Resource allocation in multi-project environments: Planning vs. execution strategies

One of the challenges in multi-project environments is the question how to allocate resources to assure a timely completion of all planned projects. In order to increase resource utilization, managers try to allocate all available resources at the beginning of a new cycle to all planned projects. This strategy would not allow for acting on potential risks and uncertainties. Thus, current literature on multi-project planning considers buffer concepts in various forms. The problem with these strategies is their complexities and consequently their general rejection by practitioners. In this study we address the problem of resource allocation under uncertainty by developing a counter-intuitive heuristic that is simple and effective. We developed a simulation tool allowing us to test resource allocation strategies in realistic environments. Surprisingly, the results demonstrate that resource allocation strategies with less than 100% resource allocation in the planning stage enable an overall value for a project portfolio that is close to the ideal maximum. This means that managers should keep a certain percentage of resources in the planning stage idle to encounter variations in the execution phase, enabling a maximal project portfolio value.