Better resource allocation means better business outcomes. Discover how to allocate resources to optimize your revenue, reputation, and ROI.
In project management, allocating the wrong resources to the project can result in higher costs, slower time to market, sub-par deliverables, and lower client satisfaction 😲 There’s a lot at stake.
No wonder, resource allocation has always been recognized as a key lever for spurring - or blocking - business growth. Depending on how you allocate resources to projects, you can either propel it forward or backpedal from everything you've achieved. Getting it right thus becomes strategically important for business outcomes.
But how do you actually allocate resources to projects to avoid the scenario above? What factors do you need to consider when resourcing a project? And what tools are available to project managers to make resource allocation easier? We answer these questions in our article below.
Resource allocation is about distributing time and talent, so your resources deliver the best ROI for your business. However, it's always easier said than done. The reason? Too many factors and risks that come into play when allocating resources.
To determine the right resources for every stage of your project, you need complete visibility into these critical resource allocation factors. Combine them correctly and you’ll be able to balance your budget, schedule, and deliverables - to achieve the best ROI for your business.
Talent doesn’t come cheap. Every resource you use incurs a cost to your project budget. So you need to allocate resources wisely if you want to balance your books.
Consider the hourly rate of the resources available to you, alongside their skill set and level of expertise. You may need to splash the cash to get the skilled resources you need to deliver project objectives. Or you may still be able to deliver your project using lower-cost resources...
You need to balance your budget against the skills required to deliver the project well. Don’t over-resource a project by appointing people who are more senior than the work demands. This will increase costs without necessarily improving project outcomes. And it will frustrate the individual involved.
Conversely, appointing more junior resources to cut costs may backfire if they can't keep pace with project timelines or deliver work to the required standard.
Aim to appoint resources that are neither so junior that they struggle and slow things down, nor so senior that they're bored and blow your budget.
Resource allocation is about getting the right people in the right place at the right time. To do this, you’ll need to plot the critical path of your project and understand the resources you’ll need at different stages. Then you can match this to the availability of different resources. You might be pinning your hopes on Resource A and what they can bring to the project. But if they’re not available when you need them, it might be better to use Resource B rather than delay your schedule.
Capacity is about whether someone has time to take on additional projects. It might sound the same as availability but it’s not. Availability is concerned with whether someone is free at the right point of your project schedule. Capacity is about whether they have the time and - importantly - energy to take on more projects.
The optimum capacity for any team member is to have 80% of their time booked with billable work. Any more than that and they’re being over-utilized, which risks burnout and reduced productivity. See more on this below.
Time off is linked to availability. It could be anything from a week away on holiday, to an extended period of absence such as parental leave, or time off due to ill health. Project managers need to be aware of any time off, so that they can avoid scheduling resources that aren’t actually available.
But not every business has a way to capture and access this information - for example, because project managers and Human Resources are working in siloed systems. It’s important to find a way to share this information - whilst maintaining and respecting appropriate privacy of colleagues, obviously.
The success of any project depends on the skills of your knowledge workers. When allocating resources to a project, you need a firm understanding of exactly what skills will be required - and which resources have them.
You can achieve this by having a centralized resource pool that records individuals’ skills and skill levels. From here, you’ll ideally be able to search for resources by skill and then filter them by other factors such as level, cost, and availability. That’s certainly how the Skills feature works in Runn 😉
Project dependencies are when certain things have to happen in sequence. For example, in house building you can’t put on the roof until you’ve built the walls. Dependencies form the basis of your project’s critical path - the things that have to happen to achieve your goal.
When assigning resources to your project, you need to be aware of these dependencies. Otherwise, you could book your preferred resource, only to have them twiddling their thumbs while they wait for other people to finish their tasks first.
Estimations are the educated guesses that you make - at the start of your project - to inform the type of resources you’ll need and how long you’ll need them for. These estimates will help you select and schedule the right resources at the right time.
There are lots of different resource estimation techniques. For example, analogous estimation uses data from similar past projects to calculate the likely duration of future projects and activities. Collecting information from past projects - and making it available as part of the project planning process - will improve the accuracy of your estimates and the efficacy of your resource planning 🙂
It’s hard to accept but just because something is a top priority for us, doesn’t mean it is a top priority for everyone else. When allocating resources, you need to be realistic about how likely you are to secure the most in-demand resources - your organization’s MVPs.
If your current project isn’t delivering a big impact for the business - or has a high risk of failure - they’re unlikely to want to assign their top players. If you do have your sights set on an MVP, make sure you have a strong business case for why your project should be the priority - in terms of client outcomes or ROI.)
