Resource Allocation

Resource
Allocation
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AY U S H G O D I YA L ( 0 1 1 1 3 4 0 1 9 2 0 )
S A N S K A R JA I N ( 0 3 1 1 3 4 0 1 9 2 0 )
WHAT IS RESOURCE ALLOCATION?
➢Resource allocation is a process and strategy involving a company deciding where

scarce resources should be used in the production of goods or services. A resource can
be considered any factor of production, which is something used to produce goods or
services. Resources include such things as labour, real estate, machinery, tools and
equipment, technology, and natural resources, as well as financial resources, such as
money.
IMPORTANCE
➢Resource allocation is a crucial aspect of your business with a
significant impact. Your business requires the right tools and
resources to succeed, and your employees need the right tools and
resources to perform their jobs effectively.
➢A study by McKinsey found that "companies that reallocated more

resources earned, on average, 30 percent higher total returns to
shareholders annually."
Types of resources in a Money
business firm
Material
Facilities
supplies
and Resources and
equipment
services
Personnel
STEPS TO ALLOCATE RESOURCES
plan
Gauge
Evaluate
availability
Track Schedule
• Plan-They must divide the project into separate tasks and identify what skills
are needed. Project managers should also identify potential team members
based on their skills and availability. They also need to determine task
dependencies that might affect completion of specific steps.
• Gauge availability-Sick time, vacation time, holidays and other projects all
impact a team's availability. During this stage, managers must establish lines
of communication with team members so resource allocation and shifts and
changes in the project or its schedule can be communicated. It also helps
identify team members that have conflicting commitments or are balancing
multiple projects that might slow down the project.
• Schedule. Managers assign tasks and develop project timelines. They use
resource management tools to automate and streamline this process and
improve workload management. Resource scheduling involves blocking time
for priority tasks and designating the priority level of each task.
• Track. Once the project begins, it's important to track the performance of
team members and monitor how effectively they complete tasks. Resource
allocations should be adjusted to maximize efficiency and take advantage of
new opportunities that arise. Business intelligence tools and project
management software and tools facilitate the collection of real-time data
needed to ensure the team remains on the project's schedule.
• Evaluate- The success of the project is evaluated based on metrics that show
how well it met expectations. Data from these findings can be used to refine
resource allocation strategies in new projects.
Factors Affecting Resource Allocation –
Organisation’s Preference of Internal politics External influence

objective dominant strategists
• Organization’s Objectives: It requires allocation of various types of resources.
The priority of tasks is judged by the amount of resources allocated to them.
Thus, the top management should ensure that the high-priority work should be
given more resources so that it is achieved in a stipulated time and cost.
• Preference of Dominant Strategists:It affects the process of resource

allocation. The strategists having high authority dominate the decisions
regarding resource allocation. The departmental heads try to attract the
resources to their respective departments by creating interest in the dominant
strategists.
• Internal Politics: It influences the distribution of resources within an
organization. Internal politics leads to securing greater resources by the
influential heads/departments of the organization. These heads or
departments are considered more effective.
• External Influence: It includes the influences of government, financial

institutions, shareholders, and public. Government laws related to labour or
pollution may require additional investment by organizations to implement
related measures. Similarly, financial institutions may impose high interest
rates on loans, which may affect the budget of the organization.
Difficulties / Challenges
Scarcity of Visibilty Mis Outdated

resources communication technology
• Scarcity of Resources – It implies that there is a lack of financial, human, and
technological resources. The major problem faced by organizations is to make
a choice out of scarce resources. Thus, scarcity leads to a problem of choice.
• Visibility- Poor visibility into the details of how a project is progressing can
result in project managers not allocating the right resources where they're
needed. A lack of visibility can also negatively affect a business's ability to
forecast future project requirements, leading to future misallocation of
resources. The lack of a centralized resource planning tool is often the cause of
poor visibility.
• Miscommunication- Poor communication among team members or teams can
cause a range of problems. For example, a common point of
miscommunication is between the sales and delivery team. If the team
delivering the product to the customer isn't informed of all project
requirements, it may not be able to ensure resources are properly allocated and
the deliverables adhere to customer expectations.
• Outdated technology- Legacy technology, such as a spreadsheet application,

may not provide adequate real-time data for tracking This can lead to missed
opportunities or overallocation of resources as project requirements shift.
Benefits of resource allocation
Collabration Efficiency Team morale Cost reduction

• Collaboration. Resource allocation helps facilitate communication among
teams and fosters collaboration. A resource allocation strategy allows
communication with stakeholders, to keep them informed about progress
toward strategic goals.
• Efficiency. Resource availability helps teams complete a project on time and

use only the resources needed to achieve each goal. A solid resource
allocation strategy helps project teams avoid mistakes related to conflicting
dependencies.
• Team morale. Resource allocation improves employee engagement and team
member morale. Resource allocation allows a more equitable distribution of
responsibilities so that no team member is overworked. This approach can
improve productivity because as team members' well-being is improved, they
have the bandwidth and agency to take on additional work.
• Cost reduction. Effective resource allocation can result in significant cost

savings because it increases efficiency, reduces waste and avoids costly
mistakes, setbacks and delays.

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Resource

➢Resource allocation is a process and strategy involving a company deciding where

➢A study by McKinsey found that "companies that reallocated more

Organisation’s Preference of Internal politics External influence

• Preference of Dominant Strategists:It affects the process of resource

• External Influence: It includes the influences of government, financial

Scarcity of Visibilty Mis Outdated

• Outdated technology- Legacy technology, such as a spreadsheet application,

Collabration Efficiency Team morale Cost reduction

• Efficiency. Resource availability helps teams complete a project on time and

• Cost reduction. Effective resource allocation can result in significant cost

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