Welcome to the latest posting in my Resource Analysis Under the Hood series.  My goal with these posts is to introduce the features of the Project Server Resource Analysis component of the Portfolio Analysis module with the help of an Excel mockup.   

This post represents the second installment of a couple posts on calculating specific what-if scenarios by adding additional resources to the portfolio.  In the last post, I talked about how the calculations work when adding internal or external *human* resources.  This time around, I’ll discuss how the calculation works when adding cost to the mix.

For previous postings in this vein:

1) Introducing the Resource Analysis Worksheet

2) Configuring the Resource Pool

3) Configuring the Resource Analysis Parameters

4) Organizational Capacity Planning

5) The Baseline Calculation (Part 1)

6) The Baseline Calculation (Part 2)

7) Performing What-If Analyses

8) The Requirements Details View

9) Incrementally Adding New Resources and Cost (Part 1)

Make sure to download the worksheet from that first post if you would like to play along at home….

As a major caveat, I’ll point out that this is one of those posts that made assumptions about the calculation model used in the Resource Analysis module – assumptions which have since been proven false.  Hence, the bulk of this post represents an alternate model for how incremental costs and resources are calculated.  It’s close enough to provide some key concepts, and at some point, I plan to rewrite it to discuss how Project Server specifically performs these calculations.  If you’re reading this post after November 2010, you may wish to skip to the bottom of to see if I’ve added a link to a revised post.

That being said, I think you’ll still get value out of this post, and hence I am publishing it as is with the above caveat.

Calculating Incremental Costs

So the first question is how to calculate the incremental cost of adding new projects to the project portfolio.  Once we assess the incremental cost of each project, we can then assess whether or not each project lies within the constraints identified by the portfolio analyst.

In my previous post, I showed how the resource deficit is calculated and how that gets translated into dollar figures.  Essentially, I take the resource pool, and subtract out the resource demand.  This yields a deficit for specific time periods, which I then sum up in the Deficit field.  For each portfolio of projects that looks like this….


To calculate the Total Incremental Cost, I calculate the total deficit (not Max Deficit) for each solution and multiply it times the relevant resource cost.  That gives us a formula of Deficit X 160 Hours/Month X Resource Rate.


External vs. Internal Resources

Now let’s take a look at the following scenario.  In this scenario, I have added $100K to the overall budget, and set the resources to internal.  This results in a more expensive solution than an external resource, as the internal resource must be hired at an allocation threshold of 100%, and once hired, the system assumes the resource may not be summarily fired.


Here’s what the incremental cost looks like for a selection of project selection portfolios.  You’ll note that I filtered in the Higher Value column to only show those solution sets yielding a higher strategic value than the baseline solution.  From there, I add another filter to display whether or not the incremental cost lies within the parameters set in the Projects worksheet, specifically, the fact that I set the incremental cost to $100K.


The system, in this case, played by the Excel worksheet, will select solution 12, or Projects B, D, and E, with an incremental cost of $88K and an overall strategic value of 70%..


Now let’s run the same analysis using external resources.


Here’s what the incremental cost solutions look like…


You see that the incremental cost for each additional scenario is much lower than when using internal resources.  This is because external resources may be hired to a lower allocation threshold – which in this case, I have left at 100% – but more importantly, external resources are only brought into the organization when resource deficits occur.  When the deficit is gone, the resource is released.

From there, I simply calculate the option with the maximum strategic value within the cost constraints, yielding a total portfolio value of 85%.


Incremental Work

You’ll also see the incremental work calculated.


That’s calculated much like the additional cost.  In this case, I take the total deficit for the project (or portfolio) and multiply that by the number of hours in a month.  For calculation purposes, I use a base of 160 hours/month.

….and that’s about it for using the Resource Analysis functionality of Microsoft Project Server to calculate what-if scenarios.  Next up on the blogging list….comparing Project Server selection scenarios..