Everything you need to know about resource allocation in 2024

resource allocation in 2024

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Resource management is one of the most difficult parts of project management. According to Wellingtone’s 2021 State of Project Management report, it is the third biggest challenge facing project management professionals today. However, it brings great value to organizations that practice it correctly.

Resource allocation is a key element of resource management. It is the process of efficiently allocating resources to achieve the best return on investment.

But it’s not just about a direct comparison between costs and profitability. It’s also about doing a good job, satisfying customers and keeping your team happy and productive… and you’ll see that this also contributes to sales and growth.

In this guide, we’ll explain exactly what’s involved in resource allocation, and share best practices so you can improve the planning, allocation and management of your resources.

What is resource allocation in project management?

By definition, resource allocation is an essential project management process that enables you to identify and allocate resources to the various activities of your project(s), in order to achieve the project’s objectives as efficiently as possible;

While resources can be people or equipment, in professional services companies they essentially refer to human resources: the teams that bring innovation and success to their customers.

Good use of human resources can make the difference between a profitable project that meets deadlines and satisfies the customer, or a late, loss-making project that damages the company’s reputation with the customer. That’s why it’s so important to get it right.

Who is responsible for resource allocation?

Planning and resource allocation can be the responsibility of several different functions within a company.

Resource allocation and management is normally the responsibility of project managers. They allocate resources during the project planning phase, and may need to reallocate them as the project progresses and parameters change.

However, some companies may hire a dedicated resource manager, such as a staffing manager. A resource manager is a person in charge of planning and allocating resources to several projects.

They may work at departmental or even organizational level, possibly 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.

Why is a resource allocation strategy important?

Having access to the right people at the right time, with the right skills, is essential to a project’s success. Here’s why.

1. To optimize your project results

An effective resource allocation process ensures that the best people are assigned to each project, based on their skills, experience, availability and project cost. This means that each project has the people and skills it needs to succeed, on time and on budget;

2. To avoid project bottlenecks

Resource allocation involves anticipating the availability of resources, enabling the detection and mitigation of resource risks that could compromise delivery before they become a problem. These could include potential conflicts between resources or gaps in their availability. It also helps you manage stakeholder expectations in terms of deadlines, budgets and deliverables.

3. To improve profitability

Resource allocation enables us to keep one eye on project implementation and the other on cost-effectiveness. It ensures that expenditure on personnel or skills does not exceed project requirements. The profit margins of each project are thus preserved, protecting the company’s overall profitability and revenue generation;

4. To protect personnel

Effective resource allocation practices protect your staff from over-utilization and the reduced productivity and mental acuity that inevitably result from work overload. Allocation decisions include an assessment of work capacity, enabling a fair and balanced distribution of the workload among your resources. The result is happier, higher-performing staff and greater loyalty.

Resource allocation problems

A systematic resource allocation process takes into account a number of different factors – such as availability, skills and even costs – to determine the best person for a given project at a given time.

In so doing, it promotes positive project results, resource efficiency and even staff retention. Misallocating resources carries many financial risks, especially if decisions are based on a single factor.

Here are three examples of resource allocation that demonstrate the impact of one-dimensional decisions on budget, schedule and results.

1. Allocation based on availability only

If you allocate resources solely on the basis of their availability, you run the risk of overspending.

For example, assigning a senior developer to a project simply because he or she is available, when a junior developer would suffice for the task in hand, reduces financial performance. In fact, the internal costs inherent in seniority put an unnecessary strain on the project budget.

On the other hand, this senior manager runs the risk of becoming bored and uninspired by the work entrusted to him/her, with the consequent risk of burnout.

2. Allocation based solely on skills

If allocation is based solely on the skills required, there is a risk that projects will be delayed.

It goes without saying that your resources must be able to do the job. But if you’re dependent on a single person with a particular qualification – and several projects are competing for the same resources – you risk having to wait weeks for them to become available. This could jeopardize your project milestones and customer satisfaction.

