What is Resource Optimization, and Why is it Important?

July 22, 2022
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The current business landscape is witnessing a paradigm shift due to digitization, market volatilities, evolving market demands, etc. To keep up with these evolving trends and thrive in the hypercompetitive market, businesses need to build an optimized, future-ready workforce.

After all, an organization’s talent pool is the success driver of the firm. Hence, they must tap into their maximum potential while maintaining the resource health index.

The pertinent question is, how can one simultaneously maintain a healthy resource index, ensure project quality and minimize costs?

Resource optimization is the ideal technique or strategy to do so. From preventing over or underutilization of the workforce to reduce resource costs and ensuring competent allocation to enhancing profit margins, this strategy can help elevate overall business efficiency.

This article highlights the essential aspects and best practices of resource optimization. Let’s begin by defining the term,

1. What is resource optimization in project management?

Resource optimization is a management practice or strategy to boost employee productivity, efficiency, and performance within a project-based organization.

To achieve these goals, it comprises processes such as planning, forecasting, allocating, and scheduling available resources and utilizing them intelligently to meet the organization’s objectives. Resources can be human, equipment, facilities, finance, etc.

The ultimate goal of resource optimization is to leverage the employees’ maximum potential to improve business profitability.

Resource managers use different techniques to optimize the workforce and balance their schedules. The following section explains these techniques in detail:

2. What are the resource optimization techniques?

Resource managers implement resource optimization techniques depending on the nature of a project. We have explained the most prominent ones:

A. Resource leveling

Resource leveling is implemented on projects with flexible timelines where the start and end dates can be re-adjusted based on the critical resource’s availability and schedule.

For example, suppose a web developer is unavailable to work on a website revamp project before the stipulated deadline. In that case, managers can communicate with the stakeholders and adjust the project timeline. This helps to prevent overallocation and reduces the risk of employee burnout.

B. Resource smoothing

Resource smoothing, also known as Time Constrained Scheduling, is used when the project is time-sensitive. If a resource is overwhelmed, managers adjust the float tasks and redistribute the workload or add additional resources without affecting the critical path.

For instance, a project’s float task requires 80 hours, and the resource is allocated 10 hours of work every day. However, since there is room for flexibility, managers can assign the same resource for 8 hours and ten days or schedule a junior resource. This helps ease the employee’s schedule without hampering the deadline.

C. Modeling and simulation

Modeling and Simulation is a technique that assists managers in building multiple scenarios in a sandbox environment. Managers can then analyze and compare the outcomes of each scenario and select the best-fit resource plan, and prioritize projects. It enables them to prevent potential bottlenecks and protect profit margins.

For example, suppose there is a pipeline project with a certain probability of approval. In that case, managers can form different resource mixes, modify the utilization, evaluate the impact on the project’s timeline and budget, and select the best possible outcome before applying it to the resource plan.

These are significant resource optimization techniques that help boost workforce productivity and prevent burnout.

However, optimization is not restricted to avoiding overutilization; it goes beyond and optimizes the workforce in terms of cost, capability, location, etc.

The following sections enlist the five major categories,

3. What are the different types of resource optimization?

Resources can be optimized at different levels such as capability, cost, utilization, location, and season to ensure profitability and successful project delivery.

Let’s look at each one in detail,

A. Capability Optimization

According to Gallup,

“Utilizing the skills and strengths of employees regularly improves their engagement by six times.”

The focal point of capability optimization is the competent allocation of resources to appropriate tasks while fulfilling the project demands. In other words, it pertains to fulfilling every skill and competency requirement of the projects, bridging an existing capacity gap, and future-proofing the workforce to beat market volatility.

To ensure successful project delivery, it encapsulates resourcing treatments such as upskilling, training, hiring, out-rotation/backfill, etc. Additionally, it helps avoid allocating over or under-skilled employees to projects, thus ensuring quality delivery.

B. Cost Optimization

After estimating the resource required, the project budget is analyzed, and the cost-effective employees are identified across the organization while keeping quality in mind. It also includes forming an appropriate resource mix to avoid cost escalations and proactively allocating resources to prevent last-minute firefighting and billing loss. All these processes constitute resource cost optimization.

It facilitates managers to procure resources with the right experience level and cost to control the project financials.

C. Utilization Optimization

Utilization optimization prevents managers from over or underutilizing the resources and ascertaining uniform workload distribution. Instead, before allocating or scheduling the tasks, managers can view the resource’s schedules, understand their availability, and book accordingly.

