Difference between Resource Allocation and Resource Utilization

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Difference between Resource Allocation and Resource Utilization

Project managers need to handle many responsibilities and juggle various projects. While doing this, they need to ensure that all the projects are completed on time and within the stipulated budget. Their role requires managing various moving parts and making decisions about the project in advance or instantly many times. This dynamic nature of projects at times makes it difficult for even the best resources and teams to fulfil clients' expectations. Businesses these days depend on efficient resource planning to make quicker decisions and do problem-solving in real-time. Though doing planning, resource allocation, and scheduling are critical to ensuring a project is successful, mostly, project managers miss a key element of the process-measuring and monitoring the resource utilization. Read on to find out what do we mean by resource allocation and resource utilization, how are these terms different, and how can you improve these processes.

What is Resource Allocation?

Resource allocation is an imperative step in project management, especially in the resource planning process. While doing resource allocation, an organization determines where and how to allocate their resources to produce goods or deliver services. Resource allocation is also termed as scheduling where a project or resource manager identifies and then assigns resources for a stipulated time period to various tasks or projects. Here, a resource could include labour, equipment or machinery, some latest technology, financial resources, etc. Resource allocation is a project management process that is closely associated with resource management. Usually, when 100% capacity is assigned, you can ensure maximum resource utilization. Mostly, your resources will be partially or fully available and hence, the project and resource managers should consider the resource availability before allocating them to various tasks or projects.

What is Resource Utilization?

Resource utilization is a term that describes how much available time does an employee have that can be used for billable tasks. Resource utilization percentage or rates display how much time is your team spending on billable tasks and how productive is each resource. Practically, this data or percentage helps supervisors and project managers to measure productivity and billing efficiency. It also helps to determine if the pricing for your projects has been done correctly and you are making a profit. To handle multiple projects in one go, you need to juggle multiple resources within teams and keep in mind cross-collaboration. Though managers always try to ensure that their team members are not overbooked or overburdened, monitoring resource utilization can help a lot to make the process much simpler.

Difference Between Resource Allocation and Resource Utilization

Two main aspects of strategic resource planning in project management are resource allocation and resource utilization. However, it is important to distinguish between these terms so that you can plan a successful project, resolve any probable resourcing problems, and aim for profitability. Though these terms sound similar, they are very different aspects of project management. Resource allocation involves assigning resources or team members to some specific activities or tasks. During the project lifecycle, project managers track how these tasks or activities are going and may reorganize the workload to other resources if required. Resource allocation also means assigning other company's resources for achieving their goals and objectives. In contrast, resource utilization aims to measure how efficiently, a project manager or organization is using its resources. Therefore, resource allocation means scheduling, allocating, or assigning people to tasks, while resource utilization means strategically measuring overall team or individual resource performance.

Resource allocation alone cannot offer the full view that project managers need for strategic decision-making. This is how resource utilization is different and why it is important in a project's success. By tracking resource utilization, a manager can check the team's utilization or total effort on various levels and provide a comprehensive view in real-time. Therefore, resource utilization helps to monitor actual allocated time or effort versus the total available hours. The clarity one gains from calculating resource utilization and the actual hours worked vis-à-vis planned hours across projects enables the managers to do strategic capacity planning. This, in turn, helps to maximize your resource pool, increase billable resources, and utilize a team optimally so as to deliver quality output, on time.

The Benefits of Tracking Resource Utilization

Resource utilization enables measuring if a team member is productive or not, and if someone is over or under burdened. By monitoring a resource's billable and non-billable hours, a supervisor or manager can figure out their team's overall productivity and do balanced workload management. This is where resource utilization is different from resource allocation as it is a key performance indicator (KPI) that helps to measure a person or team's efficiency of a team to gauge how the available resources are being used. Let's see what the other benefits of resource utilization are.

  • Efficient utilization of resources is the key to maintaining productivity and profitability. It also helps in avoiding any resource from being overburdened due to excessive workload or reaching burnout
  • Multiple projects could be managed more efficiently with better visibility, thus, cutting down the risk of oversights
  • Optimal utilization of resources offers a better return on investment (ROI)
  • Ensures that some top resources are not overbooked or any team member is not over-or under-utilized
  • Allows project managers to be agile by rescheduling resources if required to avoid any issues surfacing or projects getting derailed

Using a Time Tracking Tool to Track Resource Utilization

After you calculate the resource utilization rates, you should monitor the time spent by your team to understand if they are using it productively or not. The quickest and best way to do this is to implement a time tracking software that can handle all these activities automatically. Monitoring your team's time manually, without the right tool will enhance the effort and not give you accurate results. Consider using a top-rated resource management tool, eResource Scheduler that has an in-built time tracking feature. This helps project managers to track the total hours your team is working and how many of those hours are spent on billable/non-billable tasks. This data is stored in real-time and is used to generate various detailed reports and dashboards that show how productive your resources have been over a time period.

Efficient Resource Allocation and Resource Utilization with eResource Scheduler

If you wish to use your resources optimally while ensuring effective staffing or resourcing for your projects, then implementing a resource management tool is your best bet. Such a tool will also enable the identification of the best-suited team members for the right job. eResource Scheduler provides real-time visibility into the performance and productivity of your team members and tracks the status of your projects. It also helps to improve the overall resource utilization between 18 to 30%. What's more? eResource Scheduler enables load levelling across multiple resources and helps to get accurate scheduling estimations based on historic data. Advanced resource allocation tools like eResource Scheduler can keep track of resource and project status in real-time. You can customize various reports and dashboards to suit your requirements. So, if you want to get an ideal resource plan, sign up for a free trial soon and gain the advantage of well-informed resourcing decisions.

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