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Key factors that make up the need for resource management are companies working on multiple projects in a staging environment. This means they face several changing variables, such as project priorities, resource availability and budget constraints.
Industries such as IT services, architecture and engineering, auditing and accounting, and professional services organizations have implemented robust resource management processes, as labor cost-effectiveness determines whether they make a profit or a loss, advance or retire.
There are also many organizations in other industries based on the matrix cross-functional team and shared services model. They employ complex business processes that require strong resource management to execute effectively.
Problems caused by insufficient resource management capabilities can appear in all aspects of the business (such as employee efficiency and customer satisfaction), but the easiest to see is the relationship between resource management and cost control. The most common challenges arising from cost control in the context of lacking effective resource management are:
As with any project, budgets are prepared in advance, and inevitable changes in scope are common, leading to changes in budgets. In this case, the project managers ability to control scope changes is very important. What is certain is that project managers can only control resources and costs more effectively, and the choice of requirements is more of a user-specific choice. However, in real life, many project managers still use form-based tools. When the nature and timing of activities change, they cannot immediately reallocate resources, let alone recalculate costs as a reference for trade-offs. Therefore, they cannot provide users with an accurate trade-off reference. In the case of helplessness, some project managers even regard themselves as users to argue about requirements, and some users regard themselves as project managers to fight back.
Coordinating project schedules and budgets is another daunting task that project managers encounter in cost control management. When a project activity needs to change its time, the time and effort of the allocated resources for that activity may need to be adjusted. If the activity has a resource conflict with another activity after the time has changed, the activity or the other activity needs to reallocate resources. You can quickly see that time affects resources, and resources affect cost. All three factors must be taken into consideration to make a sound decision. However, in real life, many organizations do not know that new technologies can be used to calculate activity time, resources and costs in real time. They still use the old method—firstly estimate project resource costs that are completely disconnected from project activity time and resources, with a buffer of 10% to 20%, and the project is executed with absolutely no visible impact on the cost of changing activity time or resources. In other words, organizations that are slow to adopt advanced technology require employees to constantly make decisions and work with insufficient information, and many project managers have no idea how changing the time of activities will affect costs.
In general, stakeholders regularly request accurate reports for each activity to check its progress. But many project managers know little about the cost analysis that monitors the cash flow of each activity. Even if there is a cost analyst or accountant in the project, it is difficult for them to control the cost of each activity. Providing accurate cost analysis and reporting is a common challenge for many project professionals.
Despite the significant advancements in technology, many project managers fear not being able to adapt it properly. This is also a common challenge to cost control management that many project professionals face.