What is Resource Management? A Comprehensive Guide for All

Utilizing and managing resources intelligently is imperative for every organization as they are the most high-priced investments of any business. Moreover, organizations spend a lot of time and money creating the right talent pool. Therefore, tapping their skills and competencies to their maximum potential enhances overall efficiency and profitability.

Resource management has become an integral part of any business today. It emerged as an independent discipline after organizations became complex with matrix structures and expanded in multiple geographies.

Efficient project resource management software provides centralized data into a single repository and a single version of the truth.

Its components include resource scheduling, resource forecasting & planning, capacity planning, business intelligence/reporting, integration with other related applications, and more.

This blog explains all its necessary concepts and aims to steer you through a successful journey as a resource manager.

Let’s begin with its formal resource management definition.

What is resource management?

Resource Management is the process of planning, scheduling, forecasting, and optimizing the entire resource lifecycle for successful project delivery. It involves managing resources such as people, equipment, materials, facilities, etc., to ensure they are utilized optimally and aligned with organizational objectives.

The main aim of resource management 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.

Now we know the basics, let’s understand the significance of resource management.

Importance of resource management

Managing resources effectively plays a significant role in improving a business’s profitability and sustainability. It ensures that the right resources are available at the right time and cost for successful project completion. Let’s understand why resource management is important for business profitability and sustainability.

Minimizes project resource costs significantly

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

Effective resource management solutions provide enterprise-wide visibility that allows resource managers to utilize cost-effective global resources from low-cost locations. Depending on the project requirements, managers can create the right mix of local and global or on-demand and permanent resources. 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.

Enhances billable resource utilization

Resource management solutions empower managers to forecast workforce utilization in advance, which helps mobilize employees from non-billable to billable and strategic work. It also provides visibility into resources that are about to be rolled off from projects. Managers can either bring forth project timelines or assign them to existing project vacancies to their improve billable utilization.

Bridges the capacity vs. demand gap proactively

Demand forecasting, a resource management function, allows managers to foresee pipeline resource demand ahead of time. This enables managers to assess and analyze the skills gaps within the existing workforce. Consequently, in case of excesses and shortages, they can formulate a suitable action plan to proactively bridge the capacity vs. demand gap and avoid last-minute firefighting activities.

Leverages scarce resources effectively in a matrix organization

The resource management process 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 different projects rather than one high-priority project. Therefore, the shared services model enables managers to create and leverage cross-departmental teams for current and future projects.

Creates the best resource plan using what-if analysis

A robust resource management tool offers a ‘what-if analysis’ feature that allows managers to create and compare different resource scenarios and their potential outcomes. This includes assessing the scenarios from multiple dimensions, like revenue generated, employee availability, etc., to identify and apply the most profitable option to the actual resource plan.

Improves the organization’s resource health index

A modern resource management solution provides real-time reports and analytics that help monitor key resource KPIs such as capacity, availability, demand, utilization, etc. Thus, in case of negative variances, managers can implement corrective actions promptly. Moreover, it facilitates training/upskilling programs, enabling resources to enhance their competencies, further improving the organization’s resource health index.

Delivers projects and services within time and budget

An efficient resource management process allows managers to facilitate competent resource allocation. This prevents under/over-skilled resources from being assigned to mismatched tasks. Thus, when the right people work on the right projects or tasks, they are more productive and able to meet project deadlines effectively. Furthermore, enterprise-grade resource management solutions allow firms to monitor and control resource-centric risks. This enables them to minimize the risk of delays or budget overruns, ensuring timely project delivery.

Now that we know the significance of effectively managing resources let’s dive deep into its major resource management components.

What are the components of resource management?

Here are the main components of resource management in project management:

Resource scheduling

Resource scheduling involves identifying and allocating resources for a specific period to different project tasks. These tasks can be anything from billable, non-billable, or BAU work.

With a centralized Gantt chart view of the enterprise, resource scheduling eliminates silos of spreadsheets. It also facilitates you to deploy competent resources to the right job to finish the project within budget and time.

Resource utilization

Resource utilization measures the amount of time spent by the employees on different project tasks against their availability. It is a key performance indicator in the modern business landscape as it directly influences the firm’s bottom line.

