What is resource allocation? Learn how to allocate resources

When you think of the most important elements of project planning, what comes to mind? You probably think of the project’s main objectives, the timeline for achieving those objectives, and the scope of what you can accomplish within the project. 

But achieving any of these elements hinges on one thing: the resources available for your project. 

In project management, resource allocation can help you ensure your project team has the assets—whether that’s budget, tools, or team members—to hit the project’s objectives. Effectively allocating resources can help you achieve your project goals on time and on budget. 

If you’ve never created a resource allocation plan before, this article is for you. We’ll walk you through five steps to allocate resources effectively. Then, get a preview of common resource allocation challenges and what you can do to get ahead of them.

What is resource allocation? 

Resource allocation is the process of identifying and assigning available resources to an initiative. Effective allocation of resources helps maximize the impact of project resources while still supporting your team’s goals. To create a resource allocation plan, identify the right resources—including team members, tools, budget, and more—you need to accomplish your project deliverables.

What is a resource? 

A resource is anything that helps you complete a project. This can include:

• Team members

• Budget

• Project timelines

• Ideas, intellectual property, or specific skill sets

• Equipment

• Tools or software

• Automated processes that reduce work about work

Who is responsible for allocating resources? 

The person responsible for resource allocation varies based on the size of your organization, but it’s usually the individual in charge of the project’s decision-making. For smaller companies, the project manager or team leader typically manages the budget, resource scheduling, and project work. 

Alternatively, at larger companies, the project manager and project budget owner are often different people. As a result, you may need approval from important project stakeholders or your project sponsor before allocating resources. 

If you aren’t sure who should be allocating resources, ask yourself these two questions and identify who is best equipped to answer them:

• What is the budget, and who is approving it? You’ll need a budget for tools, technology, freelancers, and equipment. 

• What are the team’s priorities, and who has time to work on this initiative? Before you allocate human resources, think through each team member’s capacity and priorities. How can you help team members do their best work and have the highest impact?

If you aren’t sure what’s on everyone’s plate, use a workload management tool to view team member capacity, get ahead of upcoming projects, and spot burnout before it happens. 

Benefits of resource allocation

Effective resource allocation is more than just a task; it's a strategic approach that can improve project management by ensuring resources are used efficiently and judiciously. This leads to better alignment of tasks with available resources, smoother workflows, and more effective handling of project constraints. 

As a result, projects are more likely to be completed on time, within budget, and to the desired quality standards, directly contributing to the overall success of the project.

• Streamlined workflow: Proper allocation of resources leads to a more streamlined workflow. It ensures that each phase of the project aligns with the necessary project requirements, reducing delays and increasing efficiency.

• Mitigation of bottlenecks: By anticipating and planning resource usage, bottlenecks can be identified and mitigated before they impact the project timeline. This proactive approach keeps projects on track, enhancing client satisfaction.

• Simplified project management: Merging the use of dashboards with automation transcends traditional methods like spreadsheets. Dashboards provide a visual and intuitive overview of resource distribution and utilization, while automation streamlines the tracking and allocation process. This combination enhances overall project management efficiency, allowing for real-time adjustments and more informed decision-making.

• Resource optimization: A well-crafted resource allocation strategy is key for project success. It ensures the best resources are utilized where they are most needed, aligning with the project's goals and timelines. By optimally using both physical and human resources, projects are more likely to meet their objectives and satisfy client expectations.

How to allocate resources effectively

An effective allocation strategy identifies the project’s goals and priorities and collects resources to fit your needs throughout the project's lifecycle. Resource allocation should be an early project consideration—ideally, aim to allocate resources during the project planning phase. 

1. Start with the end in mind

In order to understand your project’s priorities, how important it is, and how it should be resourced, you first need to outline the project’s objectives. This is the first step to any project. Project objectives are attainable, time-bound, specific goals you plan to achieve by the end of your project.

If you haven’t already, align on:

• The project’s main goals and objectives

• The project’s key deliverables

• Relevant milestones

• A high-level timeline or project roadmap

2. Identify available resources

In resource allocation, a resource is anything that helps you achieve your project objectives. Depending on your project’s needs, this includes the project team and any tools, budget, equipment, or skills you need to hit your project deliverables. 

Before you actually allocate resources, understand what’s available. There are a few dependencies to look out for, including:

• What is the project’s priority level? This influences how it should be resourced. Is this an all-hands-on-deck project that’s contributing to a company OKR, or is it a lower priority initiative? Come up with an internal tier system for project priority to guide how you’ll staff each project. 

• Who is available to work on this project? Take a look at your team’s capacity to understand what they’re working on. If this project is more important than their current work, try resource leveling. See if there’s anything you can deprioritize or reschedule to accommodate this new work. 

