A Crash Course Guide to Resource Allocation [Updated for 2022]

Resource allocation is a critical step in the project management process. In this guide, learn what resource allocation is and why it’s important, go over some of the challenges you might encounter, and then dive into a step-by-step guide.
Shannon Toe
January 11, 2022

Resource allocation is a tricky business. It's like playing Monopoly but with real money, in a way. You need to know where your money is needed most, and can bring you the highest return. But for most project managers  poor resource management has been the biggest challenge. 60% more projects face that problem now as opposed to a few years ago, says Vince Hines from Wellingtone. Project managers know they must do better, but don’t necessarily know how.

In this blog post, you will learn all the secrets of efficient resource allocation, the do's and dont's in resource planning, and the traps you should avoid in resource allocation processes for your projects to end in success.

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What is resource allocation in project management?

By definition, resource allocation is the process of identifying and allocating your resources to various activities across your project(s) to achieve your project goals.

‘Resources’ in project management refer to anything you require to complete the project, including tools, equipment and facilities. On most digital projects, however, the key resources are people. Without effectively allocated people, it will be difficult to deliver the work required for your projects within scope, within budget, and on time. Let's focus on people then.

Who’s responsible for resource allocation?

Resource planning and allocation often fall to project managers. However, some companies may also employ a resource manager, who is responsible for planning and allocating staff and other resources across several projects.

The main difference between project managers and resource managers, however, is that generally, project managers are concerned with allocating and managing resources for only the projects they are accountable for. In contrast, resource managers take a more holistic view and look at resource allocation on a company level.

Both roles work hand-in-hand on the resource allocation strategy and assign people to projects based on their skills, experience, and resource availability.

Why is a resource allocation strategy important?

Having access to the right people at the right time and with the right skill set is critical for project success.

A systematic resource allocation process will help you identify and mitigate any resource risks, such as potential resource conflicts or gaps in availability, and manage your customers’ and stakeholders’ expectations. Planning and allocating your resources ahead of time will save you and your company lots of time, money, and headaches!

Furthermore, effectively assigning resources across your projects can lead to better company profitability, fewer resource constraints, a more balanced workload, and reduced stress for you and your team.

What are the challenges of resource allocation?

resource allocation

There are lots of blind spots to resource allocation. The blind spots most companies forget about or simply ignore thinking they are trivial. But then they end up with questionable resource allocation strategies on the table and massive project risks that will get you shell-shocked when you least expect it.

Consider this. You've got a brand new project and a pool of resources to cover it. As you start your strategic resource allocation, you match the people with the most relevant skill set and experience to the project at hand — a few hours of thinking and it's a done deal, right?

Wrong. This scenario is utopian. The reality is much more tangled than you would think. Here's how it would actually go.

So you have the project and the resources, nice. Is everyone skilled enough? If they are, do they have enough availability or is their workload heavy as it is? Are there any dependencies between your resources or other company projects (it's teamwork, people can't silo)? Do you expect anyone to take some time off — they might, unexpected sick leaves are always a possibility. Suppose someone does take time off, will your project stagnate? What will the cost of that stagnation be and, since we're on that, how much will it cost you to keep the project running?

And these are only some of the challenges you need to account for when doing resource allocation. No wonder why resource management is in the top 5 list of the processes that add the most value and are the most difficult to handle.

Allocating resources in the literal sense is relatively straightforward — it’s other factors such as balancing resource availability with an ever-changing project landscape that makes this process challenging. On top of that, you likely won’t be dealing with just one project, but multiple projects, so there will be competing demands on your project resources.

You know how they say 'less is more'? That philosophy seems to be relevant everywhere today, including project management. Business owners are interested in getting more work done with fewer resources, but that means that the multiteaming trend will only continue rising and this need to juggle resources will be even higher. In fact, a recent  survey that involved 500 managers from global companies found that 81% of they workforce are already working on multiple projects at the same.

And with several projects running at the same time and people jumping from one of them to the other, resource allocation takes on new shades of complexity. Doing realistic estimation, identifying task and resource dependencies between different projects, setting right priorities, matching the most relevant people to projects, empowering efficient communication between the project manager and each team, keeping track and documenting everything — that's just off the top of the mind.

Without a proper plan in place or good resource management software, it’s challenging to maintain visibility over the constant workload and changes in resource availability.

So now, let’s take a look at how to build a resource allocation plan and how to effectively map out your resources for your next projects.

Step-by-step guide to an effective resource allocation process with Runn

There is no single rule book you can use to find the best resource allocation example. But there have been enough project failures around for you to know what traps to avoid and how to think ahead for your resource allocation to be successful.

Before you get started

Now that it's clear what a resource allocation process is and what challenges it can throw right into your face, it's important to highlight that there is a preparation process to follow. A preamble, if you will.

1. Reduce manual work

Doing resource allocation and planning your capacity without good software in your pocket is a fool's errand. There's only so little one project manager can do when trying to generate real-time data for a single project. But when you're dealing with multiple initiatives, job number one will be to find the tool that makes the best match with your resource management needs and calculates all the numbers for you in real time.

You would think that in this day and age people automate everything that can be automated, but Wellingtone found that only 23% of organisations use a PPM or a resource management software solution. No wonder why poor resource allocation is so common — there are still too many resource-related decisions being made based on gut feeling alone.