Utilization can be measured in terms of:

Overall resource utilization
Billable utilization
Strategic utilization
Non-billable utilization

Resource Managers can proactively mobilize resources from non-billable to billable/ strategic tasks and maximize their billable utilization.

Resource forecasting

Resource forecasting helps managers predict resource utilization levels in advance and foresee the resources likely to end up on the bench. In addition to these, they can also stay forewarned of the required capacity for pipeline projects.

Leveraging this information, one can

Mobilize the resources to billable tasks from non-billable or BAU activities.
Ensure effective bench management
Bridge the capacity and demand gap

Resource planning

Resource planning is the comprehensive process of planning, forecasting, allocating, and utilizing the workforce most efficiently and intelligently. Resource capacity planning is an undertaking to analyze and bridge the capacity and demand gap well ahead of the curve.

These two components are vital to ensure that none of the project vacancies go unfilled or excess capacity gets wasted. Simply put, resource and capacity planning maximize optimal utilization and timely project deliveries.

Business intelligence and reports

Business intelligence provides actionable insights by performing extensive data analysis. Using real-time data, individualized reports, and dashboards, critical resourcing metrics are analyzed for decision-making. These reports strengthen the managers’ decision-making abilities and allow them to monitor the overall resource health index.

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

What are resource management techniques?

Resource management techniques refer to the strategies and methods employed to effectively allocate and utilize various resources within an organization or project. These techniques are critical to solving resourcing conflicts such as overallocation and underutilization.

There are two types of resource management techniques:

Resource leveling

Resource leveling is a technique used in project management to adjust project start and end dates based on the availability and schedule of resources. It is applied to projects with flexible timelines to ensure an even workload for team members and prevent over/underutilization.

Example of resource leveling:

Let’s consider a software development project where a team of programmers is working on different modules of a software application. The project manager notices that two critical modules require the expertise of a senior programmer, but there’s only one senior programmer available.

Without resource leveling, the senior programmer might be overloaded with work, leading to burnout and potential delays. To avoid this scenario, the project manager can adjust the project schedule by changing the start and end dates of the two critical modules. This would allow the senior programmer to work on one module at a time without being overloaded.

Resource smoothing

The resource smoothing technique is applied to time-sensitive projects. It involves allocating additional resources, redistributing workload among existing team members, or adjusting float tasks of projects without changing the critical path. Resource smoothing focuses on resolving resource overutilization while keeping project schedules and timelines fixed.

Example of resource smoothing:

Let’s consider an audit and accounting firm with a limited pool of consultants. During the financial year-end, there’s typically a surge in client demand requiring tax filing assistance. In this period, the tax department is overwhelmed with work, leading to overloading and burnout.

To reduce the impact of overutilization on team productivity and project workflow, the firm can hire additional on-demand tax consultants during the peak season to redistribute the workload. This will allow the audit and accounting organization to meet tax deadlines and client expectations without overexerting the internal team.

Now, let’s dive deep into some of resource management’s best practices.

What are the resource management best practices?

We know that effective resource management is essential for organizations striving to optimize productivity and achieve their goals. Therefore, adopting the following approaches can prove instrumental in this endeavor. Let’s understand.

Create centralized visibility of resources across the organization

The first step in efficient resource management is to consolidate all resource-related information, like skill sets, experience, capacity, availability, demand, cost rate, location, etc., on a centralized repository. It helps create a single version of truth for the entire organization and eliminate information silos, resulting in better decision-making.

This centralized visibility allows managers to visualize which resources are currently working on which projects. Moreover, it enables managers 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

With the help of 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, train existing resources, or implement out-rotation and backfill strategy. Conversely, when there is a resource excess, managers can bring forward the project timelines or initiate training/upskilling to ensure projects commence on time.

Allocate right resource 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 a 360-degree overview of the talent pool, managers can assess resource competencies and assign the best-fit personnel instead of the “first-visibility-first-fit” resources to every opportunity.

Moreover, they can strategically distribute the skilled resources across projects rather than assigning them to a single high-priority project. 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. Thus, it is important to ensure that the workforce is efficiently engaged in billable projects as per their capacities. With advanced color-coded heatmaps and reports, managers can gain foresight into the utilization levels of all resources.

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 mobilize resources from non-billable to suitable strategic projects or sell excess capacity at discounted rates.

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. By gaining complete visibility into the talent pool across the matrix boundaries, managers can create a balanced mix of local and global resources.