If a resource is overbooked, they can apply techniques such as leveling and smoothing to prevent burnout. Managers can also forecast and mobilize resources from non-billable to billable or strategic work to enhance productivity.

D. Location Optimization

Location optimization enables managers to hire or allocate resources from suitable locations based on the project’s requirements, keeping the skillset, cost, and other constraints in mind.

It increases in-person interaction between the client and delivery team and creates better coordination as respective personnel can meet at their convenience to discuss issues and find solutions quickly.

E. Seasonal Optimization

The professional services industry has seasonal peaks and troughs when demand and services substantially increase or decrease. During the peak period, the organizations can increase their consultants’ charge-out and employee utilization rates and improve profits for the firms.

During the trough period, the organization can reduce the charge-out rate to attract and retain clients. They can also implement training and upskilling programs to futureproof the workforce. In both situations, managers are well-equipped to increase revenue and promote the employees’ work-life balance, thus, minimizing stress and burnout.

So far, we have understood the techniques and types of resource optimization. Now, it’s time to know how it benefits the organization.

Implement workforce optimization to improve productivity

4. How does resource optimization benefit an organization?

Resource optimization focuses on improving workforce performance and productivity at the granular level to ensure successful project delivery. It offers myriad benefits to the organization. The most prominent ones are listed below:

A. Improves employee productivity

Resource optimization ensures that the right resources are allocated to the right project based on their competencies and interest. By tracking the utilization levels, managers also prevent the risks of employees being under/over utilized. Moreover, they also ascertain that no over or under-skilled employee is working on the given tasks.

When employees work on projects that align with their skill set and availability, they will not be stressed or burnt out, eventually boosting their productivity.

B. Facilitates task prioritization

During the project planning stage, managers implement the critical path method to identify the most critical tasks of the project. Once that is done, they can prioritize the tasks better.

If the resources are overwhelmed, managers can adjust their schedules or bring in more resources to finish critical tasks first. This ascertains the completion of tasks in chronological order based on the urgency.

C. Enables competent resource allocation

As discussed earlier, capability optimization enables you to allocate the right resource to the right task with relevant experience and competencies. This helps avoid assigning over or under-skilled employees to projects.

Managers also leverage the shared services model to allocate inter-departmental resources to suitable projects at the right cost. It allows them to align the project demands with the skillset and maintain quality.

D. Prevents employee burnout and disengagement

The overutilization of resources will result in stress and burnout due to excessive workload. On the other hand, when employees are underutilized, they will be disengaged as their skill set is not appropriately leveraged.

By implementing resource utilization optimization, managers ensure the uniform distribution of workload. As a result, it enhances performance, boosts productivity, and prevents burnout or disengagement.

How Workforce Planning Prevents Employee Burnout

E. Helps form the right mix of resources

Most often, niche skilled critical resources are allocated to numerous projects at times beyond their capacity, while less experienced employees are constantly working on non-billable tasks or on the bench.

Resource optimization allows organizations to form the right mix of senior and junior resources. This will help reduce the workload of critical resources and enable non-critical resources to gain more hands-on experience and diversify their skill set. Moreover, cost optimization helps them form the right blend of contingent and permanent workforce to prevent unnecessary overhead costs.

F. Reduces resourcing costs

As mentioned earlier, resource capability optimization ensures that the right resource is allocated to the right project, thereby avoiding the deployment of under-skilled or over-skilled resources.

Moreover, it allows one to identify and allocate cost-effective global resources and skilled junior resources instead of expensive senior resources to control the costs. Resource optimization also entails proactively allocating the employees and the last-minute hiring costs.

G. Helps future-proof workforce

Organizations have seasonal peaks and throughs throughout the year, and during the trough period, they implement training and upskilling programs for resources.

In addition to diversifying the skillset, they technically prepare the resources to take on multi-faceted projects in the upcoming seasons. This helps them futureproof the workforce and maintain a competitive advantage.

Now that the benefits are clear, let’s look at the effective ways to implement resource optimization.

significance of developing skills to future proof the workforce

5. What are the best practices for efficient resource optimization?

Resource optimization ensures optimal workforce utilization and helps enhance business efficiency. Therefore, building the right optimization strategy is imperative to achieve the same.

