5 Best Practices for Effective Resource Allocation

“If the allocation of resources is not done properly, the projects cannot function efficiently, and it will ultimately hurt the growth of the business. – Dominic Barton

Rightly said, effective resource allocation is the key to completing the projects on time and within budget.

But it is often easier said than done, right?

To accomplish competent resource allocation, managers must consider resource skills, experience, cost, availability, interests, among other criteria, while assigning them to the projects. Irrespective of whether the project is billable, non-billable, or strategic, it’s imperative to deploy appropriate resources on suitable opportunities.

This article will discuss the best practices for efficient resource allocation. But first, let’s understand its importance.

Why is resource allocation important in project management?  

Resource allocation plays a critical role in project management. It is the process of identifying and deploying the right resource with the right skills at the right time and cost. If not done properly, it may lead to schedule and budget overruns, employee burnout, compromised quality, and ultimately, derail projects off track.

It is much more than just delegating work and allows you to plan and prepare the workforce in advance and effectively distribute all the available resources to several projects. It helps to reduce project resource costs significantly by allowing managers to deploy cost-effective global resources. This also ascertains optimum resource utilization and ensures profitability.

Moreover, effective resource allocation increases client satisfaction, boosts employee morale and productivity. This increases work efficiency in an organization and ensures successful project delivery.

Given the significance of resource allocation, let’s look into some best practices to allocate resources effectively.

5 best practices to allocate resources effectively

Here are five ways in which allow the effective distribution of the available resources to several projects.

Make a project plan with a detailed WBS

Defining the work breakdown structure or WBS is essential in creating a project plan. It helps break down the project into several tasks and subtasks for a systematic division of work.

It is also used to determine the resources required for each task and create their dependencies in advance. This clarifies what work must be done to achieve the project deliverables and organizes a team’s work into manageable components. Once the WBS is ready, managers can start resource estimation.

Analyze the resource requirements for project tasks

After the project deliverables and WBS are defined, the project manager estimates resources and initiates the requisition process. Accordingly, the resource manager will analyze the project demand and identify resources whose skill set aligns with the project requirement.

Depending on the nature of the project, it may require both human and non-human resources. For human resources, it is necessary to identify the skills and availability. For a non-human resource such as equipment, tools, etc., determining the specifications before assigning it to a task is essential.

Use capacity planning for pipeline projects

The resource manager first assesses the gap between the current capacity against the demand and then identifies the excess or shortage of resources. Accordingly, they can implement different measures to bridge the gap. For example, excess resources can be mitigated by bringing forward projects, adjusting timelines, training or selling excess capacity, etc.

When there is a shortage of resources, it can be eliminated by hiring a permanent or contingent workforce depending on the project timeline, etc. Therefore, forecasting and gauging the gap proactively removes the risk of last-minute hiring and helps optimize the workforce for pipeline projects.

Implement out rotation and backfill strategy

There may be times when a resource with specialized expertise is required for a critical project. However, these resources are already booked on some other projects, and thus, filling these positions is difficult. At the same time, hiring a critical resource with the same levels of experience at the last minute could also be expensive.

In this case, the resource manager can implement out rotation and backfill strategy to help fulfill critical positions. Here the manager will look for the projects on which they can out rotate the critical resource with a suitable backfill so that the current project does not halt.

Monitor and track resource usage

To streamline an efficient resource allocation process, it is required to track the performance of each resource diligently. This will help to keep a check on if the resources are over/underutilized.

With resource management solutions, managers can view real-time utilization heatmap and forecast vs. actual reports and get visibility about the utilization of resources. These data-driven insights help in implementing remedial measures. Thus, it facilitates managers to improve productivity and optimize the resource health index.

The Conclusion.

Resources being the most expensive investment for the business, it is essential to utilize them effectively. The above-mentioned best practices paired with the right resource management solution will help you ensure competent allocation and utilize them productively. Thus, increasing work efficiency and ensuring successful project delivery.