Finding a resource with the right skills AND the right availability helps keep the project on schedule.

3. Cost-based allocation only

Allocating resources on the basis of cost alone can be a false economy. Suppose you allocate resources to a junior designer because he’s competent and costs a little less.

If he doesn’t have the qualifications required for the project, he’ll take longer to complete the tasks requested, and thus cost more than if you’d waited a week to find someone more experienced.

This could not only delay the project, but also make it difficult to meet the requirements, jeopardizing the project, your staff’s job satisfaction and even your organization’s reputation;

Two emerging opportunities in resource allocation for 2024

As global competition for talent intensifies, smart professional services firms are using resourcing to gain strategic advantage. Here’s what the experts have to say about these two emerging resourcing trends:

  • Skills enhancement
  • Giving more meaning to work

Allocating resources to improve team skills

Talent and skills shortages are a problem for professional services companies, as they reduce capacity and lead to delays in delivery. One way to remedy these shortages is to improve skills;

Upskilling involves investing in existing resources to develop their skills in line with business needs. According to the LinkedIn Workplace Learning Report 2022, improving employee skills is the second highest priority for R&D managers. Forty-six percent of those surveyed cite “improving and renewing employee skills” as their company’s main objective. 46% of those surveyed cite “improving employee skills and retraining” as one of their company’s main objectives;

Strategic resource allocation can be used to improve skills by allocating resources to challenging and demanding projects. To be successful, this must be the case:

  • With adequate support for junior resources, e.g. time for off-the-job learning or mentoring.
  • Factor this into the project timetable, as the person improving his or her skills may need more time and patience to put them into practice.
  • Align individual and corporate ambitions.

Resource allocation as a motivational tool

Another consideration in resource allocation is whether it enables people to do meaningful work that motivates them to achieve high performance;

Meaningful work is work that appeals to one’s values and interests, and gives meaning to one’s life. It contributes to job satisfaction and well-being at work;

But it’s not just important for employees, but also for the company. Studies by McKinsey & Co show that when people find their work meaningful, their performance improves by 33% and they are 49% less likely to leave ;

However, other studies conducted by McKinsey & Co reveal that while 70% of people are looking for a reason to be at work, only 15% of front-line workers achieve this. Resource managers can help!

Indeed, resource managers are ideally placed to understand what gives meaning to each employee’s work;

Armed with information about people’s ambitions, interests and development goals, managers can make better-informed assignment decisions, placing people in projects that ignite their passions and benefit the company.

Resource managers need support to do this

For resource managers to play these more strategic roles – finding opportunities for skills enhancement and creating meaningful jobs – companies need to give them the space to do so. This means:

  • Providing the right tools to do their job well – such as a platform that allows them to track people’s skills, interests and ambitions when programming resources – will be discussed later.
  • Give resource managers a “seat at the table” when strategy is discussed : they can only provide strategic support if they know your strategy.
  • Automate manual administration so they have more time for the human side of resource management: your resource managers should be speeding up their resource management time, not struggling with spreadsheets!
  • Don’t “dilute” the effectiveness of resource managers by spreading them too thinly – Christine Robinson says there’s no magic ratio, but aim for between 12 and 25 people per manager, depending on your business.

What are the challenges of resource allocation?

In Wellingtone’s “Process Difficulty and Value Matrix, resource management is classified as a very difficult process, but one that brings great value to the organization. This means that, although it’s not easy to master, companies that do it well will reap the rewards.

Resource allocation in the literal sense is relatively straightforward; it’s other factors, such as balancing resource availability with an ever-changing project landscape, that make the process difficult.

In addition, you probably won’t be working on just one project, but several, so your project resources will have to compete with each other;

And with several projects underway at the same time, and people moving from one to another, resource allocation takes on new shades of complexity. Here are some of the main resource allocation challenges, and how to overcome them.

Lack of overview of resources

The first step in effective resource management is for project managers to know exactly what resources they have.

