resource allocation

According to PMI’s 2017 pulse survey, “43% of projects exceed budget, and 49% fail to meet deadlines,” and “only 26% of organizations use resource management for successful resource allocation.”
An efficient resource management system aids in resource allocation, which is an important element in the resource planning process. This post will discuss the concept, problems, significance, and effective resource allocation methods.

What is Resource Allocation In Project Management?

Resource allocation, also known as resource scheduling, identifies and assigns resources to distinct tasks for a certain time period. These activities might be project-related or non-project-related, such as BAU, administration, support, and operation. Efficient resource allocation ensures that projects are completed on schedule and within budget.

Resources may be completely or partially available. As a result, resource managers must ensure that allotted resources are available for optimal exploitation.

Who Is in Charge of Resource Allocation?

Resource planning and allocation can fall under the purview of numerous different functions within a company.

Project managers typically have responsibility for resource allocation and management. They will allocate resources during the project planning stage and may have to reallocate them as the project develops and parameters change.

However, some businesses may hire a resource manager. A resource manager is in charge of planning and allocating resources across various projects.

They could work at the department or even organizational level, as part of a central Project Management Office. The resource manager will collaborate with each project manager on their resource allocation strategy under this structure.

Benefits of Resource Allocation

There’s a reason why resource allocation is a key issue for large corporations, small businesses, and everything in between. Without it, things can quickly spiral out of control, resulting in staff fatigue, poor performance, and missed deadlines.
Consider the benefits of efficient resource allocation.

#1. It aids in planning

Resource allocation can help you avoid overspending on resources you don’t need or running out of them halfway through a project. With the correct tools, you can rapidly see resource availability and schedules for projects in the pipeline and plan accordingly.

Resource allocation software also improves your understanding of your skill pool. It makes it easier to select the finest personnel for each project and activity, increasing the likelihood of success.
What’s the bottom line? More earnings for your company.

#2. Improves team morale and well-being

Poor resource management can lead to employee burnout. When this occurs, productivity and performance suffer, and happiness fades. Consider the following:

  • Employees who are stressed are 26% more likely to miss work.
  • 76% of employees believe that workplace stress has an impact on their mental health.
  • It is estimated that workplace stress costs organizations between $221 million and $187 billion.

All of these negative effects can be avoided by allocating resources wisely. This necessitates considering actual availability rather than what is printed on paper. Instead of calculating 40 hours per week per full-time employee, you take into account potential sick days, vacation time, and other work activities on their to-do list.

Taking this technique reduces the likelihood of overburdening personnel while maintaining their well-being and morale.

#3. It keeps everyone informed.

It is critical to track progress when working on a project with others. This usually entails providing regular status updates on tasks, issues, and milestones. If you use manual tools, you will waste time and increase your chances of making mistakes.

However, resource allocation software can help to eliminate errors and increase transparency. Every member of the team may track the progress of tasks, and reports can be sent back to stakeholders immediately.

t may even help you reduce the number of daily meetings you have (and make the ones you do have more effective).

What are the Difficulties Associated with Resource Allocation?

It is frequently easier said than done when it comes to resource allocation. Identifying the proper resource might be difficult without the right tools or processes in place. Let’s look at some of the resource allocation issues:

#1. Changes to the project’s scope:

Despite taking the appropriate controls, the project scope can change at any time during the project’s lifecycle. Furthermore, in an agile world, changes in project requirements can result in changing resource demands. Without an up-to-date resource schedule, frequent allocations to suit changing needs become extremely difficult.

#2. Use of obsolete legacy tools:

Spreadsheets and indigenous technologies are insufficient for resource allocation. They fail to give real-time updates to project/resource schedules, resulting in inconsistencies and redundancy. It can result in double booking turmoil, undermining the project’s success.

#3. Sales and delivery crew miscommunication:

While focusing on meeting sales targets, the sales team may fail to involve the delivery team prior to signing the transaction. As a result, the delivery team is forced to scramble for resource allocations at the last minute in order to make the delivery deadline.

