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 a project on time and within scope and budget.

Estimating your human capital, supply, 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 

What is resource management?

Resource management means organizations accurately plan for and allocate the human capital, costs, and materials needed to complete a project. This thoughtful, advanced planning allows them to complete projects on time and within budget. 

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

• Data to make informed spending decisions
• Collaboration to ensure stakeholder alignment
• Imagination to consider contingencies affecting the project

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

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Why is resource management important?

Resource management is a vital component of overall project management. It directly impacts a team’s ability to perform its role. It allows organizations to deliver on their goals as projected. In fact, according to some studies, organizations that adopt agile and high-maturity processes (processes that are incremental and data-driven) report:

• 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, optimize their staffing numbers, 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 to perform optimally on a project. Effective resource management gives teams visibility into the team members they have on hand and the skill sets and materials remaining to be sourced. It ensures there are enough people, funds, and supplies to get the job done within the scope.

Greater agility: Planning cannot save a project from every setback. However, by carefully allocating resources for new projects, teams have the 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.

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, you protect employees from burnout and reduce the likelihood of turnover. 

Good project management spreads work evenly across your 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 drives many benefits:

Increased operational efficiency: Business optimization is about both process 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.

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

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

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

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Financial audits gives companies an objective read of their financial statements. Use this checklist to get started.

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Resource management techniques

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

Several techniques are effective for maximizing resource utilization:

Allocation of resources: 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 your teams can source and purchase tangible resources and services within required timeframes and pricing.

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 them. This ensures enough people (in the right places) to complete projects as scheduled. It also aligns hiring decisions and hiring cadence to project needs. 

Resource forecasting: By looking at your current project roster and ahead to upcoming projects, you predict future needs and capacity issues. Forecasting potential issues long before the start of a project shows how changes in cost and talent will affect delivery. This gives you time to prioritize your people and resources over the longer time horizon.

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 your 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 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.