Many project managers make the mistake of overallocating resources. Here's why this can be a big problem and what you can do to avoid it.
Overallocation of resources is a dangerous practice happening in a lot of organizations these days.
When people hear the phrase “overallocation of resources,” they may think that it's all about how to avoid not having enough of something. But overallocation is more than just making sure you have enough employees to complete an entire project; it also helps you if you foster communication, collaboration, co-located teams and overall accountability.
But what is then the real depth of overallocation and how do you know whether your organization is guilty as charged? And for that matter, how do you handle resource overallocation?
Let’s start from the beginning.
It’s fairly easy to define overallocation.
Overallocation is a resource allocation misstep that occurs when an organization has insufficient resources to complete all of the critical tasks assigned within a given time frame. This misstep can also be referred to as over-commitment or over-scheduling. The definition of overallocation is, basically, “too much assigned work” and underallocation is the opposite — “not enough workload” for the available resources.
When overallocation occurs, there is typically too little staff and too much work leading to lots of resource risks and many employees needing to work overtime or on weekends as they race to meet deadlines. Overallocation can lead to disappointment in the workplace, poor performance, and even loss of some project budget. But more on that later.
Now, how can project managers know if someone is overallocated? It’s simple… just look at their schedule. If they are overbooked and can’t get everything done in a reasonable amount of time, then you know it’s time to reallocate some tasks or create more availability for them by hiring a new person on your team to help out.
Crashing your resource scheduling frequently results in overallocation of resources.
And the impact of overallocation can be felt everywhere throughout an organization.
First, employees who are overly busy are less likely to be happy or motivated. So, overallocation may also lead to burnout and turnover as employees leave for greener pastures.
Second, teams that are stretched too thin may miss deadlines and targets, thereby reducing revenue.
Third, organizations with a long hour culture often end up spending more on personnel because they need to hire more people than necessary in order to meet demand. In fact, it turns out that working long hours doesn't necessarily get more done; instead, it may actually result in less productivity and increased stress levels.
Fourth, there is a risk of reduced quality and increased errors when projects aren't allocated appropriately. This can have longer-term effects on an organization's reputation and profitability; companies that fail to deliver high-quality products or services will struggle in today's competitive marketplace.
Too many resource assignments result in a heightened state of anxiety for everyone involved on the project—the overallocator might feel like their workday doesn’t end until midnight; the resource feels jazzed up about working on such an awesome project with amazing people… until they realize that they’ve been allocated to another high-priority initiative that came along unexpectedly. This leads to increased risk and errors within the team since they’re unable to focus on one thing at a time and poor communication can lead to missed opportunities throughout the entire organization. In some cases, teams may even begin thinking about leaving when faced with too much work as well as long hours at work.
In a nutshell, the best answer to the question: “what does overallocation mean?” is that it is a mistake successful and well-managed companies can’t afford to make.
How do you then handle resource overallocation in project management? Let’s take a look.
The best way to resolve any overallocation problems is all about preventing them. Here are the things you can do to catch the trouble before it catches you.
To foster transparency, build a resource calendar. Resource calendars are visual representations of your employees’ schedules, resource's availability, and planned absences. This is a great way for managers to see what resources are available for use at any given time, and how likely each resource is to be utilized on a certain project.
Also, don’t forget to work smart, not hard (or not just hard). Build your project calendars using all the data you have. Create a forecast of availability and demand based on past performance, information from team members, and external factors like market growth or seasonal fluctuations. This will give you a better understanding of where resources can be used most effectively in the future.
Accurate forecasting is crucial to avoiding overallocation of resources. If you do not have a clear picture of how much work is waiting to be done and how long it will take to complete, you can't really begin to allocate your resources optimally. You need accurate estimates on the amount of resources needed for each project or task, as well as an estimate for when you will need those resources over time.
In fact, predicting future resource needs and capabilities is one of the keys to successful resource management.
If you don’t know how many resources you’re going to need or have available in the future, it’s hard to figure out where there could be problems with overallocation — you can only make assumptions based on past performance, which might not work well if your business is growing or experiencing other changes.
In short, a staffing plan is a document that describes what experts or particular resource your initiative requires and how many of them can get your project running.