#4. In a matrix organization, there is a lack of visibility of resources:

Because there is no centralized resource planner, there is no visibility of resource allocations across matrix bounds. As a result, resource managers have significant challenges in allocating the best-suited and most cost-effective staff to the project.

#5. A mismatch between skill set capacity and demand:

The inability to foresee future pipeline project requirements prevents talent shortages from being identified in advance. This erroneous capacity vs. demand prediction impedes the project resource allocation process.

How to Deal With Resource Allocation Issues

Even if you use all of the correct tools and follow best practices for resource allocation, you will almost certainly run into issues. Hiccups are unavoidable, so prepare accordingly!
Let’s look at some of the most common issues that project managers face and how to solve them.

#1. The project’s scope shifts.

You did your best to plan resource allocation for your next projects, but scope creep is still a possibility. Perhaps the tasks were more comprehensive than expected, or they required abilities that you did not anticipate.
When this happens, you must be agile and modify your resources accordingly. You should do the following to avoid scope creep:

  • Ensure that project scopes are always clear and established.
  • Set specific project objectives.
  • Strive to perform your finest work, but don’t be a perfectionist if it means being late.
  • Create a system that allows employees to approve change requests and revisions.
  • Keep an eye on team performance to verify that everything is on track.
  • Use all of the resources at your disposal to accelerate progress.

It is sometimes hard to avoid scope creep. In such circumstances, having a scope change mechanism in place allows you to adapt quickly and get back on track. This is how it might look:

Submit a specific form to document (in writing) change requests.
Analyze the revision request closely to understand scope creep.
Obtain consent from the key stakeholders.
In writing, document the agreed scope adjustments.

#2. Resources become scarce.

Uncontrollable external forces keep scarce resources from appearing as intended. A worker’s automobile breaks down, and they are unable to get to work. Or perhaps they have other objectives in the organization that takes precedence over focusing on a task you assigned them. What is important is what happens afterward.

Find a replacement as soon as possible from your skill pool. If no one is available with the necessary expertise, hiring a freelancer or contractor may be the best solution. You can avoid this in the future by investigating task dependencies. Investigate any other duties that team members may have that may divert them from the project.

Have a backup resource allocation plan in place in case they are unavailable for any reason. One solution is to have a pool of freelancers on hand to fill in gaps on the go. If freelancers are unavailable, temporary employees could serve as a backup.

#3. Resources must be shared.

It is usual for projects to exchange resources. This is especially true for smaller firms that cannot afford to hire a large workforce. As you can expect, shared resources can cause challenges that clog the pipeline. If project resources are spread too thin, bottlenecks may arise.

Use your resource allocation software to identify gaps ahead of time. Closely monitor the workloads of team members who switch between departments. It’s the most effective technique to avoid over-allocating resources and fatigue.

#4. Unexpected setbacks

Delays might occur when you least expect them. People become ill, work shortages occur, and miscommunication occurs. Scope creep may then raise its ugly head. Some difficulties are under your control, while others are not.
The most straightforward method to deal with problems is to strive to avoid them in the first place. You may:

  • Schedule tasks based on competence rather than time. An expert or specialized works more quickly.
  • Overloading team members with too many other priorities is a bad idea, especially if the work relies on them to proceed through the pipeline.
  • Provide flexible working hours. Some employees are more productive outside of normal business hours.
  • Plan project deadlines, divide them into phases, and keep track of progress. The software assists in identifying potential bottlenecks before they become bottlenecks.

The more systematic and clear your resource allocation, the easier it will be for everyone to accept responsibility for their job.

Most Effective Resource Allocation Methods for Successful Businesses

Now that we understand how resource allocation contributes to effective project completion, let’s look at some of the finest resource allocation methods:

#1. Determine and distribute the Best-Visible-Best-Fit resources:

A resource management system collects resource data from diverse systems and consolidates it into a consolidated platform. Complete transparency allows for appropriate resource allocation to the project based on skills, credentials, experience, availability, pricing, and other selection factors. Scheduling cost-effective global resources from low-cost areas keeps profits high without sacrificing quality.

