How you allocate your resources determines how profitable and successful your project-based business will be. Ace your resource allocation with our crash course.
Resource management is the third biggest challenge project management professionals face today.
But - seeing as efficient resource allocation is integral to project success - it's worth taking the time and trouble to understand how resource allocation works in a project management context.
Wondering how you can make the most of effective resource allocation?
We’ve put together this guide to answer questions buzzing in your head — from the role that resource planning and allocation play to addressing the challenges you’re currently facing. Here’s everything we’ll cover:
Resource allocation is a critical project management process that identifies and allocates resources to various activities across your project(s) to achieve project goals in the most efficient way possible.
Resources often include:
In professional services businesses, however, it typically refers to HUMAN resources - the talented team of knowledge workers who deliver innovation and success for your clients.
How well you use your human resources can mean the difference between delivering a profitable project that hits every deadline and satisfies the customer, or a late-running, loss-making project that dents your reputation with the client. So it’s vital to get right.
Typically, project managers are responsible for resource allocation and management. They allocate resources as part of the project planning stage — often also reallocating them as the project progresses and priorities change.
However, some companies may employ a resource manager. In contrast with project managers, this person is responsible for planning and allocating resources across multiple projects and departments.
They might work at a department or even at an organizational level, perhaps as part of a central Project Management Office. In this structure, the resource manager will work with each project manager on their resource allocation strategy.
At the end of the day, resource allocation can be the responsibility of several different roles within a business. But it all depends on your organization’s size and business model.
Having access to the right people at the right time and with the right skill set is critical for project success. This also makes resource allocation a key lever for business growth. Here's how:
An efficient resource allocation process ensures the best people are allocated to each project — based on their skills, experience, availability, and the project budget. This means each project is staffed for success, with the people and skills it needs, within the given schedule and budget.
Resource allocation involves looking ahead at resource availability, which helps you spot and mitigate any resource risks that could pose a risk to delivery before they become a problem - for example, potential resource conflicts or gaps in availability. It also helps you manage stakeholder expectations around timeframe, budget, and deliverables.
Efficient resource allocation keeps one eye on project delivery and another on profitability. It ensures you’re not overspending on more senior staff or skills than the project demands. This protects individual projects’ profit margins, laddering up to overall business profitability and revenue realization.
Effective resource allocation practices protect your people from overutilization and consequently, reduced productivity and mental acuity known to result from being overworked.
This happens as allocation decisions include an assessment of work capacity, allowing for an equitable and even distribution of workload among your resource pool. Naturally, this leads to happier staff, better outputs, and higher staff retention.
Let’s say you are a professional services firm or agency, working on a project basis with your clients.
In our hypothetical case, you’re tasked to build a website from scratch. The project scope is clear, you have a detailed project plan in front of you, with a granular understanding of the tasks that need to be completed.
Now it’s time to allocate resources.
In most cases, here are the departments that will be involved in this kind of work:
This is the first question: how do you assign the right people and make the right choices?
Start by identifying what skills are needed to complete each task. Then look into people’s availability, skills, and capacity to find the best matches.
The goal here is to pinpoint the most relevant experts, check whether they still have enough capacity to join a new initiative, and then assign them to the project of interest.
Keep in mind that this is a hypothetical experience we’re describing here. Reality is rarely so straightforward! When you're working on resource allocation for real projects, you are likely to run into several roadblocks:
Although some of these might hinder your progress with resource allocation, they shouldn’t stop it altogether.
How well you use your human resources can mean the difference between delivering a profitable project that hits every deadline and satisfies the customer or a late-running, loss-making project that dents your reputation with the client.
Thankfully, following the steps below helps you squeeze the most value from resource allocation:
Before anything, build a strong foundation — from using the right tool to centralizing your resource data to creating a talent pool or skills inventory. Here’s everything you need to do:
Without the right software, resource planning is going to be tedious, time-consuming, and probably not as effective as you try to generate real-time data for resource allocation.
So begin with choosing an appropriate project management tool — one that makes real-time data accessible, improving your decision-making. You’ll find a short list of the 7 best-in-class resource allocation tools here.
