The concept
Supply=employee hours
Demand=project manager assignments

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Supply and Demand Management is a technique to compare organizational priorities  with actual performance.  Priorities are represented by a percentage of  daily working hours for each corporate project.  Supply is the actual hours  employees work on those projects.

Demand The term "Demand" refers to the strategic priorities an organization  wishes its employees adhere to.  In other words, the executives of the  company hope (and sometimes actually demand) that employees stick to the  projects with the most value to the company.  Executives have long learned  that adherence to sound strategy is the only way to survive.  You cannot  run around like a chicken with its head cut off.  Strategies must be  carefully planned and then executed upon.  The alternative is chaos and  disaster.

Supply But given the opportunity, employees will naturally go off and work on projects  and tasks they think are the best fit for them and the company.  This  represents the "Supply" of hours, talent, and resources to corporate  projects.  Of course, executives and managers hope to positively influence  and guide employees toward the corporate goals they have set forth.  In  other words, they want employees to supply their work toward good strategic  ends.  But that doesn't always work.  Sometimes employees figure out  that the corporate priorities are whacked.  Or sometimes they just think  they are.  In either case, employees don't always work on the stuff they  are supposed to.

Gap: Comparing Supply to Demand Now that you have documented the project demand in terms of percentage of daily  hours, you can compare the actual hours with those percentages.  What  percentage of time did each employee work?  How close did they come to  meeting the strategic goals.  That measurement is called the "Gap."   It is the difference between Demand and Supply.

Example Suppose an employee is scheduled for 15% admin time, and 85% project time.   This is an example of "Demand."  But in actuality, the employee  works 25% of his time on admin functions like email, meetings, discussions, etc.  and 75% of his time on project work.  That is "Supply."  The "Gap"  in this case is +5% admin and -10% projects.  The goal is to reduce the gap  to zero, but these numbers are not uncommon.

The only way to implement a project supply and demand system is with a good  timesheet.  Employees must feel comfortable with it, and find it easy to  maneuver and enter timesheet hours.  Otherwise they won't use it.  The  hours they supply are feeding directly into the reporting module that executives  will use to direct the organization.  The timesheet must be solid.

Also see: Video: Employee Availability, Video: Project Resource Allocation


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