• What budget or tools are available? Does this project have a budget? Are there additional tools you need to invest in or develop in order to complete this work? 

• What additional resources do we need? Do you need any cross-functional team members to work on this project? Alternatively, are there unconventional resources—like very unique skill sets or new equipment—you need for this project to succeed?

• Who needs to approve the resource allocation plan? If someone other than you is in charge of budget, tooling, or team workload, check in with them to make sure this resource allocation plan looks good. Are there any additional project stakeholders who need to be looped in during the resource allocation process? 

3. Define your project scope

To scope a new project, you first need to understand the project’s goals, deadlines, and project deliverables. This helps you get a sense of your project needs so you can hit your goals on time and on budget. 

A clear project scope also helps you avoid scope creep, which is what happens when the asks and deliverables exceed the pre-set project scope.

4. Create and share a project plan

Now that you have a sense of your available resources, surface that information to the larger team. Invite your project team to a project kickoff meeting, and share:

• Your project plan

• Relevant project milestones

• The project schedule

• Any task dependencies to keep an eye on

Track all of this work with work management software. It’s important for your project team to know which resources are available for this project—and also to have a central source of truth for this information in case it changes. With a centralized work management system, you can clarify project priorities so everyone understands the context of the work. That way, if something does change, you can reprioritize based on the highest-impact work. 

5. Monitor project progress

Once your project is underway, monitor project progress in case of any unexpected resource allocation developments. No matter how well planned your project is, things can change. Team members go on vacation, a client might be delayed in getting back to you, or your business goals might change. Track project progress in real time so you can adjust if necessary.

Common resource allocation challenges

When done correctly, resource allocation can help you hit your goals, increase your impact, and maximize your resource utilization. You’ll get better at allocating resources as you go, but if you’re just getting started, here are some common challenges—and how to avoid them. 

Burnout and over-allocation

One of the biggest challenges in the resource allocation process is avoiding overwork and burnout. Without clear visibility into workloads—especially across multiple projects—it’s easy to unintentionally overallocate resources to a specific project. Prolonged overwork can lead to decreased productivity, engagement, and overall project performance.

To prevent burnout, try capacity planning to assess workload distribution and make sure resources are allocated efficiently to meet project demands. You can also use resource management software to maintain workload balance and make sure team members aren't overwhelmed. With 71% of knowledge workers experiencing burnout in 2020, monitoring workloads effectively is critical to long-term project success.

Resource dependencies

Project success often depends on multiple moving parts, but unexpected changes can disrupt even the best plans. If a key task gets delayed, it can create bottlenecks and impact related work.

Using project management software allows you to track dependencies in real-time, spot potential shortages and delays early, and adjust resources as needed. This type of automation helps avoid last-minute surprises and keeps projects on track.

Poor resource utilization

Many team members spend a significant portion of their day on administrative tasks—searching for files, chasing approvals, and switching between tools—leaving little time for strategic planning. Resource utilization measures how effectively a team’s time is spent on work that drives profitability.

Maximizing resources isn’t about working harder but smarter. Prioritizing high-impact tasks and reducing unnecessary administrative work allows team members to focus on what truly matters. Leveraging resource management tools can help streamline workflows and improve efficiency.

Tips for effective resource allocation

Many teams that are new to making resource allocation decisions often struggle to identify and deploy the best resources in a manner that streamlines operations and keeps the project on its critical path. This can lead to bottlenecks and setbacks, potentially jeopardizing the success of the project.

Follow these key strategies to streamline operations and optimize your resource allocation process:

1. Align location with resource availability

• Choose project locations wisely by considering geographic needs and the availability of resources to set your team up for success.

• Streamline logistics by sourcing materials locally, which helps cut down transit time and lower costs.

• Keep an eye on supply chain dynamics to fine-tune your resource allocation strategy and stay ahead of potential challenges.

2. Leverage automation and project management tools

• Let resource management software do the heavy lifting by automating task assignments based on your team’s workload and expertise.

• Bring in the right tools for resource scheduling and leveling to keep things running smoothly. With real-time updates on material availability, you’ll always know what’s on hand and avoid unexpected shortages.

• Spend more time on what really matters—project success and client satisfaction—by automating routine processes that would otherwise slow you down.

3. Use real-time data to drive decisions

• Use dashboards and project management software to keep an eye on key metrics and make real-time adjustments to your resource allocation strategies.

• Tap into insights from the work breakdown structure to stay ahead of delays and shift resources where they’re needed most.

• Get the most out of your resources by tweaking plans as project needs evolve, which will help you stay flexible and efficient.

Effective resource allocation leads to better projects

Resource allocation can help you set your project up for success from day one. Manage resource availability early during the resource planning process to know exactly what you can support and how you’ll hit your project goals.  

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