Portfolio Management Knowledge Areas

Portfolio Management Knowledge Areas

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6.2 Manage Supply and Demand

The required portfolio resources, according to each initiative's business case or plan, should be identified, and an inventory of resources and capabilities should be aggregated at the proper level of detail. This demand is then mapped to existing organizational resources: funds, Other tangible and intangible assets, as well as key human resources, such as program and project managers and subject matter experts. A master schedule of resource allocation is necessary to plan the consolidated demand of portfolio resources.

The term "supply" refers to resource capacity including funding and staffing resources as well as equipment and Other physical assets shared among portfolio components. "Demand" is the resource requirement from the portfolio components and from the component proposals requesting resources. The goal in managing supply and demand is to ensure resource capacity is optimally allocated against resource requirements or demand based on known organizational priorities and potential value. Resources should be allocated to minimize both unused capacity and unmet demand. The ideal outcome requires diligent, iterative resource management and optimization processes.

There are two primary approaches to balancing supply and demand. Some organizations may assume unlimited resources, and resources can be procured through various channels to meet any demand. These are typically projectized organizations. Other organizations are resource-constrained, where resources can be available within a range of variability. These organizations are more often functional or matrix organizations. In functional and matrix organizations, labor resources often are utilized on both project work and operational work. Fluctuations in operational workload Will have an impact on the availability of resources for work managed within the portfolio.

There is a complex relationship between the types of resource supplies. The capability and productivity of human resources, even when training, background, and experience are equitable can vary widely. Labor rates can vary based on skill set, experience, industry, and physical location of the resources. Labor resources can be hired or contracted. Equipment and physical assets can be purchased or leased and made available locally or remotely.

Every organization has bottleneck resources, which are skill sets needed on many projects but are in short supply. Bottleneck resources are typically those with an understanding of the business processes, and they also have technical or functional knowledge with the ability to translate business requirements and evaluate the impact of changes. These are skill sets that are difficult to hire or contract due to their scarcity and specific organizational knowledge required. Specialized equipment or facilities can also be bottleneck resources. The demand for these resources needs to be managed continuously. It can be difficult to accurately determine the demand for resources across a portfolio of projects, programs, and operations, at a point in the life cycle before detailed planning has occurred. As portfolio components are selected and planning is conducted, new information regarding resource requirements is often learned.

In order to maximize the use of resources, organizations Will commit resources to authorized portfolio components, based on the expected end date of an active portfolio component (commonly referred to as "soft booking"). Unexpected delays or unrecognized dependencies between portfolio components can result in situations where a resource is not available when expected.

Continual and ongoing monitoring of the supply and demand relationship is critical to the success of the portfolio. Information regarding resource utilization and changing resource requirements of active portfolio components as well as the resource needs for planned and approved portfolio components are analyzed against the availability of resources. Then the resources are allocated in a way so that the right resources may be identified and matched to the right projects at the right time. When resources are constrained, the organization is unable to accomplish planned components and may need to reprioritize. Figure 6-5 shows the inputs, tools and techniques, and outputs. Figure 6-6 shows the data flow diagram.

Inputs

 

.1 Portfolio

.2 Portfolio management plan

.3 Portfolio reports

 

Tools & Techniques

 

.1 Scenario analysis

.2 Quantitative and qualitative analysis

.3 Capability and capacity analysis

 

Outputs

 

.1 Portfolio updates

.2 Portfolio management plan updates

.3 Portfolio reports