To allocate the right resources to the right tasks at the right time, you need to know which resources are available. This requires centralizing people data in one place — for instance, with Runn’s People Planner you can view and assess the suitability of employees using filters like role, skill, team, tag, and more.
In addition to knowing the diversity of your talent pool, you need to have clarity on how much time they’ve available in the first place.
Do some of your people work part-time? Do some of your people only work on certain days of the week? Is there a public holiday coming up that falls in the project timeline?
The good news is, this step doesn’t take much of your time if you’re using Runn’s People Planner as it shows you everyone’s capacity (workload, holidays, time off, and availability):
This way, you can factor availability into your resource allocation to create balanced workloads and realistic project schedules.
Lastly, find out what work is currently underway and what work is coming up to avoid resource clashes and assign people to multiple projects.
Again, Run’s Project Planner is a handy asset here as it displays all your scheduled projects in the selected timeframe and shows you what’s currently in progress.
With a strong foundation offering clarity on schedule and in-progress protects, resource availability, and employee capacity, you’re off to a strong start.
Next, intelligently allocating resources to specific projects. Here’s how:
Review the project(s) you want to allocate resources with a keen eye on the scope, budget, deadlines, and dependencies. It also helps to understand stakeholder expectations at this point so you can meet them as you plan resources for each project.
Next, build out a high-level project plan. Work with your team to break down the scope into tasks and activities and estimate how much time you think you will need to deliver the scope of work.
The number of hours or days your team will need to complete each task in a work breakdown structure will feed into your resource plan and project schedule, so this is an important step.
From here, identify the overarching project phases, critical milestones, and deliverable deadlines. You can visually draw these up in the project planner. Once you have lined these all up, you’ll be able to see a timeline with start and end dates for the project.
Based on the stakeholder requirements, work breakdown structure, and project budget, identify roles, skills, and seniority levels you will need for the project in question.
Keep in mind though: as a project manager, you may sometimes not know who will be appropriate for the job. This is why when planning project resources, it’s a good idea to consult the respective team leads, solution architects, and resource managers.
They know their team members and their team's workload well. Hence, consulting with them helps you understand who’d be a good fit or where your organization may be lacking in skills necessary for project delivery.
You can also use the project budget in Runn to organize the roles you will have involved in the project and estimate how much of the budget will be allocated to each role.
Now add the available resources you want to assign to the project, ensuring that they have the capacity to take on new work.
As you do so, don’t forget to:
✅ Factor in time off or public holidays
✅ Check no one is overbooked, will have scheduling conflicts, or has holidays coming up
✅ Ensure the people you’re allocating to the project have the appropriate skill sets and level of experience
If you spot a potential scheduling conflict or overbookings, resolve it by reallocating work to a different resource or shifting the schedule if there’s no one else available. This helps keep project risks in check.
If you’re using Runn though, you don’t need to manually do this as the resource management software not only allows you to add people to a project by role and skill but also alerts you of overbookings and time off in real-time so you can adjust things on the fly.
Pro tip: Don’t have the right resources available at the right time for project success? Based on the skillset’s need, either make a case for hiring a new full-time or part-time employee or hire a contractor. Use placeholders to represent them in Runn. Or you could use a resource leveling technique to resolve your scheduling conflict.
Admittedly, factors like scope creep and inaccurate estimates can derail even the best-laid plans.
This is why you must keep an eye on progress, budget, schedule, and resources once your project is underway to make adjustments if needed.
Monitoring your resource plans against project reality lets you identify how your team is tracking against the original plan and identify any resource or scheduling risks early before they become issues.
To this end:
This includes metrics like team member utilization and capacity to inform your decision-making and avoid over-allocation and team burnout.
Data from Runn’s built-in timesheets helps with making comparisons of plans versus reality, and with forecasting your resourcing and financial health for the remainder of the project.
Runn’s variance report helps too by showing you the variance between your actual and planned resource allocations.
To stay on track and mitigate any risks, you might have to swap out a resource, allocate more resources to a project, adjust your project timeline, and negotiate project deliverables. Here’s more on how to effectively allocate resources to projects.
On the surface, it may seem like allocating resources in the literal sense is relatively straightforward. However, things get tough when it comes to balancing other factors such as balancing resource availability with an ever-changing project landscape.
