What is Resource Management? Full Explanation

What is Resource Management?

So, what is resource management? Resource Management Definition: Resource management is a process that involves pre-planning, allocating, tracking, and optimizing resources to maximize operational efficiency. In most cases, “resources” is a management slang way of speaking for an individual, but it can also mean physical assets and facilities, depending on the industry you’re in.

A resource is everything that is required to execute a task or project, whether it is the skill set of employees or the adoption of software. Therefore, there are several types of resource management depending on the type of project you are working on. For example, if you’re planning an event, some of the resources include scheduling employees for the event, planning to use vendors for promotional materials, investing in software that allows attendees to register and includes budgeting for everything, from gifts to catering.

Resource management has become an essential part of any organization firm or business today. It emerged as a separate discipline when organizations became complex with a matrix structure and expanded into multiple geographies. Its components include resource scheduling, resource planning and forecasting, capacity planning, business intelligence/reporting, integration with other related applications, and more.

Everything you need to complete your project comes in a variety of resources. Knowledge-intensive companies such as digital agencies, consulting firms, or software stores rely heavily on human skills, while for a manufacturing company, specialized equipment would also count as a resource.

Why is Effective Resource Management Important?

Resource management is about doing more with less as part of project management. Nobody likes waste, especially in business. Resource management focuses on optimization and efficiency. When you know what you need to make a project successful, you can effectively understand how to allocate resources efficiently.

For some companies, optimal efficiency is so important that they only hire someone dedicated to resource management. Also known as a resource manager. What does a resource manager do? While project managers are responsible for creating and assigning tasks to complete the project, resource managers are responsible for allocating the necessary resources to make the project a success.

Importance of Resource Management / Managing Resources

Resource management can require all kinds of planning, but without the resources available, your ability to deliver projects on time and on budget would be a wild guess. Plus, it creates transparency and visibility into your current workload and capabilities. A resource overview can help you make the most of your team’s time, spot resource limitations, and resolve various conflicts.

Resource management plays a vital role in improving the profitability and sustainability of the business. Let’s clarify how enterprise resource management can help contribute to both the bottom line and profitability of any business.

• Minimize project resource costs significantly

With visibility across the enterprise, resource managers can access cost-effective global resources from low-cost locations. Having the right mix of local and global resources helps reduce project costs. Assigning the right resource to the right project allows them to complete the delivery on time and on budget. Resource managers can control costs by distributing key resources evenly across projects rather than on one high-priority project.

• Improving effective/billable resource utilization

Resource management software helps managers forecast workforce utilization in advance. Consequently, resources can be mobilized from non-billable to billable and strategic work. Sometimes when resources are removed from projects, there is no proper function to attach them. So eventually these resources end up on the sidelines. Resource managers can initially funnel these resources into non-billable tasks before the appropriate billable/strategic projects are quickly assigned.

• Bridge the capacity vs. demand gap proactively

Demand forecasting, a feature of project resource management, allows administrators to forecast resource demand in advance. This allows them to assess and analyze the skills gap within existing competition. After identifying deficiencies and excesses, resource managers can formulate an action plan to proactively close the gap between capacity and demand.

• Using scarce resources effectively in the matrix organization

Resource management process provides transparency in communication and thus facilitates effective sharing of highly efficient resources in a matrix organization. Scarce resources can be used on different projects instead of one high priority project.

• Monitor and improve organization health index

Employees look to their leaders for professional development. Failing to motivate and provide opportunities for career growth will primarily lead to low engagement, productivity, and unplanned burnout. Regular monitoring of their skills and performance is beneficial to help them improve and add more value to the organization.

What are the advantages of resource management?

