What Is Resource Allocation: The Ultimate Guide for Project Managers

Imagine you’re onboarding a new team member — and it’s their first day at the office. You greet them, walk them into the office, and want to lead them to their desk.

However, every desk is taken — there is nowhere for them to sit. You apologize and scramble into some spare room for an old desk, which you then spend 15 minutes finding a floor space for.

Doesn’t leave a good first impression, does it? As extreme as this example is, it showcases the importance of managers being aware of the resources at hand and how to distribute them to their team.

In this article, we will talk about exactly this — what resource allocation is and how you can utilize it for the benefit of your project.

• Resource allocation is beneficial to your project — resulting in reduced costs, increased efficiency, a satisfied team, etc.
• Skill gaps and surpluses are listed as the main challenges of resource management, while training and skill development availability are the least challenging.
• Resource allocation should be done throughout the whole project, adapting to oncoming changes.
• Using a PM tool increases the efficiency of the resource allocation process.
• Task dependencies greatly affect resource allocation, so using methodologies that are centered around dependencies will help this process.

What is resource allocation? 

Resource allocation is the process of defining all finite project resources and distributing them as efficiently as possible.

Make sure to pay attention to the word “finite” — almost every resource in your project is limited. There’s a certain timeframe or a certain number of people in your project team. As a project manager, you need to have a detailed understanding of every resource available before allocating any of them. 

This can prove difficult — ProSymmetry’s 2022 The State of Resource Management study shows that participants cited visibility into the availability of resources as the second biggest challenge of resource management. 

Ironically enough, while skills gaps and surpluses are listed as the #1 challenge, training and skill development are said to be the least challenging.

Proper distribution of resources involves matching the right resource to the right task. If your task prioritization skills are not up to par, your resource allocation might be lacking. This is why, especially in larger teams, projects will have a resource manager as a dedicated role.

Furthermore, as the project unfolds, resource allocation doesn’t stop. If a change is made to the project, resources might have to be redistributed.

What are the 3 elements of resource allocation? 

Resource allocation is comprised of 3 main elements — each of these represents a category of resources that you should pay attention to when allocating:

#1: Human resources

Human resources equal your entire workforce.

Pay close attention to every team member’s specific skills and abilities so you can assign the right tasks to them.

Make sure to keep your workload management skills sharp, as you don’t want to overburden someone with tasks just because they are more skilled. 

#2: Financial resources

Financial resources involve your project budget.

You need to carefully allocate the budget to increase profits and growth and decrease costs. This process involves financial planning, analysis, reporting, and cost control.

#3: Material resources

Material resources include the physical resources required for your project.

Whether it’s an office space or technology — you need to make sure it’s in the right place at the right time.

Handling material resources properly can eliminate bottlenecks, increase production, and minimize waste.

Resource allocation example

For this example of how resource allocation may work in practice, let’s say you have a publishing house, and you’re planning a book launch:

• The first step in resource allocation is to determine your needs and goals — your current goal is to complete the launch of 10 new books. 
• The next step is to take inventory of your resources. Your budget is $30,000. Your human resources include a marketing expert, 2 sales members, a translator, 2 designers, and you. Your material resources include the book manuscripts, an office phone, and computers with design tools installed.
• Your next step is to determine which tasks are dependent — making a deal with a printer and designing covers comes before printing, which comes before pitching a deal with bookstores.
• Now, you can start the tasks that aren’t dependent whenever you’d like — in this case, you can start marketing as soon as the project starts. You can put a faster designer on higher-priority books.
• Next, you need to make sure that the one office phone is available to both sales members, which means rescheduling so that those tasks don’t overlap.
• But, let’s say that halfway through the project, you get 5 more great manuscripts, and decide to increase the scope. You need to re-evaluate the resources at your disposal.
• The budget would have to be increased, by the necessity of printing costs. You’d probably require another designer to avoid putting too much pressure on the current ones.
• On the other hand, the phone, which seemed like a scarce resource, does not need an increase in numbers — the sales team’s scope wouldn’t increase as much.

Benefits of resource allocation

Properly managing your resources can bring many benefits to your project, some of which include:

• Increased efficiency — properly managing which resources are assigned to which task can result in reduced deadlines and better outcomes.
• Reduced costs — allocating resources efficiently prevents you from wasting them over the course of the project. If you’re inefficient in your resource use, you’ll most likely need to acquire more, which will increase costs.
• Improved project planning — knowing how to properly handle resources improves your project planning capabilities. If you have a better understanding of what you’re working with, you’ll increase the accuracy of your project management plan.
• Improved team satisfaction — properly managing resources also means that no one in your team is overworked or lacking in resources they need to complete their tasks. As team satisfaction increases, so will productivity.
• Better collaboration — if resources are properly utilized, it’s easier to collaborate because there isn’t a clash in who does what or what resources they need in their work. This will, in turn, improve project collaboration.

How to allocate resources 

Resource allocation is a complicated endeavor, filled with moving parts. So, we’ve rounded up the best tips to make your resource allocation easier.

Tip #1: Identify the project scope

The first step in resource allocation is to identify the project scope. How do you cover all the work? What’s the size of your budget and your workforce? These factors will then determine the material resources you need.