They can implement a multi-location policy if local resources for a specific skill set are unavailable, minimize resourcing costs, and provide round-the-clock customer support. Moreover, even if initially these hired resources show potential but lack proficiency, firms can leverage senior staff to provide suitable training and mentorship to improve their competencies and maintain project quality.

Empower resources to choose projects of their interest

Human resources are indispensable assets for most organizations, so ensuring they deliver consistently at high productivity is important. To achieve this, firms must offer opportunities that align with their resources’ qualifications, experience, capacity, availability, etc., to keep them motivated and engaged.

Further, organizations must also empower resources 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

A robust business intelligence tool helps organizations analyze large volumes of business data and take data-driven decisions. With BI-enabled resource management software, firms can get accurate insights into various resource and project metrics such as availability, capacity vs. demand, forecast vs. actual 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.

In the next section, we’ll learn about the vital resource management skills that every manager must possess.

What are resource management skills that every manager should have?

Resource managers have multiple responsibilities to account for when managing the most significant investment of the firm. From understanding the talent pool to being the key link between PMOs and the workforce, they have a lot on their to-do list.

Here’s a list of resource management skills for a manager to streamline this complex process:

Communication skills

Resource managers are accountable for fulfilling resource requirements from project managers by assigning the job to the right resource. Since they act as mediators in this process, it’s imperative to have exemplary communication skills. It will enable them to explain the roles and responsibilities to the resources better while also making reasoning with the project managers seamless.

Conflict resolution

Often, multiple project managers end up requesting similar-skilled resources. In this case, if the project prioritization criteria are not in place, it may lead to conflicts. Also, a lack of transparency in defining goals and objectives can lead to resources being clueless, which can also result in discrepancies. It’s the job of a resource manager to intervene, set the expectations right, and ensure that everyone is on the same page to keep the work going. This is why conflict resolution skill is a mandate.

Domain knowledge

To allocate the right resources to the right job, it’s important that managers understand the skillset very well. If a resource manager with no engineering knowledge works for an engineering firm, it will put forth resource planning challenges in the long run. For this, they must have domain expertise to get more clarity.

Proactive planning

Every project manager aims to complete the project within time and budget, which makes forward planning a critical aspect. Since success highly relies on the workforce, resource managers need to be extremely proactive to fulfill the demand. They should be quick-witted to make calculated decisions about implementing the right resourcing treatments to ensure resource availability for projects.

Negotiation skills

Resource planning is a complex job and brings forward a myriad of challenges for the resource manager. For example, a project manager has requested an employee with advanced-level technical skills. If one skill is missing and it’s expensive to hire another resource, managers have to convince the project owners. In such cases, managers must be able to negotiate well and get the job done.

Risk management

What if a resource takes prolonged unplanned leaves? What happens if there is unplanned attrition? A running project can come to a halt. How would a resource manager tackle this situation? If they have a backup plan, these situations will seem easy to deal with. Risks are inevitable in the project landscape. Thus, resource managers should hone their risk management skills with forward planning to keep the project going.

These are some of the imperative resource management requirements and skills for a resource manager. Let’s now understand which businesses can reap the benefits of managing resources efficiently.

Types of businesses that require enterprise resource management

Organizations with a matrix-based set-up, cross-functional teams, and a shared-services model require enterprise resource management. The level of complexity to which they adapt the business processes depends on their size and functions. Yet, today it is part of every organization’s DNA.

Industries such as IT services, construction & engineering, audit & accounting, and professional services organizations, etc., have implemented robust resource management processes.

Other crucial factors that affect the better management of resources are firms working on multiple projects in ad-hoc environments. It means that they are exposed to several changing variables like project priorities, resource availabilities, and budget constraints.

These complexities demand enterprise-wide visibility and real-time updates to help managers stay informed at all times. They need to manage their resources diligently and finish the projects within budget and time. Therefore, organizations need to invest in enterprise-grade solutions to effectively utilize their resources irrespective of the industry type.

Formulating a project resource management framework is only half the battle won. It is equally important to implement this strategy using an appropriate tool to meet specific organizational needs. Otherwise, it will have an adverse effect on the entire resource pool and the firm’s reputation.

Let’s learn about some consequences of a poor resource management framework.