This means knowing who the resources are, what their skills are, what level they’re at, how much they cost and whether they’re available. Many companies don’t have this information.

For example, your project manager may be waiting for a middleweight software engineer to become available in your UK operations, without knowing that there are two with the right skills for the job in your US team.

The creation of a centralized resource database will enable all project managers in your organization to know exactly who is available, without the compartmentalization of teams, departments or geographical areas hampering efficient resource allocation.

Project changes and dependencies

The next, and perhaps most important, challenge is the dynamic nature of project-based businesses. Even with the best plans, projects can change in the blink of an eye. A staff member’s illness can mean a milestone is missed. A customer may alter the scope of a project.

If you used to have the right people in the right place at the right time, your schedule and project resources are now out of sync.

What’s more, it’s rare for members of your project team to be working on YOUR projects at the same time. A survey of 500 business leaders worldwide revealed that 81% of staff work on several projects at the same time.

This creates dependencies and complexity in the project: X must be produced before Y and Z. And if X is delayed, so are Y and Z. And if X is delayed, Y and Z will be too. And if X is delayed, so are Y and Z.

So when something slips in the project schedule – and the much-needed resource you had planned for next week is now needed in two weeks’ time – it may no longer be available… Argh!

This means that the resource allocation process is not a one-off exercise. It must be controlled and managed throughout the project life cycle. To avoid this becoming a huge waste of time, or worse, an inability to respond to changing project parameters, you need dynamic tools that can help.

Unsuitable tools

When you have a small team of five people, for example, you may be able to manage it without the need for formal resource allocation tools or systems. But as the team grows, the risk of inefficient resource allocation increases;

Trying to manage resources with a spreadsheet or Trello table is neither sustainable nor scalable.

Firstly, it takes time to manually manipulate and interpret the available information. Secondly, in a dynamic project environment, information becomes obsolete as soon as the “close” button is pressed.

A resource management tool is ideal for managing and allocating resources efficiently. This tool can automate availability and capacity calculations based on real-time data. So seeing which team members are free is a task that can be done at a glance, rather than spending an afternoon analyzing it.

Without a resource allocation plan – or without good resource management software – it’s difficult to maintain visibility of constant changes in workload and resource availability.

Fortunately, there are tools that can help them, and the time and money they save more than make up for their monthly costs.

A step-by-step guide to efficient resource allocation with Teambook

Below we present some of the best practices for resource allocation in project management. We’ll use Teambook to provide examples of how the right project resource management software can help.

Phase 1: Preparing the ground

Before you start allocating resources to specific projects, you need to lay the groundwork, from using the right tool to centralizing resource data. Here are the essential steps you can take to improve your resource management.

1. Use the right tools

Resource allocation and capacity planning without the right software will be tedious, time-consuming and unlikely to be as effective.

There’s only so much a project manager can do when it comes to generating real-time data for resource allocation: it’s hard to collect, interpret and act on it in a timely fashion.

The first step to improving resource allocation in project management is therefore to choose an appropriate project management tool, which calculates all the figures in real time so that you can make quick and confident resource decisions.

You might think that in this day and age, people automate everything they can, but Wellingtone has found that only 23% of organizations use a resource management or production management (PPM) software solution.

No wonder resource misallocation is so common: too many resource decisions are still made on the basis of instinct alone. It’s the wrong way to go about things.

2. Create a central resource database

To allocate the right resources to the right tasks at the right time, you need to know what resources are available. Conversely, without centralized information, project managers allocate resources blindly.

Teambook offers a centralized place to view and assess the suitability of every resource in your organization, through tags that you define according to your internal criteria. You can filter people by function, skill, team, geography and much more, making it easy to see which resources have the skills you need for your project.

Remember when we mentioned using resource allocation to improve skills and create useful work? This is where you can get that information. But how do you get it?