Assigning best-visible-best-fit resources rather than first-available-first-fit resources is one of the finest methods of project resource allocation. Visibility also enables for the uniform distribution of professional resources across several projects rather than just one high-priority project.

#2. Avoid resource under or overallocation:

The uniform distribution of resources across all projects ensures that no resources are overallocated across the organization. Under allocation of resources leads to decreased productivity and revenue. Overallocation, on the other hand, can lead to burnout, worse output quality, or, worst of all, unintended attrition.

Forecasting billable/strategic utilization enables project managers to shift resources from non-billable to billable/strategic activity on a regular basis. As a result, it promotes optimal resource usage and increases corporate efficiency.

#3. Join an automated resource request process:

Manually sorting through the resource pool or collecting phone/email requests from individual project managers can be time-consuming when distributing resources. The procedure is streamlined by automated resource requests that are not dependent on time-consuming spreadsheets.

It enables project managers to specify the skill sets, credentials, experience, pricing, and project timescales that are required. This request is forwarded straight to the resource manager in charge, who begins planning for it. Tracking allocation records removes any process-related uncertainty because the entire process is documented and auditable.

#4. Allow employees to work on personal projects:

According to studies, when workers work on assignments of their choosing, it improves their engagement and productivity. As a result, managers must consider individual interests in addition to their talents and availability when allocating resources. To do this, resource managers can create open positions and publish them, making them visible to all relevant individuals throughout the organization.

As a result, interested resources can express their desire to join the project, and the concerned resource manager can form a suitable project team. It also saves the resource manager time from searching the company for the best fit and negotiating with their line/project managers. As a result, this strategy benefits both resources and the people in charge of their allocation.

#5. Employee skill sets and duties should be varied:

Encourage staff to possess at least two talents. Allocating resources efficiently on projects that need a variety of abilities allows them to hone their major skill sets while also providing an opportunity to develop new ones. They can also receive additional training on gained skills, and on-the-job experience aids in their development.

When people are let go from a project, there may be no tasks available to them based on their core abilities. Their supplementary skill sets will be useful in this situation, and they can be rendered billable by allocating them to other tasks.

Sometimes there is a need for a specific skill set to begin a new project. Because these resources are scarce, out-rotating a niche resource from an ongoing project can assist jumpstart a new project. Simultaneously, another resource with minimal criteria can backfill to keep the existing project running. This dynamic resource allocation assures that no initiatives are harmed.

#6. What-if analysis to meet the demands of a dynamic project:

When resources are scarce, it is usual to juggle resources among various initiatives. However, in today’s fast-paced corporate climate, any lapse in judgment can be quite costly. This is where business scenario simulation comes in handy.

Applying multiple sets of rules to the same resource pool and comparing instances can aid in visualizing distinct impacts. For example, it may entail delaying or extending the schedule of a low-priority project while devoting its available resources to a high-priority project.

What-if analysis, a significant component of resource modeling and simulation, aids in the determination of probable outcomes through constraint-based evaluation. This approach applies to resource planning and allocation in the same way that we consider the pros and cons of options in our daily lives. Implementing the ideal and feasible scenario on a real project schedule improves successful resource allocation.

#7. Monitor and enhance resource allocation using real-time business intelligence.

Even after the resource allocation procedure is completed, changes in project requirements may arise that necessitate a quick response. Modern resource management solutions with real-time business intelligence dashboards and reports contribute to an improved organization health index.

Role-based configurable dashboards allow decision-makers to make educated decisions and alter resource allocations as needed. Thus, real-time business intelligence assists in anticipating and controlling resource allocations.

Last Thoughts

Using your resources wisely results in a higher ROI on your personnel expenditures, better project outcomes, and more profitability. As you can see, it begins far before your project and requires monitoring and management as it progresses.

This necessitates real-time data as well as enterprise-wide visibility into your project pipeline and resource availability.


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