1. Avoid unexpected delays: By understanding your resources in advance and planning how to use them, you can fix gaps or problems before they occur.
2. Prevents burnout: Effective resource management allows you to avoid “over-allocating” or “depending” on resources by gaining insight into your team’s workload.
3. Delivers a safety net: Suppose the project failed due to lack of resources. Resource planning and management establishes that you did all you could with what you had.
4. Create transparency: Other teams can gain visibility into your team’s bandwidth and plan accordingly if your team is at capacity or available to take on new projects.
5. Measurable Efficiency: With a high-level understanding of what it takes to manage and execute an upcoming project, you can effectively plan and measure ROI and utilization versus efficiency.

Challenges in Resource Management

The efficient use of resources comes with many challenges. In the ideal project scenario, each resource has a schedule and tasks are assigned in a way that does not exceed the limits of their working hours. Sounds simple, right?

Read Also: Project Monitoring Measurement Analysis and Improvement

But upon closer inspection, there’s more to it than you might think, especially if you need to monitor and manage hundreds of those schedules with thousands of tasks. So it’s not just about handing in homework. There are other factors that affect the process, such as resource availability, estimates, dependencies, priorities, change requests.

What are some resource management Techniques, Concepts & Components?

Now that you understand what is resource management? Let’s see how you can start applying it to your projects.

• Resource Allocation

Resource allocation helps you make the most of available resources. This is the process of approaching projects using available resources in the most efficient manner, based on the skills and abilities of team members.

To get a clear view of allocation, project managers often use resource allocation reports. These can provide everything from a high-level view to detailed overviews of resource availability, helping you avoid schedule delays and budget overruns. The better reporting capabilities you have at your disposal, the more transparency and efficiency your projects will have.

• Resource Leveling

Resource leveling techniques aim to discover unused or inefficiently used resources within the organization and work them to your advantage. An example of resource leveling is having a content writer with graphic design experience help the design team with smaller content tasks that require design work. If one team member can flex their design skills, the design team won’t need to hire a freelancer if they’re suddenly inundated with design requests.

• Resource Forecasting

It is important to have a resource management plan to optimize the efficiency of people, materials and budget. Resource forecasting allows you to forecast your future resource requirements before a project begins.

Resource forecasting helps managers predict the level of resource utilization in advance and estimate the probability that resources will end up in the bank. In addition to these, they can also warn about the capacity required for the projects.

• Resource Scheduling

Resource scheduling involves identifying and assigning resources over a specific period of time for various project tasks. These tasks can be billable, non-billable, or anything from the BAU job.

With the company’s centralized Gantt chart view, resource scheduling eliminates spreadsheet silos. It also allows you to leverage efficient resources to complete the project within budget and on time.

• Resource Utilization

Resource utilization measures the amount of time employees spend on various project tasks compared to their availability. It is a key performance indicator in the modern business landscape as it directly affects the bottom line of the company.

• Resource and Capacity Planning

Resource planning is the comprehensive process of planning, forecasting, allocating, and utilizing your workforce in the most efficient and intelligent way. The Resource capacity planning is the process of analyzing and closing the gap between capacity and demand well ahead of the curve.

These two components are critical to ensuring that no projects become vacant or excess capacity is wasted. Simply put, resource and capacity planning maximizes optimal utilization and timely delivery of the project.

• Business Intelligence and Reports

Business Intelligence provides actionable insights by performing comprehensive data analysis. Using real-time data, custom reports and dashboards are generated on important resource management metrics. These reports strengthen the decision-making capacity of administrators and allow them to monitor the general index of health of the resources.

Read Also: What is Project Control Process?

Resource Management Skills Every Manager Should Have!

Resource managers have many responsibilities in managing the company’s most important investments. From understanding the talent pool to being the key link between the PMO and the workforce, you have a lot on your to-do list.

• Communication Skills

Resource managers are responsible for fulfilling resource requests from project managers by assigning tasks to the correct resource. As they act as mediators in this process, exemplary communication skills are imperative. This will allow them to better understand the roles and responsibilities of resources and allow them to comfortably reason with project managers.

