Resource Allocation in Project Management

Introduction

In project management exists a tight connection between results and resources optimization. An inadequate planning of resource allocation might lead to a non-manageable or non-reasonable budget formulation.

Each organization must wisely allocate resources to avoid delays, rework, nonconformity and to ensure an overall company efficiency in the long run. All companies face the same dilemma at one point, how best allocate resources. Allocating resources to wrong ideas or projects that eventually fail will lead to wastage. On the other hand, not allocating resources in the right ones can lead to even greater opportunity costs. Under and over allocation are the main problems that arise in a non-planned resource allocation scenario.

Is critical to have a planned approach in RA to manage a project portfolio effectively. Being able to allocate the correct resources, in terms of skills and quantity, to the right ideas, projects and products should be the final goal of each project manager.

Resource Allocation

The process of assigning and managing assets in order to support an organization's strategic goals is called resource allocation. In project Management, is the scheduling of activities and resources required by those activities taking into consideration both the project time and the resource availability. It involves balancing competing commitments and priorities in order to determine the most effective course of action to best utilize a limited pool of resources and maximize the return on investment.

Core Resources

• Land: Natural resource required in production process, land, mineral, forest, oil and water resources.

• Labour: The aggregate of humans physical and mental effort used to generate goods and services. It is a primary factor in production. The labor force is determined by the adult population of a nation.

• Capital:Wealth in the form of money or assets, sign of the financial strength of an individual, organization, or nation, and assumed to be available for development or investment.

Allocation Decisions

The basic allocation decisions begin with the choice of what is going to fund the project, it is important to avoid allocating resource merely in terms of meeting milestones, but also in terms of timing and utilization of scarce resources. The challenge

Resource Allocation Problem

• Time Limited: Projects must be finished on an agreed time, using as few resources as possible.

• Resources Limited: Projects must be execute by not exceeding specific level of resource usage or general resource constraints.

• Resource Over-allocation: Assign more tasks than what resources can handle within the standard workweek time frame. A company with multiple projects and a limited pool of resources often risk to encounter this issue, this can lead to overtime and overspending on financial resources.

Resource Allocation Techniques

“The schedule produced for a project assumes that enough manpower and equipment is available to get the activities done as scheduled. This is not always the case, and in a large or complex project, it might not be obvious that a deficiency exists.”

“Resources required by activities are unlimited, while some resources are highly limited in practice. In most real construction projects, scheduling without considering resource limitations may result in a non-credible schedule, since the start-ability of activities is affected by resource availability.”

There are different solutions and techniques to tackle the problem of resource allocation, identify the right one for a specific business is crucial to ensure the effectiveness of the procedure.

Resource Leveling

The aim of leveling resources is to minimize the variations in resource loading by "Shifting tasks within their slack allowances".

The technique is applied to resolve conflicts and to create a smoother distribution of resources, determine the correct resource requirements to ensure availability at any given time and to schedule the activities in order to secure the smoothest achievable transition across usage levels.

In resource leveling resources should be assigned to those activities with:

• Minimum slack
• Shortest duration
• Earlier start
• Most amount of successor tasks
• Highest resources requirement

Steps

Figure 1 - Activity Network Diagram - Construction Building Example

• 1- Create a project activity network diagram.

It is the sequence of project activities that shows the sequential relationships between them with arrows and nodes. This tool is widely used in project management and is required to identify a project’s critical path (used to determine the expected completion time of the project). The nodes represent the nine activities required to build a construction, the arrows that connect the different nodes show the process flow. [Figure 1] It is possible to identify different type of activities, A,B,C run in series, i.e. is not possible to proceed with the activity B if A is not completed. D,E,F run in parallel, they must all be completed before G or H can be executed. A network diagram is also essential in identify the critical path, the path which has the longest completion time.

• 2- Create a table showing resource requirements, duration and available slack for each activity.

In order to allocate resources optimally and identify project resource gap it is important to have create a complete overview of each activities' requirements. This will help in identify the difference between available and required resources. This stage is crucial as different approaches can be taken, e.g. adding more resources, prolong the schedule, hire more labor force.

Figure 2 - Gantt Chart Example

• 3-Develop a resource loading table or Gantt chart .

"Is a instrument that addresses the determination of realistic due dates and other important milestones for new customer orders, as well as the resource capacity levels that are a result of the actual set of orders in the system"

• 4-Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Curabitur pretium tincidunt lacus. Nulla gravida orci a odio. Nullam varius, turpis et commodo pharetra, est eros bibendum elit, nec luctus magna felis sollicitudin mauris. Integer in mauris eu nibh euismod gravida. Duis ac tellus et risus vulputate vehicula. Donec lobortis risus a elit. Etiam tempor. Ut ullamcorper, ligula eu tempor congue, eros est euismod turpis, id tincidunt sapien risus a quam. Maecenas fermentum consequat mi. Donec fermentum. Pellentesque malesuada nulla a mi. Duis sapien sem, aliquet nec, commodo eget, consequat quis, neque. Aliquam faucibus, elit ut dictum aliquet, felis nisl adipiscing sapien, sed malesuada diam lacus eget erat. Cras mollis scelerisque nunc. Nullam arcu. Aliquam consequat. Curabitur augue lorem, dapibus quis, laoreet et, pretium ac, nisi. Aenean magna nisl, mollis quis, molestie eu, feugiat in, orci. In hac habitasse platea dictumst.