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Resource Allocation: A Complete Guide

Anyone in charge of any sort of project has a certain amount of resources available to them. It is up to them how, when and where to allocate these resources so they can be used as efficiently as possible.

Project managers cannot just wake up one day, and randomly start allocating workers, materials, and budget to various projects — they need to have a plan. This plan is what we call a resource allocation strategy.

These managers must be careful in how they allocate resources, and they must also be able to adapt their strategy as the project develops and changes.

In this article, we will discuss what resource allocation is, the different types of resources that can be allocated, its benefits and challenges, as well as how to create the optimal allocation strategy for your firm.

Let’s get going!

What Is Resource Allocation?

Resource allocation is the process of assigning people, materials, and budget to tasks so they can be completed efficiently and on time.

The goal of resource allocation is to use available resources in the most efficient way possible. This means that project managers must carefully consider what tasks need to be completed, how long they will take, and what resources are needed before making any decisions.

What Types of Resources Can be Allocated?

There are three main types of resources that can be allocated: people, materials, and budget.


The most important resource in any project is people. Without the right people working on the right tasks, it is very unlikely that a project will be successful.

When allocating people to tasks, it is important to consider their skills, experience, and availability. It is also important to make sure that people are not overworked or underutilized.


Another important type of resource is materials. Materials are any physical resources that are required to complete a task. This could include things like tools, equipment, or raw materials.

When allocating materials to tasks, think about their cost, availability, and lead time. The materials must also be used as efficiently as possible in order to reduce unnecessary wastage.


The last type of resource that can be allocated is budget. Budget is the money that is available to pay for resources, and it needs to be carefully managed in order to ensure that a project does not run out of funds.

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Resource Allocation Example

In order to understand resource allocation, let’s consider a real-world example.

Imagine you are in charge of organizing a music festival. You have a limited amount of time and money to work with, so you need to be careful in how you allocate your resources.

First, you need to decide which tasks need to be completed in order for the festival to be a success. These tasks might include booking bands, renting equipment, advertising the event, and so on.

Once you have a list of all the tasks that need to be completed, you can start to allocate resources. For example, you may need to allocate a certain number of workers to book bands, rent equipment, and so on.

You will also need to allocate a budget for each task. This could consist of the need to spend more money on advertising the event than you do on renting equipment.

Once you have allocated all of the resources, you can start working on each task. You will need to monitor the progress of each task and make sure that it is completed on time and within budget.

If one task starts to fall behind schedule or over budget, you will need to re-allocate resources so that the project can stay on track.

Types of Resource Allocation

There are two main types of resource allocation: centralized and decentralized.

  • Centralized: in this type of resource allocation, all decisions are made by a single person or group. This person or group is typically in charge of the entire project.
  • Decentralized: decentralized resource allocation consists of decisions being made by multiple people or groups. This can be helpful if there are different areas of expertise that need to be considered.

Which type of resource allocation is best for your project will depend on the size and complexity of the project, as well as the skills and experience of those involved.

4 Benefits of Resource Allocation

There are many benefits to using a resource allocation strategy. Let’s go through the most important ones to understand why a resource allocation strategy could be beneficial for your firm.

Increased Efficiency

By carefully considering which tasks need to be completed and what resources are required, project managers can ensure that workers are used in the most efficient way possible. This can help to save time and money on projects.

Improved Communication

A resource allocation strategy can help to improve communication between project managers and workers. By clearly outlining what tasks need to be completed and what resources are required, there is less room for misunderstanding and confusion.

Reduced Stress

Carefully planning how resources will be used can help to reduce stress for both project managers and workers. Having a clear plan can make it easier to stay organized and on track, and it can also help to avoid last-minute scrambles when unexpected problems arise.

Greater Control

Project managers can have greater control over the outcome of the project when they make decisions about how resources will be used upfront. This can be especially helpful for large and complex projects that require precise coordination.

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4 Challenges of Resource Allocation

While there are many benefits to using a resource allocation strategy, there are also some challenges that need to be considered. These include the following:


Creating a resource allocation strategy can be time-consuming, especially for large and complex projects. Project managers need to take the time to understand all of the tasks that need to be completed and what resources are required for each one.

Requires Accurate Data

In order for a resource allocation strategy to be effective, it must be based on accurate data. This means that project managers must have a good understanding of the project timeline and the resources that are available.

Can be Inflexible

Once a resource allocation strategy has been created, it can be difficult to make changes. This is because changes might require re-allocating resources which can impact other parts of the project.

Requires Communication

A resource allocation strategy will only be effective if it is communicated effectively to all members of the project team. This communication is essential so that everyone understands the plan and knows what their role is.


10 Top Tips for Your Resource Allocation Strategy

Here are a few tips to keep in mind when creating your resource allocation strategy:

  • Be realistic in your estimates. It is better to overestimate the time and resources needed for a task than to underestimate them.
  • Do not overcommit your resources. If you do not have enough people or materials to complete a task, it will only cause delays and frustration.
  • Be flexible. Things will inevitably change as the project progresses, so be prepared to adjust your resource allocation accordingly.
  • Communicate with your team. Let them know what your plans are and why you are making certain decisions. This will help them understand and buy into the process.
  • Keep an eye on your budget. Make sure you are not spending more than you have allocated for the project.
  • Monitor your progress. Regularly check in on the status of tasks and make adjustments as needed.
  • Be prepared to adjust your plans. The resource allocation strategy is not set in stone, so be willing to change it as the project evolves.
  • Make sure everyone is on the same page. Hold meetings and send updates to keep everyone informed of the latest changes.
  • Take into account the skills of your team members. Assign tasks based on their strengths and abilities.
  • Do not forget about the little things. Pay attention to the details and make sure all the resources are accounted for.

How Can You Create an Effective Resource Allocation Strategy?

There is no one-size-fits-all answer to this question, as the best resource allocation strategy will vary depending on the project and the resources available. However, there are some general steps that can be followed to create an effective strategy:

  1. Understand what tasks need to be completed and how long they will take.
  2. Identify the resources that are available and what they can be used for.
  3. Decide how to best use the available resources to complete the tasks on time and within budget.
  4. Adjust the resource allocation strategy as needed throughout the project.

Resource Allocation Software

There are a few different software platforms that can be used for resource allocation. The best one for you will depend on the size and complexity of your project, as well as your personal preferences.

One popular option is Microsoft Project, which is a tool designed specifically for project management. It includes features such as task scheduling, resource assignment, and cost tracking.

Another option is Smartsheet, which is a more general-purpose spreadsheet application that can be used for resource allocation. It includes features such as task management, Gantt charts, and real-time collaboration.

Finally, there is Wrike, which is a cloud-based project management platform that includes features such as task management, resource assignment, and file sharing.

Whichever platform you choose, make sure it has the features you need to create an effective resource allocation strategy.

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Final Thoughts

Resource allocation is a critical part of any project and requires careful planning to be done effectively.

By understanding the different types of resources that can be allocated, the benefits and challenges of resource allocation, and how to create an effective strategy, project managers can ensure that their projects are completed on time and within budget.