Workload touches on capacity, availability, time off, dependencies, and more. It’s about the bigger picture of whether someone has too much on their plate.
For example, someone might seem to have availability and capacity for your project. But perhaps they’re playing catch up after a period of leave and working longer hours than they should? Or they’re undertaking training that’s temporarily reduced their availability for billable work?
It’s important to have complete transparency and visibility into factors that impact your resources, if you want to hit the sweet spot of people and productivity.
Successful businesses have a resource allocation strategy that informs how they assign resources and prioritize people's time. Here are five tips for effective resource allocation processes in your business.
Have you ever tried to work at 100% capacity, 100% of the time? How’d it go? We’re guessing not well! People aren’t designed to work at full capacity. We get stressed, depressed, and unproductive.
You should aim for resources’ time to comprise about 80% billable/project work (leaving 20% for admin and other essentials). And within that 80% billable work, you should aim to keep them working at 80% capacity.
This is the sweet spot where resources are working to a comfortable and productive level, making money for your business without burnout or boredom.
Not every project can be a success. There are lots of reasons why projects might fail - being over ambitious, being underfunded, the client being unable to provide timely input. If you have a feeling that a project is ill-fated, don’t over-invest in it. Keep your resource allocation lean.
Allocate the minimum viable resources to service the project fairly. That is to say, don’t doom it to failure by under-resourcing it. But don’t blow your budget on a top-flight project team when you might not be destined to see any ROI.
Your MVPs are your most valued players. They’re the people who bring something special to the table - using their unique experience to add more value than most. These MVPs can be costly to a project. But often save money by working smarter than someone without their combo of skills and experience.
These MVPs should be allocated to projects that represent the highest potential to your business - whether that’s in terms of success, revenue generation, or strategic fit. Make sure you have processes in place that determine how your MVPs' time is prioritized and allocated for maximum effect.
Your critical path is called that for a reason! It is your roadmap to successful project completion - every thing that needs to happen, in the order it needs to be completed. If you cut corners to try to shave time off your schedule - or save £££ from your budget - it could backfire and cause the entire project to fail.
Use estimating techniques - based on data - to understand project requirements, create a realistic path, and resource it appropriately.
In their evergreen report on resource allocation, McKinsey state that proactive reallocation of resources increases returns. They found that businesses that dynamically reallocate resources - 'money, talent and management attention' - to priority areas see significantly better returns than those that don't.
To do this effectively, you need a way to quickly assess and understand the implications of different scenarios and resource allocations. This lets you strategically reallocate resources to projects and activities that can deliver the most impact.
If you'd like to improve resource allocation in your business, there are lots of tools available. These tools help project managers allocate resources effectively and intelligently - so that projects succeed and your organization thrives.
Here are just some of the resource allocation tools you can use to make smarter decisions.
Runn is resource management software that makes it easy to create perfectly resourced projects. Here are some of the tools you can use.
Identify and allocate the ideal resources for every project and activity. See everything you need to know - about all of your resources - in one place. Search for people based on their skills and seniority, view their capacity and cost, then add them to projects and assign tasks. The perfect resource scheduling tool.
Discover what else People Planner can do.
Build project plans, fast - whether you're managing one project or a whole portfolio. Easily drag-and-drop project phases to build a critical path, allocate resources, and see the impact of your decisions on budget, schedule, and other projects. Use Project Planner to manage projects too, comparing actual time and spend against projections, and dynamically reassigning resources as required.
Delve deeper into Project Planner’s features.
Get an accurate overview of team and individual workload to keep everyone working at optimal capacity. Use utilization heatmaps to instantly identify resourcing risks. See short-term workload and capacity to monitor resource utilization across multiple projects. And use the longer-term view to inform decision-making about onboarding news projects and recruiting new staff.
See capacity planning in action.
Use tentative projects to model different project combinations. Quickly see the impact of different scenarios on workload, utilization, revenue, and more - to work out the best combination of projects to achieve your revenue and growth objectives.
Read more about scenario planning and ‘what ifs.’
Ready to see how better resource allocation means better business outcomes? Try Runn for free for 14 days - no credit card needed.
Want to make better upskilling and hiring decisions? A skills gap analysis will give you a baseline understanding of where your team is at - from there, smarter decisions await!
What does a good scope baseline look like? In this blog post, we explain what you should include in your project's scope baseline and why each item is important.