What is resource allocation?

• Resource allocation is the strategic assignment of resources to optimize efficiency and engagement performance
• Effective resource allocation is important to ensure fair workload distribution, prevent staff burnout, and improve client satisfaction
• Efficient resource distribution needs to take into account available time, skillsets, client budget, workforce capacity, and business goals
• The benefits of effective resource allocation can include improved staff retention, increased profitability, and optimized engagement success
• Resource management software can be used to automate resource allocation, enhance visibility, and support career development through skills tracking. It can also help to reduce bias and improve fairness in resource assignment

In this article, we explore what resource allocation is, its importance, benefits, and how complexities can be navigated with intelligent resource management software.

What is resource allocation?

Resource allocation vs. resource scheduling

Resource distribution also considers the availability, capacity, and utilization of resources across a firm. However, it should not be confused with resource scheduling.

While scheduling is also a crucial part of the overall resource planning process, it typically follows allocation.

After identifying and allocating resources based on the best match of skills and experience for a particular engagement, the resource manager will then schedule these resources for a specific time and task. They’ll take into account the necessary skills, experience, and qualifications for the appropriate stage of the engagement.

Why is resource allocation important?

In the delivery of any project, poor allocation of resources will have a knock-on impact on overall performance. Lacking the right skills or knowledge on a project can result in the loss of efficiency, time, confidence, and motivation along the way. Effective resource allocation is not only an essential management process, but is also a critical lever for growth and success. 

Well-thought out resource allocation should:

• Make sure work is divided evenly among all available and suitable resources to prevent staff burnout
• Empower teams by ensuring resources have the skills, knowledge, and training necessary to complete allocated work
• Optimize engagement performance by matching the right resources to the right task, at the right time
• Ensure successful, profitable client engagements

Benefits of effective resource allocation

Getting it right isn’t always easy, but when done right, effective resource allocation can deliver multiple benefits, including:

1. Improve staff retention

Poor resource allocation can lead to staff burnout. A 2024 report from accountancy wellbeing charity CABA found that 74% of accountants had experienced indicators of burnout in the previous 12 months, with 63% of those surveyed saying their work environment contributed to these feelings. As a result, 45% of respondents said feelings of burnout had affected their ability to work.

Using the right allocation process, businesses can drive better utilization, employee satisfaction, and retention simultaneously. An effective allocation system will optimize resource utilization rates without overburdening your people.

Dayshape CEO Matt Cockett explained in a piece for CEO Monthly: “Resource managers don’t just know who is working where. They understand which teams are stretched, which individuals are nearing burnout, and where capacity is being wasted. They can tell you if a growth plan is achievable with current headcount, or if your most valuable people are stuck on the wrong work.”

Efficient resource allocation methods should prevent other capable and available resources from being overlooked, ensuring tasks are assigned both fairly and strategically. What’s more, by taking into account individual preferences, interests, and career aspirations when allocating work, your firm can better support professional development and retention.

2. Increase client satisfaction

Clients will expect to see individuals with the right qualifications and experience assigned to deliver their engagements; that means those with appropriate skills, insight, and knowledge relevant to the client’s specific business and industry. This could include a combination of technical skills or sector experience, with particular ‘soft skills’ required on top. 

However, these skills do not all have to reside in one person, location or time zone. An optimal resource allocation system considers these details and identifies a team with the most suitable skills for each project stage. A resource management system that can utilize your people in the best way will benefit staff and client satisfaction alike.

3. Enhance efficiency

In the long term, an effective resource management strategy can help your firm to strike the right balance between over and under-utilization of resources. Maintaining this balance reduces the risks of overburdening your team or overspending on resources that are not required.

Allocating the right resources to the right engagement at the right time boosts efficiency and cuts the risk of overruns, enhancing project timelines and quality.

4. Cost savings

Proper resource allocation prevents the overuse or underutilization of resources, reducing unnecessary expenses. The combination of greater visibility across all resources and engagement financials helps to ensure projects remain profitable and on schedule, maximizing return on investment and supporting cost efficiencies.

