Resource allocation entails a considerable investment and therefore entails a high deal of risk as well. For this reason, businesses aim to allocate their resources to maximize profitability and long-term viability properly. Inefficient resource distribution raises prices, delays delivery, and eventually derail ventures.
A report from a PMI survey notes that 4% of projects are unable to meet deadlines because of poor resource allocation. It also states that only 26% of organizations use resource management for successful resource allocation.
Proper resource allocation can make all the difference in resource planning.
We’ll review some common challenges with resource allocation management and what you can do to improve how you do it moving forward.
Common Challenges with Resource Allocation Management
Resource allocation is not as simple as it sounds. Not having the right tools and strategy can make resource allocation costly and time-consuming.
Below are some common resource allocation challenges in business.
Unexpected Changes in Project Scope Can Derail Resource Planning
Even if all of the appropriate controls are in place, the project scope will change at any point during the project lifecycle. In an agile environment, changing project requirements will result in fluctuating resource demands. As a result, regular resource allocations to meet evolving needs become difficult without an up-to-date resource schedule.
What you can do: use what-if analysis to meet complex project demands.
When resources are scarce, juggling resources across several projects are typical. However, in complex resource management, any mistakes from poor judgment can lead to high costs and wasted resources. This is where business scenario modeling comes in handy.
Applying different sets of rules to the same resource pool and contrasting scenarios will aid in visualizing the various consequences. It may include delaying or extending the timetable of a low-priority project while allocating its resources to a relatively high project.
What-if analysis is essential to resource allocation, helping teams make crucial business decisions based on insights. What-if analysis allows teams to weigh their options by balancing the pros and cons of day-to-
day issues and concerns. When they arrive at the most feasible solution, these solutions become easier to implement, which also fast-tracks how resources are reallocated across the organization.
No visibility on Organizational Resources
When you don’t have a proper resource planner in your organization, it cannot be easy to get any visibility at all into available resources and how these are allocated. Managers often find it challenging to assign which resources would be the most effective in any given project.
What you can do: Stop over-allocating and under allocating company resources. A consistent and streamlined resource allocation process across all initiatives ensures that no staff is overworked or underpaid—under allocation results in a loss of production and sales. Over-allocation may lead to burnout, reduced quality performance, or, worst of all, unplanned attrition.
Planning billable/strategic use helps project managers reallocate focus from non-billable to billable/strategic work regularly. It allows for the most efficient use of resources while still increasing business productivity.
Mismatch in the skillset between capacity and demand:
The failure to predict potential projects in the pipeline can lead to skill gaps which can delay projects even further. For the most part, resource allocation stems from being unable to calculate capacity vs. demand correctly.
What you can do: Determine the most logical fit in terms of tools and skillsets and assign them to these areas accordingly. A resource management system can help bring together data from different systems to consolidate plans accordingly. Having complete visibility across teams makes it easier to allocate resources to projects based on their expertise, credentials, experience, availability, costs, and other factors. Profitability is maintained without sacrificing efficiency by scheduling cost-effective global resources from low-cost locations.
Assigning the best fit in crucial project roles is more important than choosing whoever is most available. Having a resource planning tool that gives you this visibility makes it easy to assign skills across various projects.
Outdated legacy tools can lead to inaccuracy.
Companies will find that spreadsheets and outdated tools are insufficient when it comes to proper resource distribution in a growing organization. While these can still serve their purpose, these tools do not have the agility to account for real-time changes in project demands. When project managers are tied down with the lack of a scalable resource planning solution, inconsistencies are bound to happen, which can further stretch out project timelines and budgets.
What you can do: Use an advanced business intelligence tool like Performance Canvas Financial (PCF) which ensures you get a fully integrated resource planning tool with financial budgeting, forecasting, and analysis. With PCF, finance teams can do allocations, what-if analysis, view historical figures and make side-by-side budget comparisons versus actuals, among other things.
With PCF, companies are better equipped to adapt to volatile project demands using a secure environment that guarantees the most updated software version with seamless monthly patching. It comes reasonably priced with flexible subscription options that can be configured according to your business needs.
Get in touch with our team today to learn more about how you can use PCF for resource allocation management.