Resource Management: Why It's Important and How to Optimize With Order.co

Whoever said, "Failing to plan is planning to fail," was probably involved in project management.

Planning out the minute details of a project paints the most accurate path to completing it on time and within scope and budget. Estimating your human capital, supply chain, and monetary needs is vital to that planning. Milestones, spreadsheets, and delivery deadlines mean nothing unless you have the people, inventory, and funds needed to perform.

This is the heart of resource management. This set of practices and tools ensures that projects perform well, come in under budget, and finish on time.

This article covers the essentials of resource management. Read on to learn:

What resource management is
Why it’s important to project success
Benefits of implementing resource management
Techniques used in managing project resources
How technology can help drive these benefits

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What is resource management?

Resource management means developing an accurate outline for allocating the human capital, costs, and materials needed to complete a project.

Resource management is as much an art as a science. It requires:

Data to make informed spending decisions
Visibility to discover opportunities for project, labor, and procurement savings
Collaboration to ensure stakeholder alignment
Imagination to consider contingencies affecting the project

Growth-minded businesses prioritize resource management to achieve company goals and drive revenue.

What does the typical resource management process look like?

When setting up or refining your resource management process, aim to cover each of the following steps in detail. The complete process offers full visibility into your current capabilities and resources. It provides a way to improve your future outcomes further.

1. Establish objectives and goals

Companies must first decide upon the overall objectives in the resource management process. Organizations should build expectations for cost or resource overages and contingencies to address potential issues. By creating clear objectives and goals during the resource management process, companies ensure their teams stay focused throughout the project lifecycle.

2. Identify resources

Teams must collect, categorize, and document the resources needed to complete a project. This includes people, costs, and materials. Consider the skills required for specific tasks and determine if external contractors or additional resources are necessary. Then, establish a budget for personnel, materials, and other associated costs.

3. Plan the project timeline

A project timeline outlines the steps and milestones needed to reach completion by an expected date. The timeline should identify when specific tasks must be started and completed as well as outline additional checkpoints. It’s also important to establish contingency plans for unforeseen delays or changes in resource availability. A well-crafted project timeline helps anticipate and mitigate delays.

4. Assign roles and tasks

Projects work best when stakeholders have specific roles and responsibilities and handle them within expected timeframes. Utilizing individuals with the appropriate skills for tasks maximizes efficiency and reduces conflicts. It also creates accountability and helps the team monitor progress.

5. Track the project

Tracking progress and budgeting for resource management helps teams measure progress against the initial plan. Every project has changes and delays, but with proper planning, teams have the resources to complete each task as close to the agreed timeline as possible.

Monitoring expenses against budgets helps identify potential issues with achieving targets. By tracking progress and budgeting for resource management, project managers ensure that teams are on track.

6. Plan refinement and updates

Updating plans and implementing course corrections is vital for project management. This may involve adjusting tasks, reallocating resources, or extending deadlines to maintain achievable goals and team motivation. Strong resource management leaders factor in unforeseen obstacles like scope creep to prevent resource shortages. They also use available data to evaluate progress and refine allocations.

7. Monitor results

Clear benchmarks for success help teams measure progress and make modifications to create closer plan alignment. Regularly monitoring results and refining processes can help teams stay agile and maximize their success on projects.

Not only does monitoring benefit the current project, but its results are also vital for refining the resource management process — making future projects easier and more streamlined.

Why is resource management important?

Resource management is a critical component of overall project management. It directly impacts a team’s ability to perform its role and allows organizations to deliver on their goals as projected.

Some studies report that organizations that adopt agile and high-maturity processes (processes that are incremental and data-driven) report a:

21% improvement in meeting goals and intent
21% increase in completing projects within budget
24% improvement in on-time delivery
17% reduction in “scope creep”

As more businesses prioritize cost and process optimization, resource allocation becomes the standard measure of success. Organizations are pressed to do more with less and maximize the return on spending. Project resource management empowers organizations toward those goals.

Implementing a resource management approach provides more stability and better experiences, including:

Identification of gaps and challenges: A carefully planned project accurately estimates the work hours, cash, and tangible resources required for optimal performance. Effective resource management gives visibility into the team members on hand and the skill sets and materials remaining to be sourced. It ensures enough people, funds, and supplies to get the job done within scope.

Greater agility: Planning cannot save a project from every setback. However, by carefully allocating resources for new projects, teams have time to deal with challenges or changes in the plan. Agility is especially important in the current climate of delayed supply chains and economic uncertainty. Resource management includes contingency planning that keeps projects on track.

Increased employee satisfaction: Successful initiatives heavily rely on the energy and institutional knowledge of the team. Overworked teams and contributors are subject to burnout. This puts skills allocation in jeopardy as key employees head for greener pastures. By planning resources and work hours effectively, companies protect employees from burnout and reduce the likelihood of turnover.

Good project management spreads work evenly across available staff members, increases communication, reduces friction, and improves general working conditions. This creates an environment where everyone can be heard, understood, and respected for their contributions to the goal.

Benefits of resource management

Organizations prioritize resource planning to take advantage of broad cost and operational benefits. Implementing mature project management techniques, such as project frameworks, technology, and methodologies, saves teams up to 28 times more money.

Effective project management and resource management drive many benefits, such as:

Increased operational efficiency: Business optimization is about both processes and resources. Using a resource management approach, teams have the visibility to form and pursue strong business goals. Over time, continuous improvement can increase efficiency and productivity.