5. Drive growth

Efficient allocation enables businesses to scale operations effectively without resource wastage. Strategic resource allocation ensures that financial and human resources are directed towards the highest priority projects, driving growth.

Effective resource allocation also enables organizations to adapt to changing market conditions quickly, creating resilient foundations and opportunities to size new opportunities.

Common resource allocation challenges

There are some common challenges that can impact the efficiency of resource allocation, including:

• Poor communication: failing to effectively communicate how resources have been allocated can lead to issues, potentially impacting project delivery
• Changing demands: evolving demands and last-minute client requests can disrupt planned schedules, requiring an agile resource allocation solution 
• Staff preferences: if team members’ preferences are not taken into account, this can impact staff morale. However, allocations based on preference or recency bias don’t necessarily support fair progression, so there’s a balance that needs to be struck
• Inadequate data: inadequate or outdated data on staff skills or qualifications can result in the improper allocation of resources, causing more issues further down the line

How to manage resource allocation for a project

When allocating resources to a particular project, it’s important to follow the below steps to ensure all goals and priorities have been considered.

1. Establish goals

The first step is to define the project’s goals, objectives, and scope. This will help with prioritization, ensuring that the right resources are allocated to the right tasks to achieve the intended outcomes. The risk of resources being wasted is significantly reduced as a result, supporting cost efficiencies too. Clearly setting out goals helps to keep everyone motivated and accountable to deliver the best outcome for the client.

2. Identify available resources

The next step is to identify which resources are available for distribution. This may include:

• Staff
• Contractors
• Freelancers
• Specific skills, qualifications and experience

3. Prioritize tasks

Tasks then need to be prioritized to ensure resources are allocated in the most impactful direction first. Priorities may be determined based on strategic value or likely return on investment, depending on the project goals - refer back to these when setting out priorities. This will help to prevent resources being wasted on low-value or low-impact activities, supporting overall efficiency.

4. Allocate resources

Allocating the right resource combinations for complex engagements demands thorough, up-to-date knowledge of your resources' skills, capacity, and availability. It also requires the ability to accurately predict the impact that resourcing decisions will have on engagement performance. Resource management software will assist you with this, monitoring resource allocation and enabling real-time adjustments. 

Communication is key here too, to ensure everyone is aware of the resource allocation plan, and can raise any concerns to prevent bottlenecks before the project delivery timeline begins.

5. Review and adjust as needed

Once resources have been allocated, the plan should be regularly reviewed to address any changes in project scope, timelines, or resource availability. Agile resource management software enables plans to be updated in real time, so allocations can be adjusted as needed. It’s also important to evaluate the performance of the resource allocation plan once it’s live. Dayshape’s resource management software provides you with analytics and reports from a customizable dashboard, so you can review, amend, and plan for the future.

Advantages of resource allocation software 

When you consider the number of moving parts required across multiple, large-scale client engagements, optimizing resource allocation can be incredibly challenging. However, utilizing an intelligent resource management software solution can help your firm overcome these complexities, and allocate resources more strategically. 

1. Reduce admin

Resource management software can allow you to reduce the admin burden on your team and optimize your resource planning with automated best-match resource allocation.

Advanced resource management software streamlines allocation by automatically identifying the best candidates by:

• Using suitability scoring
• Considering skills and qualifications
• Looking at availability, location, and key criteria

This automation increases efficiency, freeing up time for resource managers to focus on strategic tasks. 

2. Explore alternative resourcing decisions 

Resource scheduling software centralizes your resources, providing greater visibility into alternative options. Optimize resource allocation by considering skills, expertise and availability at a national and global level to support more agile decision making.

Unexpected changes or the sudden need for additional resources can occur, but intelligent software enables firms to explore staffing options and adapt to changing demands without disrupting existing schedules.

Enhanced visibility over available resources makes it easier to consider alternative resourcing decisions when needed. Filters and automated alerts help resource managers identify schedule clashes, allowing them to prevent or resolve conflicts in real time. 

3. Track preferences to boost staff morale

Track team members’ skills and preferences to support fulfilling career progression to bolster staff morale with resource allocation software that empowers team members by granting them greater autonomy in their work. During allocation, individuals can indicate their preferences for task types, engagements, or industries from available unassigned work that aligns with their grade, location, and business unit.