Once you tick that box, buckle up for the rest of your resource allocation ride. It is just as challenging as it is rewarding.

2. Know your project team’s capacity and availability

Before you begin allocating your resources, you need to figure out how much time you have available to allocate 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?

Capacity refers to the amount of time someone can work. This comes from the number of hours per week or day they would usually work. Typically, this is laid out in your contract with the employee.

Resource availability refers to the amount of time a person can work minus extra time off, sick leave, time allocated on other projects, and other tasks. You’ll likely discover that after all these things have been taken into account, a person’s availability may be a lot less than what you may initially have expected.

Our People Planner gives you real-time access to your pool of employees and contractors so you can see everyone’s workload, holidays, time off, and availability for allocation.

3. Know what other projects are in the delivery pipeline

To improve resource allocation, it’s also important to know what work is currently underway and what work is coming up as you may have people working on multiple projects at a time.

Our Project Planner displays all your projects scheduled in the selected timeframe and will show you what’s currently on.

Look out for tentative projects, which if they become confirmed, will be other projects you’ll need to balance your resource allocations among.

The People Planner and Capacity Charts are quick ways to see where you may be going beyond capacity.

Easily view team capacity and workload, as well as confirmed workload for team members.

Planning your project and allocating resources

1. Understand the project scope and delivery constraints

Firstly, make sure you know the requirements and deliverables of your project and have identified any delivery constraints, such as:

  • Scope
  • Deadlines
  • Dependencies

At this stage, it is crucial to effectively communicate with all the stakeholders involved so you align expectations from the project and can be realistic about what is achievable and what isn't. Stephan Zoder from Forbes says that poor communication is still the primary contributor to project failure. To avoid this, talk to everyone standing above and below you to find out whether their understanding of the initiative aligns.

2. Identify roles and skills for your project

To allocate resources effectively, start identifying the roles, skills, and seniority level you will need for your project. As a project manager, you might not always know who will be appropriate for the job. Planning project resources, it is 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 and will have an idea of who on their team would be a good fit or where you may be lacking in skills necessary for project delivery.

If you have a project budget, you can use the project budget in Runn to organise the roles you will have involved in the project and approximately how much of the budget will be allocated to each role.

3. Map out your high-level project timeline

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 project’s resource plan and schedule, so this is an important step.

From here, identify the overarching project phases and 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.

A project timeline in Runn with phases and milestones added.

4. Allocate people to the project

Add the available resources you want to assign to the project, ensuring that they can take on new work. Remember:

  • To take any time off or public holidays into consideration
  • To make sure the people you’re allocating to the project have the appropriate skill sets
  • And that no one is overbooked or will have scheduling conflicts
  • Account for odd jobs — people tend to spend 28% of their workday checking and answering emails, McKinsey says
Allocate people's work on Runn's Project Planner and get a bird's-eye view of the entire project.

Resolve any overbookings or conflicts by re-allocating the work to someone else or moving the timeline.

Runn allows you to add people to a project by role and skill, as well as alerts you of overbookings and time off in real-time so you can adjust things on the fly.

What if I don’t have the right resources at the right time?

If you don’t have anyone on your project team with the right skill set, you might need to hire a contractor to help you deliver the work. Use placeholders to represent them in Runn.

In Runn, you can use placeholders to indicate demand for a role or if you’re not sure yet who on the team will be taking on the work.

5. Look at People Utilization

As living and breathing beings, people cannot spend their whole business day actually working. They need to take breaks to grab a cup of coffee, have a casual chat with a colleague, or even take a walk for a bit of rest during the day. And although they get paid for these breaks, for a business, this is non-billable time. The time when the things people are doing are not directly contributing to your project's progress. You can usually get that number by dividing the total time someone spends working on the project by their total available hours, aka capacity.

Understanding your resource utilization will make it much easier for you to make accurate estimations of how much time each tasks requires to be completed and ultimately make it easier for you to do efficient resource allocation.

With Runn, you can easily view the percentage of a person's time that has been assigned, and how much of it is billable, non-billable in a daily, weekly, or monthly view.

Once the project is underway

As you progress through your project, things don’t always go as planned. Even with all the planning in the air, you should still leave some room to surprise (aka scope creep).

What if your resourcing plans were too conservative, and you now run the risk of going over budget?!

An easy way to see how your plans fare against reality is by getting your team to track their time worked on the project.

This allows you to identify how your team are tracking against the original plan and identify any resource or scheduling risks early before they become issues. Frequently checking important resourcing metrics like utilisation and capacity will 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 shows the variance between your actual and planned resource allocations.

Runn’s variance report shows 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
  • Change the allocation of resources

Conclusion

An effective resource planning and allocation process involves having a strategy before a project starts. Allocating resources at the right time and keeping track of your plan along the way will ensure optimal team utilisation and successful project delivery.

Runn provides critical visibility over your pipeline of work and your team’s capacity and availability so that you can react to changes quickly and adjust your plan effectively.

If you’re not already using Runn, try it out with a 14-day free trial today.

Disclaimer: This article has been repurposed from our original post on The Digital Project Manager.

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