The project scope is also important for time management. If you have a long time to finish a project, you have more leeway to reschedule tasks when needed.

Always keep in mind, however, that scope is subject to change during the course of a project. You need to keep track of any scope changes in order to appropriately change the way in which your resources are allocated. 

Tip #2: Track task dependencies

The ways in which your tasks relate to each other will always have an effect on resource allocation.

This is most apparent with scheduling. If 2 tasks are dependent, you must schedule one after the other and can’t do them simultaneously. So, the ways in which you can utilize human or time resources are limited. 

So, task dependencies will greatly influence your resource allocation decisions.

Tip #3: Track resource dependencies

Apart from task dependencies, you also need to mind resource dependencies — which show how your tasks are dependent on certain resources. For example, you can’t start construction without the proper tools. Or, you can’t bake a pie without flour.

You want your resource dependencies to be as few as possible — so that in the event of a resource shortage, your whole project isn’t halted.

What resources are available? How important are they for certain tasks? Are they replaceable? All of these questions help determine resource dependencies.

Tip #4: Avoid over-allocating

Over-allocating and under-allocating pose a large risk when prioritizing tasks. As you determine which tasks are of higher priority, you will want to pour more resources into them. However, if you go overboard, this becomes an issue.

If you have a highly skilled team member, you might feel tempted to give them more responsibilities and assign as many priority tasks to them as possible. This can lead to burnout or an unbalanced workload compared to the rest of the team. Instead of being rewarded for being more skilled, the team member is overworked.

It’s important to remember that whenever you add resources to one part of the project, you’re taking them away from another part. If you increase the budget for your marketing department, you have to decrease the budget for something else.

Tip #5: Avoid parallel tasks

Parallel tasks are created when one large task is split into subtasks, each assigned to a different team member and completed at the same time.

While multitasking might be tempting, in most cases, it causes more harm than good. With parallel tasks, you need more resources since you cannot share them between the two tasks — one forklift is enough to transfer one material at a time, but if you want to speed up the process, you might be tempted to get 2 more. The issue is, this might cause the storage area to become overcrowded, and if there’s no room for 3 forklifts — they’ll work slower than one.

While sometimes creating parallel tasks is necessary, avoiding them will aid in a more efficient use of your resources.

How to allocate resources with Plaky

The best tip for resource allocation is to use project management software. PM software allows you to have all your project information in one place and easily track where your resources are needed.

In Plaky, you can create a separate board for resource planning, which outlines our 3 main elements: 

• Human, 
• Financial, and 
• Material resources. 

You can either have an assignee field or add a separate field detailing which team is responsible for that part of the project when working with larger scopes.

With custom fields in Plaky, you can also define the difficulty level of the tasks, allowing you to assign the right person to them. 

Material resources are easiest to track with tags, as there are usually many of them, and multiple are required for one task. You can use different colored tags to distinguish the type of resources needed for each task. 

There’s an added benefit to this — the summary row at the bottom of a task group indicates which resources are most needed.

The Plaky resource planning template 

If you’re unsure of how to start from scratch, Plaky also offers a resource planning template. It allows you to keep all resources in one place and discern which are needed for which task.

You can track the budget plan, assignees, teams, documents, and more using this template. 

This template also serves to boost collaboration, as other team members will have insight into how the resources are allocated.

The template is fully customizable, so you can change and update it with the information that is relevant to your team. 

What are 4 methods suitable for resource allocation? 

Resource allocation can be approached in many different ways, with the 4 best methods being:

• The Critical Path Method (CPM) — while it focuses more on time management than anything else, the critical path method is great for deciding task priorities. It involves finding task dependencies within your project and identifying the longest line of dependent tasks. Every task outside of the line can be delayed without much issue. Tasks that are on the critical path are higher in priority — so resource allocation gives priority to those tasks.
• Critical Chain Project Management (CCPM) — even though it’s similar to CPM, the CCPM gives more consideration to other resources. It takes into account not only task dependencies but resource dependencies as well. The main idea of the CCPM is to ensure that there are extra resources on the side, i.e. buffers. The buffers serve to keep the project timeline and schedule safe from delays.
• Resource leveling — resource leveling focuses on changing the project timeline to account for resource availability. If a resource isn’t available for a task at the desired time, reschedule the task. Even though this solution sounds simple enough, its use is limited — overdoing it will delay the project too much. This is why resource leveling works much better in more flexible projects.
• Resource smoothing — resource smoothing is the opposite of leveling. Its goal is to try to not change the timeline. Instead, in smoothing, you will likely add additional resources as needed to avoid rescheduling. Still, try not to go overboard with smoothing — do this too much, and you’ll eat through your resources in no time.

Allocating resources will ensure that your project runs smoothly

By now, you should be aware of the ways in which resource allocation improves your project and the dangers that come with neglecting it.

Bottlenecks, late deadlines, conflict, and scope creep can all be prevented by just using the right resources in the right places, at the right time.

But, if you manage your resources properly, your project will run like a well-oiled machine.

Resource allocation is easy with the right tools. With Plaky, you can keep track of all the available resources in one place, assign them to the right projects, and share the information with your team. Sign up for Plaky for free and get organized today.