Managers can then support career development and staff retention efforts by considering skills and individual preferences when allocating work in the system. In addition to attracting and retaining talent, the ability to match skills and preferences to the work assigned will contribute to higher quality engagements, and provide greater visibility of skill shortages.

4. Increase transparency

An automated resource allocation system reduces the chance of human bias or favouritism by emphasising capacity and best skills-experience match. With proper tools and governance, staff see that work is assigned based on set criteria rather than connections, preference or recency bias. 

Offering this transparency within the resource allocation process is increasingly important for creating a fairer and more inclusive workplace, which can positively impact:

• Overall performance
• Productivity
• Staff engagement and retention
• Client relationships
• Firm culture

Frequently asked questions

What is resource allocation in project management?

Resource allocation is a subprocess of resource or project management, involving the strategic selection and assignment of available resources to a task or project in support of business objectives. In contrast, resource management is the overall process of examining all of your resources and deciding how they’ll be used.

In project management, resource allocation is the strategic distribution of assets, including time, budget, workforce capacity, and individuals’ skills to a particular project to drive the most successful outcomes.

Who is responsible for resource allocation?

The person or department responsible for resource allocation can vary depending on the organization. The responsibility may fall to:

• Senior management
• Project managers
• Resource managers
• Finance departments
• Department heads or team leaders

What are the key methods of resource allocation?

Businesses use several different methods of resource allocation, such as: 

• Priority-based allocation: this method prioritizes high-impact projects first
• Cost-benefit analysis: with this approach, resources are directed to projects with the best ROI 
• Strategic planning: this method of resource allocation aligns available resources with long-term business goals
• Just-in-time (JIT): this approach assigns resources only where they’re needed in order to minimize waste

What is a good example of resource allocation?

Grant Thornton UK successfully centralized its resource management with Dayshape’s AI-powered resource allocation software. The professional services firm was previously using legacy resource management software, supplemented by spreadsheets. After transitioning to Dayshape, the firm reported it was subsequently able to:

• Make objective, commercially driven resource allocation decisions
• Access real-time resourcing data, thanks to seamless integrations with HR and CRM systems, and timesheets
• Receive powerful, accurate reports, combining data from integrations

Laura Brierley, Project Implementation Director and Head of Agile Talent at Grant Thornton UK, commented: "With Dayshape's reporting, we now have accurate and complete data from all teams, which is hugely beneficial, and we can be a lot more proactive as a result.

"From a resource management maturity point of view, we'll continue to enhance and evolve how we use Dayshape to further benefit from the solution. We'll start to leverage the next level of AI scheduling, Advise, which will take time. But considering the progress already made, and Dayshape's support, we're confident that we'll get there." 

What are the best tools for effective resource allocation?

There are various tools that can support effective resource allocation, such as:

• Gantt charts: these charts provide a visual overview of a project’s timeline, clearly highlighting which resources have been allocated where and when. Gantt charts are easy to interpret at a glance 

• AI-powered resource management software: Dayshape’s all-in-one AI-powered resource management software allows organizations to allocate resources, manage budget, create Gantt charts, schedule tasks, and view reports in one location, supporting overall efficiency

• Project management tools: project management and task management tools can be used alongside resource allocation software to help individual team members manage their workload day to day

What’s the best way to allocate resources across multiple projects or departments?

Allocating resources across multiple projects or departments at one time can be complex, as there may be competing priorities and different budgets to consider. To manage large-scale resource allocation effectively, it’s important to determine the highest priorities, before utilizing data-driven tools and software to gain intelligent insights into available resources, and where they could be allocated.

Communication across teams and cross-department collaboration will also be key to ensure effective resource allocation on this scale, to prevent work being duplicated, and to share resources to drive efficiencies where possible.

Book a resource allocation software demo 

Regardless of your firm's size, effective resource allocation hinges on identifying, matching, and utilizing your team's skills and capacity in line with client demand. The right resource management tools will boost profitability, client satisfaction, and team morale.

Start transforming your organization’s resource distribution today. Book a resource management software demo, or contact us to find out more.