Here are seven best practices you can follow:

A. Estimate project resource requirements in advance

The estimation of project resource requirements is the first step in resource optimization. The project managers first identify and determine the total number of required resources and the corresponding competencies and skillset. Once the resource estimation is complete, the project managers can raise resource requests using the resource management tool.

This gives enough lead time for resource managers to ensure the availability of suitable resources and implement measures in case of shortages or excesses. To bridge the gap, they can apply appropriate strategies such as training and hiring a permanent or contingent workforce. This will ensure competent resource allocation to projects and maximize productivity.

B. Understand resource availability and capacity before scheduling

Once resource managers identify and allocate resources to the project, the project managers need to schedule them for specific tasks. While doing so, they need to ensure that resources are not under/overloaded with the work against their capacity.

For example, project managers can share the workload with another resource (keeping the costs in mind) if a particular resource has work beyond their capacity. This will ensure uniform workload distribution and prevent employee burnout and disengagement.

definitive guide to resource scheduling

C. Implement out-rotation and backfill strategy to fill critical roles

Out-rotation and backfill strategies can help in capability optimization, especially when there is a shortage of niche skilled critical resources. For example, an IT project requires a data modeler. But there is only one such niche-skilled resource across the organization working on another project and thus, unavailable.

In this case, if the second project has reached the completion stage, managers can co-ordinate and out rotate the data modeler to the new project. Additionally, they can use another resource who has meets the prerequisites for this role as a backfill to finish the job. This will ensure that both projects’ progress is not hampered and that they are completed within the estimated time and quality.

D. Monitor and track employee performance in real-time

Sub-optimal resource utilization can negatively impact workforce performance and the project’s progress. Thus, the onus is on managers to monitor their utilization in real-time and course correct in case of discrepancies.

They can implement a resource management tool that provides real-time utilization reports of the entire resource pool. Managers can proactively implement corrective measures if a resource is over or underutilized or if someone is spending more time on non-billable work. Moreover, forecast vs. actual utilization reports helps managers to evaluate the gap in planned or estimated hours versus the actual time spent on work. In case of variance, they can understand the root cause and rectify it accordingly.

E. Empower resources to take up projects of interest

When employees are allocated to similar tasks, the work becomes monotonous and starts lowering productivity. This can hamper their overall growth and result in unplanned absenteeism and high attrition. Therefore, organizations can go the extra mile and allow their workforce to choose projects of their interests.

Using the resource management tool, managers can publish open positions mentioning project requirements which will be notified to resources. Then, they can consider candidates’ interests and skill sets during allocation. Since employees choose projects of interest, they will show full commitment, reflecting their high performance.

empower employees to enhance productivity

F. Use cost-effective global resources as appropriate

Leveraging the skills of cost-effective global resources is an excellent way to optimize project costs. Managers can control project costs without compromising the quality.

Since the resource management tool provides visibility of employees based at different locations, their skills, charge out rate, etc., managers can identify and allocate cost-effective global resources from low-cost locations. This helps maintain the project’s financial health without compromising quality and prevents budget overruns.

G. Implement training and upskilling to future-ready the workforce

Organizations can facilitate training and upskilling programs for the employees during the seasonal trough and futureproof them effectively. In addition, they can provide shadowing and on-the-job training opportunities to level up their expertise before a particular project begins. This will give them hands-on experience, prepare them for future endeavors, and help reduce the workload of critical resources.

Managers can access resource profiles and future project demands using the resource management tool to identify skills gaps. They can then formulate a development plan that aligns with the resources’ career goals and company objectives. This will reduce external hiring, help build a future-ready workforce, and ensure maximum productivity.

ways to retrain & upskill resources and future-proof them

6. Conclusion

Resource optimization allows organizations to tap into the maximum workforce potential and enhance business efficiency. Using the abovementioned techniques, an organization can allocate the right resources to the right project, ensure optimal utilization and increase engagement and productivity. In addition, they can ensure profitability and sustainability by pairing them with the right resource management software.

So, what resource optimization techniques do you follow?

7. The Glossary

the glossary

8. The Saviom Solution

SAVIOM is the market leader in helping multinational clients manage their resources efficiently and effectively. With over 20 years of experience, this Australian-based MNC has a global presence across 50 countries and has helped 100+ clients with their Workforce Planning Software. Saviom also provides tools for Enterprise Project Resource Management, Project Portfolio Management, and Professional Service Automation. Boost your remote team collaboration with Saviom.

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