What is Resource Allocation in Project Management?


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Key takeaways
  • Resource allocation for project management is the process of committing labor, equipment, and money to each step of a project before they are needed.
  • Once the project is underway, resource management also involves actively analyzing data to ensure resources are effectively utilized.
  • Project management software plays a critical role in providing needed insights..

If you’re ready for a crash course on resource allocation, then let’s dive in.

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What Is Resource Allocation for Project Management?

As a project manager, people rely on your planning skills to accomplish their tasks. But this involves more than direction and deadlines. Resource allocation in project management, or getting the right stuff to the right people, is crucial to success.

Indeed, proper allocation can mean the difference between success and complete project failure. Without sufficient laborers, for example, your team may be too thinly stretched to construct a building in a narrow timeframe, creating a nightmare for everyone.

But resource allocation also buoys other aspects of a project. Generously providing your direct reports with what they need builds trust, which improves communication and reduces turnover.

Read More: Top 10 Project Resource Management Best Practices for Project Managers

Ongoing tasks and data-driven decisions

Keep in mind that resource allocation is a dynamic process. You must constantly reassess your needs as work progresses. For example, if a team of computer programmers is falling behind, they may consider hiring several more workers if the budget allows—even if they didn’t plan to originally.

And once your project wraps up, you’ll need to draw conclusions for next time. Specifically, you’ll want to clarify resources that went unused so you can avoid wasting money on them in the future (more on this below).

What kinds of resources do project managers allocate?

As mentioned above, project managers allocate labor, equipment, and money. But what this looks like in real life varies per project.

For example, a construction project manager considers available excavators and workers. Meanwhile, an event planner works mostly with money and budgets as they book venues and caterers.

Here are some other examples of resource allocation for project management:

  • Delivering 10 company pickup trucks to a construction site on a deadline
  • Arranging to have 10 workers from another team assist on a project
  • Allocating 15 company laptops for a software project

By planning resources in advance, you can minimize project issues, such as delayed deadlines or communication problems. Clear plans also keep stress low, which can lead to greater team trust and higher morale for even better results.

Read more about the best tools for resource management.

How do project managers allocate resources?

The first step to resource allocation involves defining your budget, current resources, and timeframe. These three elements are the foundation of a successful project. And to help avoid shortcomings, it’s wise to cushion in extra funding and time, if possible.

Once you have dollars, assets,  and time mapped out, the fun can begin. Let’s explore the next steps in detail.

  1. Develop a human resources plan

    Nothing can get done without the right people. As a result, if you need more staff, crafting a hiring plan is a top priority.

    Of course, you may have to turn to others to get an accurate read on staffing needs or plans. Consult seasoned managers for recommendations or for their expectations if they’re involved in the project. For example, a director of marketing can advise you on how many copywriters they’ll need.

    You’ll also need data on estimated pay for each new worker. If you’re looking for top talent or exceptionally specialized professionals, they’ll demand higher compensation. And don’t forget to budget extra for non-monetary compensation, like insurance benefits and catered meals, if it comes out of your project budget.

  2. Order goods and services

    Once you’ve got staffers nailed down, you’ll need to arrange for the tools and equipment they require to complete their tasks. This could mean ordering computers for a team of programmers, or it might involve getting a crane and tractor for a construction site. It could even include assets like software.

    If you don’t have in-house workers or assets to cover every task reasonably, you can rely on third-party services for many needs, such as rentals and contractors.

  3. Monitor progress

    It’s not enough to set it and forget when it comes to resource allocation. Workers quit unexpectedly, supplies run out, and budgets get busted, to name a few surprises.

    So be sure to develop a monitoring plan. This could involve frequent check-ins with field supervisors, or if you’re gifted with ample funds, you could prepare for shortcomings in advance.

    For example, you could order two or even three times the amount of supplies needed and save any excess for future projects.

    Some industries, such as food service, can’t keep extra resources sitting around. But if it’s practical to allot more than what’s necessary, then you can avoid falling short mid-project.

    The bottom line is you’ll need to prepare for unforeseen challenges. Creating backup plans for labor, money, and equipment shortages can help mitigate delays and problems.

How do you measure resource allocation effectiveness?

Well done deploying everything your project needs. Now you need to ensure your resource allocation is effective by supervising several key metrics, such as customer and staff satisfaction.

Here are the top KPIs to monitor for resource allocation effectiveness.

ROI (return on investment)

This metric keeps tabs on how efficiently money was invested. The basic formula compares how much cash was spent versus the value received in return.

For example, say you spent $1,000 on an elaborate engineering software package. Because it made some processes more efficient, the team was able to do more work in less time, which brought in an extra $10,000 that month. So the ROI would $9,000 ($10,000 subtracting the $1,000 software cost).

Resource utilization rate

Nobody wants resources sitting around gathering dust. To dodge this issue, you’ll want to monitor the resource utilization rate. This metric measures the frequency something or someone was used for a project. 

All you have to do is divide the number of hours an employee or other asset is utilized by the maximum number of hours that person or asset can be utilized. For instance, say a cross-departmental developer is allocated to a project for 40 hours over several weeks. But unexpected needs come up, and they spend 50 hours on the project. 

In this case, the resource utilization rate is 125%, which isn’t ideal for a shared resource like a cross-company developer.

Alternatively, say the developer only spends 30 hours on the project. That would shift the resource utilization rate to 75%, which could be seen as a positive in this particular scenario.

Your company may have different parameters for what is considered an optimal resource utilization rate.. But if something is scarcely deployed, consider cutting it out in the future to save money.

Client satisfaction

Certainly, you have an idea of what a successful project looks like. But this dream is worthless if it isn’t what your client wants.

As a result, you’ll want to keep clients and end-users in mind when allocating resources. This forethought is especially critical if a customer has to pay more if you go over budget. Think about a client’s specific requests and if your resources align with this vision.

For example, a real estate developer might have requested marble countertops on the upper floors of a building. Failing to adhere to this preference and going with a cheaper lookalike instead of what they requested may result in dissatisfaction, leaving resources poorly spent when the job’s redone with the right countertops.

Employee satisfaction

Since human resources are the backbone of every project, keeping morale high is a must. Classic supervisory best practices, like offering a good work-life balance and competitive salaries, are ideal.

But giving workers the autonomy and resources they need to do the job right can keep employees satisfied and in the role—and experienced employees are more efficient. The same goes for contractors. If workers feel like they’re constantly making do with too little, the frustration can pile up and lead to turnover or other issues.


This classic project management concept focuses on how long it takes to go from idea to finished product. Since resource allocation is the gas that keeps a project running, time-to-market reveals how efficiently resources were deployed and utilized. Going past a deadline means there are inefficiencies that need fixing and vice versa.


Sure, you might have saved some money buying cheaper equipment. But if the more expensive tools would have helped your team create a higher-quality product faster, then that could be considered a poor use of resources.

With this in mind, you’ll need to evaluate the quality of the finished product. This consideration makes use of the principle of return on investment, as high-quality items might cost more yet provide greater value.

For example, if your software project produced a glitchy product, consumers may not be as interested, impacting your profits. Spending more money on a few software testers could have prevented this issue and led to a better bottom line.

Read More: Capacity Planning vs. Resource Management: Why the Difference Matters

The Takeaway

Superb resource allocation skills are crucial for success as a project manager. Securing the right people and equipment can ensure a project finishes on time and within budget. And since you won’t have specialized knowledge on every aspect of a project, consult specialists and project stakeholders to get a clearer picture of what you can expect.

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