Resource Allocation & Resource Leveling in Project Management
Bala T Peketi
Executive PGDM
RESOURCE ALLOCATION DEFINITION
Resource allocation is a process and strategy involving a company deciding
where scarce resources should be used in the production of goods or services.
A resource can be considered any factor of production, which is something used
to produce goods or services. Resources include such things as labor, real estate,
machinery, tools and equipment, technology, and natural resources, as well as
financial resources, such as money.
Resource allocation is the process of assigning and managing assets in a manner
that supports an organization's strategic goals. Resource allocation includes
managing tangible assets such as hardware to make the best use of softer assets
such as human capital.
RESOURCE ALLOCATION IN PROJECT MANAGEMENT
Resource allocation in project management is one of those particles which
make work of a good PM effective and significant. And even though it may
seem simple, it is actually crucial in delivering a great project.
Resource allocation in project management is concerned with creating a plan
which can help achieve future goals. There are many resources which have to
be allocated when managing a project, beginning from budget to equipment
and tools, to data and the project’s plan.
Why Is Resource Allocation in
Project Management
Important?
Resource allocation in project
management is so important
because it gives a clear picture on
the amount of work that has to be
done.
It also helps to schedule ahead and
have an insight into the team’s
progress, including allocating the
right amount of time to everyone on
the team.
Resource allocation allows to plan and prepare for the project’s
implementation or achieving goals. It is also possible to analyze
existing threats and risks to the project.
But above all, resource allocation in project management helps to
control all the workload. This, as a result, contributes to team’s
effectiveness at work and what follows later is a satisfying and
exhaustive project.
The 6 Steps of Resource Allocation
Resource allocation is the process of assigning and scheduling resources to
project [Link] are the life blood of project management. Resources are
used to carry out the project, and are returned to their owners if not consumed by
the project. There are 6 steps to performing a proper resource :
● Divide the Project into Tasks
● Assign the Resources
● Determine resource attributes
● Resource Leveling
● Re-allocate as necessary
● Track resource utilization
A. Divide the Project into Tasks
In project management, the project is divided into tasks and managed on a task, rather than a project,
level. Resource allocation is an integral component of this process because each task is assigned the
necessary resources, and the resources are managed by task.
During the project planning phase, the project’s constituent tasks are determined and listed, like this:
ID Task
100 Dig Holes
200 Build Fence
Each task is assigned a start and end date and a budget, like this:
ID Task Start End Budget
100 Dig Holes July 1 July 10 $1,000
200 Build Fence. July 8 July 31 $9,000
This is called a work breakdown structure (WBS), and it is the minimum planning phase for a small project,
according to all of the three main project management methodologies.
Once the project is successfully divided into tasks, the resources can be assigned.
B. Assign the Resources
Each task requires resources in order to be successfully performed. As a minimum, most
tasks require a human resource to carry out some actions. Usually, the person starts with
some input materials which are used to produce an [Link], there are five types of
resources:
[Link]
Human resources are an integral part of most projects. The project team has needs that
require active management, like:
A satisfying work environment that does not involve conflicts with other team members.
Making an important contribution to the project, and/or greater society.
Leaving the project with something more than they started with, for example additional
knowledge or skills, or a strong resume/CV entry that results in a better chance at future
work.
[Link]
Tools and equipment that are used to produce the product, but don’t become part of it, must be identified
and allocated to each task. This equipment must be paid a reasonable rate that takes into account the
wear and tear experienced during the project. Specialty equipment often requires significant investment of
time and money.
[Link]
Materials that become a part of the final product must be allocated so that they can be procured at the right
time and their availability is confirmed.
[Link]
Buildings and work areas are often a significant cost to the project. If they are not readily available, they
also require space in the project schedule and budget to ensure they are ready for the project team.
[Link]
Most projects require other resources that impact the budget or schedule. This can include project
financing and insurance costs, performance bonding, administration, contingencies, risk premiums,
transportation and delivery, or any other item necessary to perform the project.
For the human resources (project team), it is often helpful to communicate project roles using a
RACI chart, pronounced “racy,” which assigns each task to each team member according to one
of the four responsibility levels:
Responsible (R)
Accountable (A)
Consulted (C)
Informed (I)
RACI chart
All project managers use RACI charts, even if they don’t know it. Writing out the chart is a highly
effective way to communicate project roles to project members and ensure there is no confusion.
C. Determine Resource Attributes
building fenceEach resource comes with attributes (project manager lingo) which must be
sufficient to carry out the project work. These attributes include:
[Link]
Grade refers to the technical specification level of the resource. In this case, the the length of
the fenceposts, the depth of the holes, and the strength of the fence material are all
characteristics of grade. In short, the resources must be adequate for the task.