No wonder, Wellingtone’s ‘process value vs difficulty matrix’, rates resource management as a highly difficult process, but one that delivers high value to the organization.
Meaning: although it’s not easy to master, businesses that do it well reap the rewards.
So where do you start? How can you master results-driving resource management?
The simplest solution is to develop awareness of the challenges you’ll encounter along the way and create game plans to counter those challenges.
So let’s do just that by diving into the expected challenges and ways to overcome them:
The first step to effective resource management is for project managers to know exactly what resources are available to them.
This means visibility into your employees, what skills they have, what their level is, how much they cost, and whether they’re available.
The problem is: many businesses don’t have this information readily available.
For example, your project manager might be waiting for a mid-weight software engineer to become available from your UK operations, not knowing there are two with capacity for the work in your US team.
Create a centralized resource pool to allow all project managers in your organization to see exactly who’s available — without team, departmental, or geographic silos getting in the way of effective resource allocation.
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The next challenge, arguably the biggest, is the dynamic nature of project-based businesses.
Even with the best-laid plans, projects can turn on a dime. Staff sickness could mean missing a milestone. A client could change the project scope. Where you previously had the right people in the right place at the right time — now your schedule and project resources are out of sync.
This creates project dependencies and complexity.
Understand that the resource allocation process isn’t a one-and-done exercise. It needs monitoring and managing throughout the project lifecycle.
And to prevent that from becoming a massive time-sink or worse, use dynamic project and resource management tools to proactively respond to changing project parameters.
When you have a small team of 10-12 staff members, say, you can just about manage it without any formal tools or systems for allocating resources. But as you grow, so does the risk posed by ad hoc resource allocations.
Trying to manage resources using something like a spreadsheet or Trello board just isn’t sustainable or scalable.
Firstly, it takes time to manually manipulate and interpret the information available to you. And secondly, in a dynamic project environment, the information quickly becomes out-of-date almost as soon as you click the ‘close’ button. Here’s a detailed account of why resource planning in Excel is not scalable.
To manage and allocate resources efficiently and effectively, you need a robust, all-in-one resource management tool. This can automate availability and capacity calculations based on real-time data. This makes reviewing team members’ availability an at-a-glance task instead of an afternoon of analysis.
There are lots of financial risks associated with poor resource allocation, especially if you’re making resourcing decisions based on a single factor instead of multiple factors like skills, availability, and cost.
The one-dimensional approach to decision-making, in turn, impacts your budget, schedule, and deliverables. Keeping this in mind, here are three mistakes to avoid when planning and scheduling resources:
If you’re assigning resources based purely on their availability, you could be seriously overspending.
For example, assigning a senior developer to a project where a junior developer would suffice, simply because your senior developer happens to be free.
This overservices the project requirements, potentially delivering more than is needed, and will burn through your project budget unnecessarily. It also risks your senior staff members feeling bored and understimulated by the work assigned to them, making them a flight risk.
Assigning resources based on their skill alone potentially leads to delayed projects.
Your resources need to be able to do the job. But if you rely on a single person with a particular skill set — and multiple projects are competing for the same resources — you might have to wait weeks for them to become available.
That could be a risk to your project milestones and client satisfaction. Looking for a resource that has suitable skills and availability keeps your project on schedule.
Similarly, assigning resources based only on cost could lead to a false economy. Say you assign a junior designer because they have capacity and cost a little less.
But if they don’t have the right skills for the project, they could end up taking longer and costing more than if you’d just waited a week for someone more senior.
Not only could this delay the project but the incorrect allocation can also cause the employee to struggle to deliver to the standard required - ultimately posing a risk both to the project and their job satisfaction.
Using your resources effectively ensures higher returns from your staff costs, better project outcomes, and higher profitability.
It all starts long before your project does though, and requires real-time data and organization-wide visibility into your project pipeline and resource availability.
A project management software like Runn provides exactly this so that you can allocate resources with clarity and confidence, and react dynamically to changing circumstances. Using Runn, you can:
Ready to reclaim control of your resource allocation? Try Runn for free for the next fortnight - no credit card, no charge, no catches.
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