What is Resource Management? A Complete Guide for All

In the current competitive business environment, utilizing and managing resources intelligently is imperative as they are the most high-priced investments of any firm. Moreover, as organizational structures have evolved from traditional hierarchies to intricate matrix systems spanning multiple geographies, the challenges associated with managing resources have become increasingly complex.

Therefore, mastering the art of resource management has now become a critical cornerstone for organizational success.

It ensures the right resources are allocated effectively across projects and that their skills and competencies are utilized to the maximum potential for successful project delivery. It also helps break informational silos and ensures data-driven decision-making.

This blog will provide an in-depth insight into resource management concepts. But first, let’s understand the definition of resource management.

What is Resource Management?

Resource management is the process of planning, forecasting, scheduling, and optimizing the entire resource lifecycle for successful project delivery. Its main objective is to fulfill the project requirements and ensure the productive utilization of every resource across the organization. In addition, it helps build a future-ready workforce, improve business profitability, and beat market volatility.

Types of Business Resources

The following are some of the resource types that organizations manage across projects:

Human resources
Time
Financials
Equipment & tools
Supply inventory
Information and data

Now that we understand the basics, let’s also explore its significance.

Importance of Resource Management in Project Management

Managing resources efficiently ensures that the right resources are available at the right time and cost for successful project completion. Let’s deep dive to understand the importance of managing resources in project management.

Minimizes Project Resource Costs Significantly

According to Deloitte, “Cost reduction takes precedence over other business initiatives.”

An efficient resource management framework provides enterprise-wide visibility that allows a resource manager to utilize cost-effective global resources for projects. It helps managers create the right mix of local and global or on-demand and permanent resources based on project requirements. Moreover, they can leverage a balanced mix of junior and senior employees for every project to ensure high-quality deliverables and reduce project resourcing costs.

Bridges the Capacity vs. Demand Gap Proactively

The resource management process allows managers to foresee pipeline project demand ahead of time. That way, managers can conduct a capacity vs. demand analysis to identify if there are any resource excesses and shortages. In case of any variances, they can formulate a suitable action plan to bridge the demand gap and avoid last-minute firefighting activities.

Enhances Billable Resource Utilization

A proper resource management process helps ensure optimal utilization of all the employees within an organization. It empowers managers to foresee resource utilization in advance, which helps mobilize employees from non-billable to billable and strategic work. It also provides visibility into resources about to be rolled off from projects. Accordingly, managers can bring forth project timelines or assign them to existing project vacancies. This will help improve the resource health index and overall billability.

Leverages Scarce Resources Effectively in a Matrix Organization

Resource management facilitates the effective utilization of highly skilled resources in a matrix organization. It allows collaboration and movement of resources across different departments and geographical locations. As a result, scarce, niche-skilled resources can be assigned across multiple projects rather than one high-priority project. This way, the shared services model enables managers to create and leverage cross-departmental teams for current and future projects.

Delivers Projects and Services within Time and Budget

Efficient resource management allows managers to facilitate competent resource allocation. This prevents under/over-skilled resources from being assigned to mismatched tasks. Thus, when the right talent is engaged in suitable projects or tasks, they are more productive. This way, the resources can contribute effectively to achieving project goals, meeting deadlines, and ensuring work is completed within the stipulated budget.

Now that we know the basic concepts, let’s learn about resource management techniques.

What are Resource Management Techniques?

Resource management techniques refer to the strategies and methods employed to allocate and utilize various resources within an organization or project.

Some of the most common techniques include:

Resource Planning

Resource planning is a comprehensive process of planning, forecasting, and allocating resources to the most suitable projects proactively. It also ensures efficient and effective utilization of resources as per their capacity/availability to drive favorable project outcomes. Moreover, it allows managers to anticipate various risks and frame an appropriate resource backup plan so that firms are better equipped to handle any workforce issues that may arise.