[Link]
Skill is the same as grade but specific to the human resources. Bill and Bob, in this case, must
know how to pound the fence posts and be strong enough to drive the posts.
3. Quality
Quality and grade are not the same thing. Quality refers to the degree to which the resource meets
specifications, that is, if poor quality fence material arrives at the site it is not acceptable and must be
rejected, adding unexpected costs and schedule implications. This is different from the grade of the
fence material, which can be low. The fence may not need high grade fence material. Low grade is
acceptable (in the right circumstances), whereas low quality is never acceptable.
4. Resource-specific attributes: Size, shape, length, speed, color, strength, etc.
Each resource has many specific attributes that define its function. for example, if the paint is
supposed to be brown, but a green paint arrives on site, it is probably still high quality as well as grade,
yet not sufficient for the project. The required attributes must be determined individually for each
resource.
5. Availability
In project management lingo this is called a resource calendar. The resource calendar can range from
a simple listing of employee vacation time to sophisticated material tracking software. But its purpose is
to ensure the project resource is available when needed.
D. Resource Leveling
Project schedules are usually created without the resources in mind. That is, the network diagram
and gantt chart are manipulated to minimize the schedule duration based on the number of hours
or days required to carry out each task, but the resources assigned to the task might be highly
volatile, incurring sometimes major cost and schedule implications.
For example, if we need Bob for 2 hours one day and 18 hours the next, we might need to pay him
overtime thereby driving the project over budget.
Resource leveling refers to the process of inspecting the resources to ensure their use is as
“smooth” and level as possible. It is a common scenario that it is more advantageous to extend
the project schedule to avoid large spikes and dips in resource usage.
In addition, the resources used to carry out those tasks must be procured (purchased), delivered,
and prepared. During the project, they must be maintained and serviced. All of these tasks must
be accounted for within the project schedule and budget.
E. Re-allocate as Necessary
Throughout the project, resource re-allocation tends to be a constant and inescapable function of
the project manager.
Resources are scarce. They sometimes do not show up on time, are needed by other projects, or
lose their usefulness over time. Many things can happen that require a shift of resources from one
task to another, or a change in the project schedule or budget.
F. Track Utilization Rates
It is a common occurrence that a resource arrives at a project and sits idle for a long period of time.
It is equally common that project managers have no idea that the resource is being paid for but not
being used.
A simple solution is to track resource utilization rates. The utilization rate is simply the percentage
of billable time: Utilization Rate = Number of Billable Hours / Number of Total Hours
For example, if Bill worked 4 hours out of a possible 40 hours for the week, his utilization rate is 4 /
40 = 10%. This would suggest corrective action is warranted on the part of the project manager.
RESOURCE LEVELING
In project management, resource leveling is defined by A Guide to the Project
Management Body of Knowledge (PMBOK Guide) as "A technique in which start
and finish dates are adjusted based on resource constraints with the goal of
balancing demand for resources with the available supply."
When performing project planning activities, the manager will attempt to schedule
certain tasks simultaneously. When more resources such as machines or people
are needed than are available, or perhaps a specific person is needed in both
tasks, the tasks will have to be rescheduled concurrently or even sequentially to
manage the constraint.
Project planning resource leveling is the process of resolving these conflicts. It
can also be used to balance the workload of primary resources over the course of
the project[s], usually at the expense of one of the traditional triple constraints
(time, cost, scope).
When using specially designed project software, leveling typically means resolving
conflicts of over allocations in the project plan by allowing the software to calculate
delays and update tasks automatically.
Project management software leveling requires delaying tasks until resources are
available. In more complex environments, resources could be allocated across multiple,
concurrent projects thus requiring the process of resource leveling to be performed at
company level.
Resource leveling techniques are closely related with critical path calculations. For that
reason, total float, activity sequences and logic of the network diagram effect the
required resource quantities per time.
Resource Leveling, is a technique that avoids over-allocation. Resources are taken from
non-critical activities and allocated to critical activities. However, while leveling ensures
that resources are not overestimated, avoiding spikes, the method typically increases
project time. Therefore, cost and time analysis should be done before leveling and
rechecked after applying the method.
Resource leveling Techniques
Critical path is a common type of technique used by project managers when it comes to
resource leveling. The critical path represents for both the longest and shortest time
duration paths in the network diagram to complete the project.
However, apart from the widely used critical path concept, project managers use fast
tracking and crashing if things get out of hand.
Fast tracking: This performs critical path tasks. This buys time. The prominent feature
of this technique is that although the work is completed for the moment, possibility of
rework is higher.
Crashing : This refers to assigning resources in addition to existing resources to get
work done faster, associated with additional cost such as labor, equipment, etc.