• Conflict Resolution

Often multiple project managers request similarly qualified resources. In this case, if the priority criteria of the project are not set, it can lead to conflicts. In addition, the lack of transparency in the definition of goals and objectives leads to unearthing resources, which generates discrepancies. A resource manager’s job is to step in, set expectations, and make sure everyone is on the same page to keep the job moving. That is why conflict resolution skills are a must.

• Domain Knowledge

Since resource managers have an obligation to allocate the right resources to the right job, it’s important that they have a good understanding of the skills. If a resource manager without an engineering background works for an engineering company, it will present resource planning challenges in the long run. For this, they need to have domain experience for more clarity.

• Proactive Planning

Every project manager aims to complete the project on time and within budget, which makes planning ahead an important aspect. Since success depends heavily on the workforce, resource managers must be very proactive in meeting demand. They must be resourceful in making calculated decisions about implementing appropriate resource treatments.

• Negotiation Skills

Resource planning is a complex task and presents myriad challenges to the resource manager. For example, a project manager may request an employee with an advanced level of technical skill. If a skill is missing and it’s expensive to hire another resource, managers need to convince project owners. In such cases, managers should be able to negotiate well and get the job done.

• Risk Management

What if a resource takes a long, unplanned vacation? What happens if an unplanned accident occurs? An ongoing project can stall. How would a resource manager handle this situation? These situations will be easier to handle if you have a backup plan. Risks are unavoidable in the project scenario. Therefore, resource managers need to hone their risk management skills along with planning ahead to keep the project on track.

Types of Businesses that Require Enterprise Resource Management?

Organizations with matrix-based configurations, cross-functional teams, and shared service models require enterprise resource management. The degree of complexity to which business processes adopt depends on their size and functions. Today, resource management is part of the DNA of any organization.

Other important factors that constitute the need for resource management are companies working on multiple projects in an ad-hoc environment. This means they are exposed to many changing variables, such as project priorities, resource availability, and budget constraints.

These complexities demand enterprise-wide visibility and real-time updates to help managers stay informed at all times. They need to diligently manage their resources and complete projects within budget and on time.

Read Also: What is Purchasing Management System?

Creating a resource management framework is only half the battle won. It is equally important to implement this strategy using appropriate resource management tools according to the needs of the organization. Otherwise, mismanagement of resources will have an adverse effect on the entire pool of resources and the reputation of the company.

Consequences of Poor Resource Management Strategy

• Increased Project Costs

The inefficient allocation or reservation of high-cost resources instead of low-cost but equally skilled labor increases the project budget. Since the skills and competencies of the resources are not leveraged in the most effective way, the cost of the project will increase, leading to unnecessary budgeting.

• Reduced Employee Performance

Poor employee performance is the first and foremost indicator of suboptimal resource management. Unrealistic expectations, excessive assignments, or reservations can contribute to low engagement and productivity without considering the interests and skills of the employee. This will negatively affect the quality of the project and lower employee morale.

• High Employee Turnover

When employees do not fully exploit their strengths and abilities they feel dissatisfied and dissatisfied. Overuse due to unrealistic deadlines can lead to employee burnout. These circumstances may force your valuable talent pool to seek opportunities elsewhere, leading to a gradual increase in employee turnover.

• Delays in Meeting Project Deadlines

Without visibility into team members and their skill sets, resources can be assigned to projects that don’t match their competencies. This can cause a delay in delivery, as a significant amount of time will be spent learning on the job before becoming productive. The delay in meeting the deadline also affects the cost of the project.

• Client Dissatisfaction and Loss of Business

Inefficient resource management practices lead to misallocation of resources, leading to teams taking longer to accomplish project goals. Tight deadlines and heavy workloads can put your team under pressure, increasing the chance for mistakes. Late delivery, compromised quality, and budget spikes jeopardize the health of the project, resulting in customer dissatisfaction and eventual business loss. I hope you like this articles related to What is Resource Management? Full Explanation. For more topics continue visit to www.educlicker.in.