Resource Forecasting & Capacity Planning

Resource forecasting enables managers to estimate pipeline project requirements well ahead of the curve. It helps them perform the capacity vs demand gap analysis to identify resource excesses and shortages. Accordingly, they can take suitable resourcing measures to create an optimal talent pool.

Resource Scheduling

Resource scheduling involves identifying and deploying competent resources such as people, equipment, materials, and facilities to various tasks for a specific period. These tasks can be anything from non-billable to billable/strategic work. This process helps managers to seamlessly meet project deadlines and achieve business objectives.

Resource Utilization

Resource utilization is a critical KPI that measures the time employees spend on different project tasks against their availability. It helps track and monitor the resource utilization rates and determine if employees are over/under-utilized. Accordingly, managers can take necessary measures to optimize their utilization levels.

Resource Optimization

Resource optimization is the process of utilizing resources most efficiently to achieve overall business goals. This includes ensuring the right resource is available at the right time, preventing sub-optimal resource utilization of employees, and improving the bottom line.

Now, let’s break down the above-mentioned processes to understand it better.

Resource Management Process: A Real-life Example

Let’s examine a real-life scenario – the construction of a residential building. Explore how the above concepts are applied in practice.

At the outset, project managers clearly outline the project’s goals, considering factors such as project complexity, local building codes, site conditions, architectural style, etc. They also specify how long it will take to construct the building, the various stages of the project, dependencies, etc.

They then determine the resources needed for each project stage, including skilled labor (architects, engineers, carpenters, electricians), materials (concrete, lumber, bricks), equipment (excavators, cranes), and finances. Given below is a breakdown of the same.

Design: 1-3 architects, 2-4 engineers, and 2-3 junior professionals work on developing plans and blueprints.
Site Preparation & Foundation: 5-10 excavators, 10-15 concrete workers, and 5-10 masons, along with concrete and steel reinforcement will be allocated.
Structural Erection: 20-30 carpenters, 5-10 steel workers, 2-3 crane operators, lumber, and steel are designated for this stage.
Building Systems: 10-15 electricians, 8-12 plumbers, 5-10 HVAC technicians, 3-5 junior technicians, electrical wiring, plumbing fixtures, and HVAC systems will be assigned.
Interior Finishes: 10-15 drywallers, 5-10 painters, 5-10 flooring installers, drywall, paint, and flooring materials are to be secured for this phase.

Once the project manager estimates the required resources, they send the resource request to the resource manager. Accordingly, he will do capacity planning to evaluate their current workforce repository and identify if the necessary resources are available within the internal talent pool for the scheduled timeline. They discover a potential shortage of electricians during the building systems stage and plan to hire 5 contingent electricians in advance to address this gap.

Similarly, they assess the need for additional architects, engineers, masons, carpenters, and other skilled professionals to ensure each project stage has the appropriate resources for the specific time period. Resource managers then allocate these resources to this construction project. After that, the project manager selects the team of required resources and schedules them to appropriate tasks. They ensure that architects and engineers work on the design phase while carpenters and masons focus on the structural erection stage.

Given the labor-intensive nature of construction projects, it is crucial for managers to monitor resource utilization levels continuously. This is particularly important for skilled professionals, such as electricians, plumbers, HVAC technicians, and carpenters, who may become exhausted during resource-intensive stages like building systems installation and interior finishes.

These real-time insights will help managers implement the right optimization techniques and rectify instances of overutilization to maintain resource health index and boost productivity.

In the next section, we’ll learn about the types of businesses that need a comprehensive project resource management plan.

Types of Businesses That Require Resource Management

Organizations with a matrix-based set-up, cross-functional teams, and a shared-services model usually deploy a geographically dispersed workforce to deliver projects successfully, reduce costs, and maximize profitability.

Given the complexity of matrix organizational structures, these companies are exposed to numerous resource-centric challenges, such as scheduling conflicts, high resourcing costs, skill shortages, sub-optimal utilization, and more. Moreover, since these firms have multiple projects running simultaneously, they must optimally utilize their resources to ensure every project succeeds.