This plan should be able to answer questions like: How many more resources or employees will you need? What skills will they need? And when do they need those skills? Again, the best way to combat overallocation of resources is by preventing it in the first place—and having a staffing plan can help with that immensely.
You need to create staffing plans early on so they're ready when projects start. It's often helpful to build a team before starting work on any new initiatives. After all, staffing plans help you predict which team members are available for each upcoming project by mapping out employee vacations and other commitments ahead of time.
When deciding how many people you need for your projects, remember that most staff members aren’t 100% billable at all times (and neither should they be). It takes time for them to schedule meetings, take breaks, prepare reports and presentations, cover sick leave — we’re all humans. So including those types of non-billable tasks in your forecast will help you avoid overutilizing their talents.
Let’s face it: we all spend a little bit of our day doing things other than working on business projects, whether it’s answering emails from our mom or taking care of administrative tasks like updating expense reports or organizing our calendar for next week's meeting with the boss.
Accounting for this little wiggle room as a must will make it easier for you to do realistic resource utilization predictions and be more flexible when you need to do some resource leveling.
Our CEO Tim Copeland has shared this story with us, explaining how to approach utilization, while improving profitability:
A few months back, I engaged in a conversation with the CFO of a considerably large company. During our discussion, he recounted an experience where the company had shifted its focus from staff utilization. This change came after two decades of operating as a well-established organization. For about 20 years, utilization was their North Star, getting the most out of their staff's time. It was all about making sure everyone's busy and that supposedly drove their success.
However, they’ve come to realize that the skill set possessed by their workforce wasn't necessarily the most sought-after in the market. Consequently, they chose to temporarily step back from focusing on utilization and redirect their efforts towards comprehensive staff training and development, with a particular focus on their sales team. The company even sought projects aligned with the evolving skill set they were cultivating.
This strategic shift wasn't without its challenges. It involved a six-month period of significant adjustments, entailing substantial costs for the transformative process. The result, upon reevaluation, was a scenario in which their staff's utilization was lower than before, yet the work they were undertaking held greater value for their clients.
This transition yielded an intriguing synergy: the company's profitability increased while the workforce experienced reduced stress levels.
Operating under the premise that allocating 100% of staff time solely to work tasks left little room for creativity, and even practical considerations like sick leave, they recalibrated their approach. By targeting, for instance, 80% of planned work, they allowed space for spontaneity and creativity to flourish. Instead of aiming for that elusive 100% utilization, they dialed it down to 80%.
Ultimately, this balance facilitated a more productive and innovative work environment. Entrusting employees to manage their time effectively eliminated the need for micromanagement on an hourly basis.
Resource optimization techniques allow you to find the best way of allocating your resources so that you can avoid overallocation and save on costs at the same time. Those techniques usually mean resource leveling, resource smoothing, and reverse resource allocation.
You can also try running multiple scenarios (or "what-if" scenarios) where you change different parameters like project duration, team size, cost of labor, etc., until you arrive at the best solution for your organization to find the safest option for your project.
When you want to improve efficiency but also avoid burnout or losses, some advanced resource scheduling automation might be in place. Using resource management software will help you automate processes and remove human error from the equation. It will also allow you to easily scale resources up or down when there is more or less demand for them across your different projects.
As much as we'd like to think otherwise, resource management is complex: many factors affect our availability at any given time; there are many tasks that must be completed before our time can be fully used; the need for different types and levels of expertise will sometimes overlap; and so forth.
This complexity makes it difficult to predict how much effort we could realistically put into each task, or even how long it would take to complete each one. In many cases, we can't properly estimate our own efforts until after the fact—and even then, we're likely to underestimate how long certain tasks take (especially if they require some level of creativity) just by looking at them from the outside in.
The result is a situation where people work with unrealistic expectations about what they can accomplish in their allocated period.
Allocating resources and managing projects wisely means being realistic about what you can and cannot do or predict. This is why having a little automation helper can make such a big change!
Start a free trial of Runn to see how your resource allocation experience can get improved in a matter of a few clicks.
Looking for the best project planning software for your service business? Here’s the features to look for, the benefits they’ll bring, and our cream-of-the-crop top 10 software planning solutions.
The chance that you'll fail to deliver the project because of the lack of resources is known as resource risk. Here's everything you need to know to mitigate it.