource re-allocation.

There are a couple of points to note here. Firstly, resource re-allocation did not work. Secondly,  despite major differences in between the two organisations, both suffered from similar resource allocation  issues. This suggests that this resource allocation syndrome is a common problem in multi-project environments.

Understanding the syndrome

Based on data gathered, the authors identify a number of factors that affect resource allocation.  These are:

1. Failure in scheduling: this attributes the resource allocation syndrome to improper scheduling rather than problems of coordination and transition. The fact of the matter is that it is impossible for people to shift seamlessly from one project to another. There is – at the very least – the overhead of context switching. Further, projects rarely run on schedule, and delays caused by this are difficult to take into account before they occur.
2. Over commitment of resources: This is another common problem in multi-project environments:  there are always more projects than can be handled by available personnel.  This problem arises because there is always pressure to win new business or respond to unexpected changes in the business environment.
3. Effect of accounting methods: project organisations often bill based on hours spent  by personnel on projects. In contrast, time spent on internal activities such as meetings are viewed as costs. In such situations there is an in-built incentive for management to keep as many people as possible working on projects. A side-effect of this is the lack of availability of resources for new projects.
4. Opportunistic management behaviour: In many matrix organisations, the allocation of resources is based on project priority. In such cases there is an incentive for project sponsors and senior managers to get a high priority assigned by any means possible. On the other hand, those who already have resources assigned to their projects would want to protect them from being poached to work on other projects.

The above factors were identified based on observations and from comments made by interviewees in both organisations.

Resource allocation (as taught in project management courses) focuses on the first two points noted above: scheduling and over-commitment. The problem is thus seen as a pure project management issue – one that deals with assigning of available resources to meet demand in the most efficient (i.e. optimal) way. In reality, however, the latter two points (which have little to do with project management per se) play a bigger role.  As the author’s state:

Instead of more scheduling, progress reports, or more time spent on review meetings, the whole system of managerial procedures has to be reconceptualized from its roots. As current findings indicate: the resource allocation syndrome of multi-project management is not an issue in itself; it is rather an expression of many other, more profound, organizational problems of the multi-project setting.

The syndrome is thus a symptom of flawed organisational procedures. Consequently,  dealing with it is beyond the scope of project management.

Conclusion

The key takeaway from the paper is that the resource allocation issues are a consequence of flawed organisational procedures rather than poor project management practices.  Project and portfolio managers responsible for resource allocation are only too aware of this. However, they are powerless to do anything about it because, as Engwall and Jerbrant suggest,  addressing the root cause of this syndrome is a task for executive management.