Therefore, they need to develop a well-defined project resource management plan to manage their workforce efficiently, irrespective of the industry type. It is equally important to implement this strategy using an appropriate tool to meet specific organizational needs.

Industries such as IT, construction & engineering, audit & accounting, and professional services organizations need enterprise resource management strategy to competently leverage their workforce and meet business objectives.

Let’s dive deep into some best practices to maximize project success.

7 Resource Management Best Practices Every Manager Should Know

We know that effective management of resources is the cornerstone of every business, and it helps optimize workforce productivity, enhance project delivery, and maximize profitability. Given below are some best practices on how adopting modern ERM software can prove instrumental in this endeavor.

Create Centralized Visibility of Resources Across the Organization

Advanced resource management software helps consolidate all resource-related information, like skill sets, experience, capacity, availability, demand, cost rate, location, etc., on a centralized repository. It creates a single version of truth for the entire organization and eliminates information silos, resulting in better decision-making.

This centralized visibility allows resource managers to visualize which resources are currently working on what projects. Moreover, it enables them to identify and allocate the best-fit resources to projects and tasks with matching competencies to ensure competent allocation.

Forecast Resource Shortages/Excesses and Bridge the Gap

Organizations must have a competent talent pool to ensure successful project execution. With the help of the tool’s advanced forecasting capabilities, managers can predict the resource requirements for pipeline projects. They can perform a capacity vs. demand analysis to identify the shortages or excess of resources and implement necessary corrective measures to bridge the gap.

For instance, in case of skill shortages, firms can hire contingent or permanent staff, retrain existing resources, or implement out-rotation and backfill strategy. Conversely, when there is an excess, managers can bring forward the project timelines, initiate training/upskilling, or sell the extra resources at discounted rates to avoid capacity wastage.

Allocate the Right Resources for the Right Project at the Right Time

Allocating the right resources to the right project at the right time and cost is crucial to ensure successful delivery. With the ERM tool’s 360-degree overview of the talent pool, resource managers can assess the competencies and assign the best-fit personnel instead of the “first-visible-first-fit” ones to every opportunity.

Moreover, they can strategically distribute niche-skilled resources across all projects rather than assigning them to a single high-priority initiative. Additionally, if a low-cost, competent resource is available, then managers can assign them to the project instead of a high-cost professional.

Forecast and Maximize Billable Utilization of Resources

The overall profitability of an organization depends on the optimal utilization of resources. Modern resource management software offers color-coded heatmaps and real-time utilization reports that provide timely insights into the workforce’s utilization levels. This helps managers identify the instances of over/under-utilization and implement corrective resourcing treatments on time.

In case of overutilization, managers can implement appropriate optimization techniques such as leveling and smoothing to adjust project timelines or deploy additional resources to ensure even workload distribution. In cases of underutilization, firms can assign resources to pipeline billable/strategic projects. Moreover, they can mobilize resources working on non-billable tasks to billable work to improve profitable utilization.

Read More: How to Track Resource Utilization?

Leverage the Right Mix of Local and Global Resources

Due to globalization and increased competition, many multinational corporations are expanding their operations across geographies to meet growing client demand, reduce costs, and boost profitability. With advanced ERM software, organizations can effectively create and maintain a balanced workforce of local and global resources.

Further, they can implement a multi-location policy that allows managers to leverage cost-effective global professionals when local resources for a specific skill set are unavailable. Moreover, they can use contingent workers for short-term project requirements instead of hiring permanent resources. This helps minimize resourcing costs and ensure seamless operational workflow.

Empower Resources to Choose Projects of Their Interest

Human resources are indispensable assets for most organizations, so it is essential to ensure they maintain consistent performance and high levels of productivity. To achieve this, firms must offer development opportunities that align with their resources’ qualifications, experience, capacity, availability, etc., to keep them motivated and engaged.

Further, organizations must also empower employees to choose projects of their interest. Managers can implement IDPs, i.e., personalized career paths that cultivate a sense of purpose and enhance resource satisfaction. This, in turn, will ensure that resources are happily engaged in work, leading to improved business outcomes.