Consequences of poor resource management strategy

When organizations adopt inefficient resource management processes and techniques, it can drastically affect project delivery and overall profitability.

Here are some of the negative impacts of poor resource management strategy.

Increased project costs

Incompetent allocation or booking of high-cost resources instead of the low-cost but similarly skilled workforce spikes project budget. Since the resources’ skills and competencies are not leveraged most effectively, project costs will increase, causing unnecessary budget overruns.

Reduced employee performance

Poor employee performance is the first and foremost indicator of sub-optimal resource management. Unrealistic expectations, over-allocations, or bookings without considering employee interests and skills can contribute to reduced engagement and productivity. It will adversely affect the project’s quality and lower employee morale.

Delays in meeting project deadlines

Without visibility of team members and their skill sets, organizational resources may get allocated to projects that do not match their competencies. It can result in delivery delays as significant time will be spent learning on the job before becoming productive. Further, delays in meeting deadlines also blow up project costs.

High employee turnover

Employees feel disengaged and dissatisfied when their strengths and skills are not exploited at their best. Over-allocating resources due to unrealistic deadlines can lead to employee burnout. These circumstances can compel your valued talent pool to look for opportunities elsewhere, which will gradually increase employee turnover.

Client dissatisfaction and loss of business

Inefficient resourcing practices lead to poor resource allocation, which causes teams to put in long hours to meet project goals. Tight deadlines and a heavy workload can put the allocated resources under pressure, thereby increasing the likelihood of errors. Delayed delivery, compromised quality, and budget spikes jeopardize project health, resulting in client dissatisfaction and, eventually, business loss.

The decision-makers must, therefore, formulate an efficient resource management plan to avoid facing these consequences. Managers can develop this plan using advanced software.

Resource management trends to look forward to

The emergence of innovative and advanced technology has created a paradigm shift in the ways resources are managed. Comprehensive resource management tools are developed using Business Intelligence that provides precise insights into resource metrics and promotes data-driven decisions.

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

Going beyond simple scheduling and planning tools

Most resource managers implement basic scheduling and planning tools to efficiently manage resources and allocate tasks to them. However, as mentioned earlier, it goes beyond these concepts and covers a lot more. Thus, firms will soon start investing in holistic resource management tools that maintain a single version of the truth across the enterprise and provide all features under one roof.

Replacing guesstimations with real-time forecasting to plan future projects

While managing resources, many managers still implement resourcing treatments based on mere assumptions and guesstimations. A modern tool will replace that with real-time forecasting. Managers will get precise foresight into project resource demands, resource availability, utilization, and more.

Using Business Intelligence to derive reports and maximize utilization

Modern resource management software is integrated with business intelligence that derives information from the data and provides intuitive reports in real-time. Managers can use these reports to assess and improve various metrics. For instance, they can maximize the productive utilization of the workforce, which will enhance their productivity.

Switching from emails to a well-formulated resource requisition workflow

Resource and project managers still send endless trails of emails to get the required resources. Advanced software will change this by helping you form a resource requisition workflow. The first-come, first-serve basis will become obsolete, and priority projects will take precedence. Moreover, it will form an audit trail that will give absolute transparency regarding resource requirements to all the stakeholders and management.

Implementing modeling & simulation to form the best-fit resource plan

Creating a resource plan involves a lot of analysis to eliminate potential bottlenecks in the future. An advanced tool brings a compelling feature, ‘what-if analysis,’ into the picture. Accordingly, managers can leverage it to simulate different variables, form the best-fit resource management plan, and mitigate against potential risks.

Empowering employees to choose their areas of interest

Businesses have restructured to become employee-centric, which helps them grow professionally while the project needs are taken care of. To stay one step ahead, managers can now create an open seat for relevant project positions and allow employees to choose their areas of interest. It will enable them to diversify their portfolio, hone their skills, and increase productivity.

Introducing a well-defined out-rotation policy for employee retention

When a critical resource is working on one project, managers tend to deploy the same resource to similar projects in the future. It creates a limitation for the employees as they don’t get to work on multi-faceted projects. Thus, resource managers must formulate a well-defined out-rotation policy that will provide fair chances to every employee. This will help facilitate all-around resource development and improve organizational efficiency.

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

Over to you

It is now evident that a complete 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 use the right resource management system and processes to manage the most expensive investment of your organization, your workforce!

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

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