Resource Management Guide

Resource Allocation

Definition

Resource allocation is a process of assigning resources to different tasks, projects, or activities based on their importance, priority, and availability.

By allocating resources effectively, organizations can ensure that they are maximizing their productivity by using their resources in the most productive way possible, leading to greater efficiency and profitability.

Effective resource allocation is also crucial for meeting project goals and deadlines. By ensuring that the right resources are available at the right time, organizations can ensure that projects are completed on time, on budget, and to the required quality standards.

 

Resource allocation can help organizations to manage costs more effectively by ensuring that resources are allocated based on their value and importance to the project or organization. This can help to prevent wasteful spending and ensure that resources are being used in the most cost-effective way possible.

Managing risk: Effective resource allocation can help organizations to manage risk more effectively by ensuring that resources are allocated in a way that mitigates potential risks and uncertainties. For example, by allocating resources to multiple projects or activities, organizations can reduce the risk of delays or disruptions caused by unexpected events.

Improving team morale: Effective resource allocation can also help to improve team morale by ensuring that team members are working on projects that are meaningful and aligned with their skills and interests. This can help to increase job satisfaction and reduce turnover, leading to greater stability and continuity for the organization.

Overall, resource allocation is a critical component of effective project management and organizational success. By allocating resources effectively, organizations can ensure that they are using their resources in the most productive, efficient, and strategic way possible.

Resource Allocation Methods

Soft Allocation

Typically resource allocation happens before a project starts, for example when a sales team is negotiating a contract with a client, the resource manager can preliminarily allocate resources (sometimes referred to as “Soft” allocation”) to indicate that these specific resources might not be available to work on other projects.

Soft allocation can be done for specific people or positions (job roles), e.g. we will need a senior engineer for this project from May until December.

Hard Allocation

When the contract is won, the resource manager can change “soft” allocation to “hard” allocation, meaning that the booking for these people is now confirmed and finalized.

Resource allocation is specified in either absolute number (hours) or percentage of the time, e.g 50%.

Scheduled hours

Bottom-to-Top Approach

There are radically different approaches to Resource Allocation.
The method, when a project manager first creates the project work breakdown structure, identifies all tasks, their duration, timelines, and then creates resource allocations based on these tasks, is usually referred to as the “Bottom-to-Top” resource allocation approach.

This is typical for situations when a project is standard and all its details are known upfront.

Top-to-Bottom Approach

The “Top-to-Bottom” approach is more commonly used when the project’s scope is not well defined yet, and the project or resource manager only has a rough idea of what resources will be required. In this scenario, resource allocations are created first just to book the resources, and all respective tasks are created later.

Resource Allocation Process

Here is what a typical resource allocation process can look like in an engineering company:

  • Identify resource requirements: The engineering firm identifies the resources needed to deliver services to clients, such as project managers, engineers, architects, software developers, equipment, software licenses, and materials.
  • Assess available resources: The next step is to assess the availability of resources within the organization. This may involve reviewing staffing levels, equipment availability, and inventory levels.
  • Prioritize resource allocation: Once the resource requirements and availability have been assessed, the organization needs to prioritize resource allocation. For example, a project with a tight deadline and high budget may receive priority over a project with a longer timeline and lower budget.
  • Allocate resources: Based on the prioritization, resources are allocated to specific projects or tasks. For example, the engineering firm may allocate specific engineers or job roles to a project, assign equipment to certain service lines, or ensure that the necessary materials are available for specific tasks.
  • Adjust resource allocation as needed: Finally, if it becomes apparent that the initial resource allocation is not effective, adjustments may need to be made. This may involve re-assigning personnel, acquiring additional equipment, or re-prioritizing projects.

 

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