Gain Real-time Business Intelligence for Accurate Resource Insights

The software’s real-time business intelligence feature helps organizations analyze large volumes of business data and make informed decisions. They can get accurate insights into various project resource metrics such as skills, availability, capacity, demand, cost, etc.

Managers can utilize this information to identify and mitigate potential risks before they derail project progress. For instance, a forecast vs. actual cost report helps review if the project is progressing as per the estimated budget. If there is a variance, managers can implement cost optimization measures to control budget overruns.

Having explored resource management best practices, it’s important to stay informed about emerging trends shaping the business landscape. Read on:

Resource Management Trends to Look Forward to

As industries evolve and challenges grow more complex, staying abreast of emerging trends becomes imperative for maintaining a competitive edge.

Here is the list of trends you will witness in the near future:

Transitioning Towards Hybrid or Remote Work Arrangements

The traditional office-based work model offers limited flexibility, longer commutes, and imbalanced work-life dynamics. These conditions have often resulted in increased employee stress and reduced productivity. In response, recent technological advancements have paved the way for hybrid and remote work arrangements, skillfully blending the advantages of both on-site and off-site working arrangements. This shift has promoted increased flexibility and enhanced employee well-being, contributing to a productive workforce.

Reliance on Predictive AI for Demand Forecasting

Traditionally, organizations have relied on basic forecasting methods or statistical models to anticipate future demands. However, this often led to inaccurate predictions due to human error or insufficient data analysis. Given the unpredictable nature of the business landscape, companies are increasingly adopting predictive AI tools to analyze future project demands. These tools can identify patterns in data and adjust forecasts in real time, enabling intelligent project prioritization and accurate staffing decisions.

Adoption of Automation Software to Streamline Resource Requisition

Resource requisition processes were predominantly manual and time-consuming, often involving cumbersome paperwork and multiple levels of approval. However, modern-day organizations are increasingly adopting automation software to streamline resource requisition workflows. This helps facilitate efficient resource planning by enabling early identification and allocation of the best-fit resources. Moreover, it helps to minimize managerial conflicts, which usually arise when two or more managers have requirements for similar resources. Thus, the software helps maintain the project schedule and reduces administrative costs.

Implementation of Dynamic Scheduling Algorithms

Earlier, organizations leveraged basic scheduling tools, which were limited to static inputs and manual adjustments. However, to keep up with modern demands, companies are increasingly turning to dynamic scheduling algorithms. This helps managers leverage real-time data on key parameters such as resource skills, availability, capacity, etc., enabling organizations to allocate resources more efficiently and improve project performance.

Harnessing Real-time BI for Resourcing Decisions

Conventionally, resource managers have often relied on assumptions and guesstimation when devising resourcing strategies to manage their talent pool. However, modern organizations are increasingly leveraging BI tools and their intuitive dashboards and reports to get precise foresight into project resource demands, resource availability, capacity, competencies, and more. This helps resource managers identify skill gaps and take proactive, data-driven resourcing decisions to ensure seamless project completion.

These are some of the latest trends in this space that will help managers unleash the maximum potential of their workforce and maintain a competitive edge.

Over to You

It is now evident that a well-defined resource management plan is crucial for the success of any business. It is not a ‘one size fits all’ process. Every organization operates differently and, therefore, needs a tailored project resource plan that suits its needs.

Therefore, it is imperative to develop the resource management skills of your managers and implement the right system and processes to manage the most expensive investment of your organization, the workforce!

What process do you follow to ensure efficient management of resources?

The Glossary

The SAVIOM Solution

SAVIOM is the market leader for more than 20 years in providing efficient and configurable solutions for managing the workforce. It has been deployed by many Fortune 500 companies across the globe. SAVIOM also provides tools for project portfolio management, professional service automation, and workforce planning software. Contact us for a free trial, and we will provide a customized solution to solve all your project resource-related challenges.

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What is Resource Management? A Comprehensive Guide for All