What Is Resource Allocation? (Definition and How-to Guide)

By Indeed Editorial Team

Published 8 November 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

It's critical that the teams and departments of an organisation have timely access to the resources they require, which enables them to complete their projects and achieve strategic business goals. Companies can use resource allocation to procure, manage and distribute finances, assets, raw materials or manpower for various projects and business activities. If you're in project management or work in a related role, you might benefit from learning about this process. In this article, we define what resource allocation is, outline its benefits and explain how you may use it to support the organisation and workplace.

What is resource allocation?

Resource allocation is a process that companies use to plan and assign their resources optimally so that their teams can complete projects and tasks on time and within budget. It involves identifying project requirements and business activities and understanding how best to assign available resources given the organisation's finance and schedules. A project manager may estimate the resources their team requires to finish the tasks in each phase. They may also adjust resource levels throughout the project's timeline if their team requires more or less than originally planned.

Teams that use resources efficiently can help the organisation maximise productivity and save time and money. Planning allocation of resources for different projects and teams requires an understanding of the various resources and assets a company has at its disposal. These different types of resources can include:

  • Manpower: Manpower refers to employees, people and teams with the necessary skills to complete a task or project. By delegating tasks and assigning roles that suit employees' abilities, an organisation can capitalise on their manpower's skills, qualifications and professional experience.

  • Equipment: Equipment, machinery, hardware and software are among the physical resources that companies use to produce goods, deliver services or accomplish other business-related activities. For example, a construction company may use bulldozers and CAD software to complete their projects.

  • Raw materials: An organisation's raw materials refer to any physical supplies that are used or consumed in generating outputs or products or providing services. These include raw materials like steel, oil and wood and also computers, desks, chairs, printers and other office supplies.

  • Physical space: Businesses may lease or purchase physical spaces or environments such as facilities or office headquarters where they can perform work, develop products and provide services. For instance, a design consultancy may rent an office for managers to meet with other professionals and review designs for their projects with clients.

  • Funds: Allocating resources and funds to different business departments is key. Teams can use the money to acquire resources, pay salaries and invest to help the organisation generate additional income and revenue.

Benefits of resource allocation

Learning about the benefits of resource allocation can help you better plan what you require to complete a project or task successfully. Here are some of the key benefits:

Sets clear expectations

Allocating resources is crucial for determining a project's timeframe since it presents clear milestones and objectives. By allocating resources appropriately, managers can assess whether the deadlines they set are feasible given the resources available to them and their teams. In addition, this ensures that teams are informed of the expectations for the project, which allows them to prioritise tasks and perform their work accordingly.

Improves cost-effectiveness

Assigning resources in advance provides managers and staff with a better idea of how to plan their project goals and work towards achieving them. It provides a thorough understanding of exactly the type and amount of resources a team requires to finish a certain project or task. This can help managers to avoid overspending or underestimating resource requirements, and improve organisational cost-effectiveness. Allocating resources appropriately offers transparency to employees and teams and provides assurance that resources are available for them to complete projects on schedule and within budget.

Tracks project changes

It's important to keep track of any project changes that might affect how resources are allocated. Sometimes, project requirements change and managers may make adjustments to resource distribution in response. For instance, a manager may have given a team member a data management project, but the sales team suddenly discovers that they require more product reports and assistance with data analysis. This significantly increases the workload of the team member. To alleviate the increased responsibilities, the project manager may delegate the report tasks to another team member instead.

Identifies team competencies

To allocate resources properly, managers frequently evaluate their team member's strengths and competencies. Some team members may have more expertise in a certain field or have a better understanding of a particular software system. If a team member excels at a certain task, they can consider assigning them specific duties that leverage their respective skills and talents. The effective use and allocation of resources enable the organisation to learn more about each team member's talents and abilities and play to their strengths.

Related: Skill vs. Competency (With Definitions and Examples)

Identifies necessary tools

It's beneficial to ensure team members have the resources they require to complete the project before assigning them tasks or duties. Knowing where there are shortfalls or constraints in resources, such as the limitations of using a legacy software system can help managers perform better allocation and delegation of responsibilities. In situations where the organisation may not have the latest tools or is using inefficient systems, managers can choose to allocate more time to the completion of certain tasks.

Staggers deadlines

Allocating resources properly can sometimes involve spacing out task deadlines. This can happen when the team leader reallocates resources after team members finish tasks. If there are outstanding jobs that require substantially less time than others, managers may give respective team members shorter deadlines to accomplish these tasks. After they complete their tasks, they can assign these members to focus on a more time-consuming job that's already in progress.

Related: How to Show Your Ability to Meet Deadlines on Your Resume

Updates clients

When managers allocate resources for different projects, it can give clients an accurate overview of the teams that are involved, the type of resources used, their quantities and the overall progress. During the project, team members may report on the level of resources and provide feedback to managers, which also helps keep clients informed on the project's progress, tasks, milestones and issues.

Related: Stakeholder vs. Shareholder: Definitions and Key Differences

How to allocate resources

If you want to learn how to allocate resources, apply the following steps:

1. Develop a roadmap

Developing a thorough overall roadmap and detailed project plan can ensure the proper and efficient allocation of resources. This outlines the scope of tasks and project requirements in advance, which helps provide direction to team members and employees on their roles and responsibilities. Break down the task or project to create measurable goals and milestones, which help to establish timelines for individual deliverables.

To create a proper roadmap, you can start by collecting data and information on the overall tasks and projects. This can include the timelines for the project and individual duties, the skills and manpower that the task or project requires, the manpower available, any skill gaps and the resources required to address them.

Related: What Does a Strategic Planner Do? Role, Skills and Salary

2. Determine the resource requirements

You can ascertain the resource requirements for each component of a project once you've mapped out a table detailing the relevant activities and tasks. These resources can be manpower like employees or physical raw materials necessary for completing the project or task. Then, decide on the skills and capabilities that you require from employees. Remember to also confirm each team member's schedule to plan for any contingencies, such as sick days or urgent leave ahead of time, which can affect their availability. This helps you to be flexible as you adapt to unexpected changes and mitigate resource shortfalls.

Related: What Is Talent Management? (With Processes and Strategies)

3. Allocate work and resources accordingly

Effective workload management is necessary for proper resource and manpower allocation. It's critical to account for any constraints when allocating resources, which involves understanding the individual team member or employee's work capacity. This can help ensure that work is equitably distributed and keep employees at optimum productivity levels. Managers can employ the use of project management software to schedule workloads, monitor tasks and keep employees motivated to complete their tasks and jobs.

4. Adhere to a realistic timeline

Projects or tasks that take a longer time to complete typically require more resources and manpower. This places greater emphasis on the company to implement proper time management, which can help them allocate resources efficiently. Develop a realistic estimate of how much time and how many resources each project stage might require. Then, ensure that you keep important department heads and project leaders informed about the level of resources at their disposal. You can try using resource allocation software with dashboards and reporting functions to help you monitor and track usage.

5. Monitor the project schedule

Projects can sometimes experience changes or disruptions which affect the allocation of resources. It's crucial to track and account for any variables that may impact a project's timeline, such as delayed tasks or changes to business objectives that can affect resource availability. Project managers can control resource requirements by closely monitoring the situation and preventing it from delaying the other aspects of the project.

Explore more articles