It must then be made available to the company, so that managers can identify opportunities to capitalize on these ambitions and align them with the company’s strategy;

3. Establish capacity and availability

Before project managers can start allocating resources, they need to determine how much time can be allocated.

  • Do any of your employees work part-time?
  • Do some of your employees only work certain days of the week?
  • Is there a public holiday?

Capacity refers to the length of time a person can work. It is derived from the number of hours per week or per day that a person usually works. Resource availability refers to the length of time a person can work, after deduction of vacations, sick leave, time allocated to other projects and tasks;

Once these other factors are taken into account, a person’s availability may be much lower than you had originally anticipated.

Teambook’s planner takes into account your organization’s usual working hours, as well as any part-time work your resources may be doing. In addition, the tool integrates official public holidays and allows you to enter vacations and other “time-offs”. This enables you to take real availability into account when allocating resources, and create balanced workloads and realistic project schedules. Our capacity diagrams can help you see the big picture and filter capacity for the functions that are important to you.

‍4. Improve the visibility of the project portfolio

To improve resource allocation, it’s important to know which jobs are in progress and which are to come, as people may be working on several projects at the same time.

Our project planner displays all your scheduled projects within the selected timeframe, and shows you what’s in progress. Keep an eye out for provisional bookings. If they are confirmed, you’ll need to balance the allocation of resources between several projects.

The planner and performance indicators are quick ways of seeing where you’re exceeding your capacity.

Phase 2: Project planning and resource allocation

Once you’ve set up your tools to tell you what other projects are underway – and how many people and hours you have available – your project managers will be better able to allocate these resources intelligently to specific projects. Here’s how.

1. Understand the scope and constraints of the project

Define your project’s requirements and deliverables, and identify any milestones.

At this stage, it is essential to communicate effectively with all stakeholders to align project expectations and be realistic about what can and cannot be achieved.

2. Identify roles and skills for your project

Start identifying the roles, skills and level of seniority you’ll need for your project.

As a project manager, you don’t always know who will be best placed for the job. When planning resources for a project, it’s advisable to consult team leaders, solution architects and resource managers.

They know their team members and workloads well, and will have an idea of which members of their team would be best suited, or which do not have the necessary skills to implement the project.

If you have a time budget for the project, you can enter it in Teambook. By doing so, you can easily assess the “residual” available in relation to the time already allocated, and also compare this budget with the time actually spent on the project.

3. Establish a general project schedule

Next, develop a high-level project plan. Work with your team to break down the scope into tasks and activities, and estimate the time you think you’ll need to complete the work.

The number of hours or days your team will need to complete each task in a work breakdown structure will be factored into your resource plan and project schedule.

From there, identify overall project phases, milestones and deadlines. You can represent these visually in Teambook’s planner in the form of milestones. Once all these elements are aligned, you’ll see a calendar with the project’s start and end dates.

4. Know your utilization rates

It’s always important to remember that human resources are HUMAN first and RESOURCES second. This means they need to take breaks, chat with another team member or even take a walk to rest during the day.

In addition, they have to answer e-mails, attend meetings and receive training.

For your company, this is important but non-billable time. You need to assume that your team members have 80% of their time to work, and that 80% of this time is available for billable project work.

With Teambook, you can easily see the percentage of time allocated to a person and the billable or non-billable portion on a daily, weekly or monthly basis. Use this resource utilization information to maintain a manageable and balanced workload among your colleagues.

5. Allocate resources to the project

Add any available resources you wish to assign to the project, making sure they have the capacity to take on the new work. Don’t forget to :

  • Take vacations into account;
  • Ensure that the people you assign to the project have the right skills and level of experience;
  • Check that no one is overloaded with work, and that there are no scheduling or vacation conflicts.

If you detect a potential scheduling conflict or overbooking, resolve it by reassigning the job to another resource, or by rescheduling if no one else is available.

Teambook lets you add people to a project based on their role and skills, as well as receive real-time alerts on overbooking and free time so you can adjust things on the fly.