Improved cost efficiency: Planning gives teams leverage to negotiate and achieve cost optimization on salary, professional services, supply purchases, and category management. Strategic sourcing with a preferred list of vendors is better than unfocused, transactional buying. Resource management also reduces redundancy and cash leaks caused by poor planning.

Strengthened supply chains: Building supplier partnerships through strategic sourcing creates resiliency in the supply chain. Businesses may realize better contract terms, early payment discounts, or other benefits with preferred vendors. With well-established vendor partnerships, there is somewhere to turn when project challenges, shortages, or delays arise.

Shortened time to market: The efficiency and resiliency created in a resource management plan also reduce the roadblocks to building and shipping a product or service. With efficient systems, stable cash flow, and strong vendor partnerships, getting projects off the ground and into the market is easier.

What are the consequences of poor resource management?

Doing things the right way offers many benefits, but doing them the wrong way can invite serious consequences and potentially money-wasting outcomes.

Increased costs: Planning resources carefully gives organizations better control over project components. It allows them to use resources to their fullest potential, avoid costly issues and delays, and anticipate roadblocks. Resource management helps avoid project issues and delays that cost time and money to fix.

Lower-quality production: If the adage about picking two of three project components (good, fast, and cheap) is true, outcomes are likely to be expensive or fall short of quality expectations. Poor resource management causes teams to cut corners when shortfalls occur. When budget remains the same and timelines compress, quality suffers.

Higher risk: Moving too fast or cutting corners to compensate for poor resource planning may cause more than reputational damage. Often, cut corners introduce risk into the equation in the form of poor-quality vendors, opportunities for procurement fraud, lapses in project security, and other avoidable consequences. Poor risk management has the potential to be far more costly than just the obvious consequences.

Resource management techniques and best practices

Effective resource management requires coordination across departments and short- and long-term planning. A holistic view of your project roadmap allows full resource utilization that minimizes waste.

Resources allocation: Resource allocation plans the amount of money, time, and skills devoted to a specific project. Building allocation reports and considering completion scenarios helps assign budget, talent, and resources according to task priority.

Capacity planning: Capacity planning creates project roadmaps based on estimated resource levels and future availability. Capacity planning ensures teams can source and purchase tangible resources and services at the right price and within the required timeframes.

Resource leveling: Resource leveling reduces overallocation and scheduling conflicts by managing tasks according to resource availability. Planners produce a project schedule according to availability and adjust delivery dates based on when resources and staff can reasonably complete objectives. This ensures enough people in the necessary places to complete projects as scheduled. It also aligns hiring decisions and hiring cadence with project needs.

Resource forecasting: Companies predict future needs and capacity issues by looking at their current project roster and ahead to upcoming projects. Forecasting potential issues long before a project starts shows how cost and talent changes will affect delivery. This gives enough time to prioritize people and resources over the longer horizon.

How to improve your resource management process

A mix of good practices and the right technology delivers the best results in creating an effective resource management process. When building or refining the management practice in an organization, there are many tools available to improve tracking, planning, and automation.

Types of resource management tools

Resource planning software: Software enables teams to collaboratively plan projects, allocate budgets, and manage resources and people more efficiently.
Project management software: Project management software helps companies plan and track the deadlines and milestones associated with a project to ensure the optimal use of resources.
Time tracking software: Tracking project time helps teams understand where billable hours go and where they would be best used. It also gives visibility to efficiency data for future project planning.
Scheduling software: A scheduler helps teams schedule projects, assign workers, and ensure that all tasks are completed on time. Software removes the need for a stakeholder to coordinate resources manually.
Budgeting tools: At its heart, resources management is about financial management. Budget tools help stakeholders and teams keep track of costs associated with each project or task to stay within budget.

Choosing the right resource management tool

A great resource management tool should have features that make it easy for teams to track and monitor resources. Features that improve the collaboration and administration of resources include:

Systems with advanced analytics and reporting that provide insights into how teams use resources
Communication tools that allow stakeholders to report to teams, leave feedback, check off completed milestones, and see upcoming deadlines and resource needs
Visibility and real-time availability of data on different types of resources so teams can quickly assign tasks
Budget tracking capabilities so stakeholders can keep current on costs
Strong integrations with other software, like payroll or accounting software, to streamline data entry and analysis
Cutting-edge enhancements like AI and machine learning that make allocation and trend-spotting faster and more accurate

Implementing resource management tools into workflows

Automation provides significant enhancements to the project and resource management process. Look for tools that integrate with the other software already within the tech stack. These tools should allow workflows and algorithmic assistance for allocation, task assignment, budget tracking, purchase order processing and tracking, and other tedious tasks.

How to optimize with Order.co

Spreadsheets and other manual planning methods aren’t effective for delivering the results needed on large-scale resource management projects. These methods are prone to errors, shortfalls, and overallocation of resources.

Using resource management tools to manage the project lifecycle gives you access to the real-time data and metrics needed to make decisions about project needs and available resources.

Procurement software is an essential component of a resource management plan. It gives teams:

Access to the right resources from preferred vendors
Automation to approve, purchase, and pay for supplies easily
Reporting features for managing spend efficiency and optimizing cost

Procurement software should be a prominent part of your resource management software stack, allowing you to deliver greater value in your projects and across your organization. Could procurement software help your organization improve its resource management program? Learn more by scheduling a demo of Order.co.

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