What happens if you discover that you don’t have the right resources at the right time?

If no member of your project team has the required skills, you may need to call on an external subcontractor to help you complete your project. Don’t hesitate to create him/her as a Teambook user, with the corresponding role, which will enable him/her to consult his/her personal schedule only, without having access to all your organization’s data.

Stage 3: Resource monitoring and management

Even the best-laid plans can be derailed: changes in project scope, inaccurate estimates, unforeseen illness or absences… Once the project is underway, it’s imperative to monitor progress, budget, schedule and resources… and make any necessary planning adjustments.

Frequent checking of important resource parameters, such as team member utilization and capacity, will help you make decisions and avoid over-allocation and team burnout.

In addition to updating project planning, it is important to keep track of the time actually spent on projects. Teambook’s integrated timesheets can be easily entered, especially if they are based on planning data. Once these actual times have been reviewed and approved by project managers, it is then possible to compare plans with reality, enabling you to identify your team’s performance against the original plan, and spot resource or schedule risks before they become a problem.

If necessary, you can adapt resources to mitigate risks, for example by..:

  • Exchanging one resource with another
  • Allocating more resources to certain phases of the project
  • Adjusting your project schedule
  • Negotiating project results.

 

Example of resource allocation

Suppose you’re a professional services company or agency working on a project for an external client. In our hypothetical case, you’re tasked with creating a website from scratch. The scope of the project is clear, and you have a detailed project plan, with granularity right down to the tasks to be accomplished.

The time has come to allocate resources. In most cases, these are the departments that will be involved in this type of work:

  • Engineering: Front-end and Back-end
  • Design: web and/or marketing designers
  • Marketing: copywriting and SEO
  • Product: product management

This is the first pitfall: how do you assign the right people and make the right decisions?

As we saw above, assigning a person solely on the basis of their role or availability can mean that you entrust work that a junior could do to a senior, or the reverse: something that a senior can do in a day, while it will take a junior weeks to accomplish. If you don’t take availability into account, you run the risk of overloading a person and entrusting them with far more work than they can actually do;

‍Once the project has been drafted, check people’s availability and ability to find the most suitable ones. Remember that  your user database should thus reflect the skills specific to your industry, your organization. The aim is to identify the most relevant experts, check whether they still have sufficient capacity to participate in a new initiative, and then assign them to the project in question.

Bear in mind that we’re describing a simple experience. In reality, you’re likely to encounter a number of obstacles:

  • Resource constraints
  • Budget constraints
  • Shortcomings in project planning
  • Scope extension

While some of these may hinder your progress in resource allocation, they shouldn’t stop you altogether.

For example, if you find yourself in a situation where you don’t have any experts with the skills required for the project, you can create a fictitious resource bearing the name of the role they should play, and assign the tags corresponding to the skills required ;

‍This information can then be used by the HR department to hire future resources. You can also look at your existing talent pool and see if a person can be redeployed (although this is a risky step to be considered with caution) ;

In addition to these guidelines, it’s a good idea to leave a margin for possible changes. According to the experts, you should always add 25% to the project completion forecasts to make the results more realistic. To stay within this safety zone, take the time to list the things that could go wrong with the resources allocated, and see what steps you can take to preventively address these issues and make your mission future-proof;

Things to remember

The efficient use of your resources translates into a better return on investment for your personnel costs, better results for your projects and increased profitability. As you can see, this starts long before your project begins, and needs to be monitored and managed as projects progress.

This requires real-time data and organization-wide visibility on current projects and resource availability. Teambook project management software provides exactly that, so you can allocate resources with clarity and confidence, and react dynamically to changing circumstances.

  • Centralized resource reservation for secure resource planning ;
  • Access to information on skills, level, capacity and availability;
  • Drag and drop resources into your project plan ;
  • Easily monitor project progress and adjust resources.

Regain control of your resource allocation. Try Teambook for free.

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