"How can I ensure this project is completed on time and within budget?"
This is a question that almost every manager faces when taking on a new project or task. However, finding the right solution isn't always straightforward. In fact, 70% of businesses admit to failing at least one project in the past year—a worrying statistic that can unsettle even the most experienced managers.
Successfully managing projects involves tackling numerous complex challenges. However, one crucial first step for every manager is creating a solid Resource Management Plan. This plan ensures that the right people, tools, and budget are allocated effectively, setting the project up for success from the very beginning.
According to the Project Management Body of Knowledge (PMBOK®), resource management is the process of identifying, allocating, and managing the resources (such as people, tools, and materials) necessary to complete a project efficiently.
Specifically, a resource management plan should define and regulate the following aspects:
There are six main techniques for managing resources effectively: forecasting, planning, allocation, scheduling, leveling, and smoothing.
This involves predicting future resource needs. Accurate forecasting helps reduce waste and speeds up projects while keeping costs down. It’s about knowing your project cycle and understanding what resources you have available.
Example: A project manager forecasts additional developers will be needed based on previous project data.
Resource planning is about figuring out what resources (like people, time, and money) you’ll need to complete your project and ensuring everything is where it should be at the right time. When done well, it helps teams stay organized and efficient.
Example: A construction company plans for materials, labor, and equipment required to build a bridge.
This means using your available resources wisely. You assess what you have, figure out how to use it efficiently, and then allocate those resources to get your team working productively.
Example: Assigning 5 developers to work on different parts of a software product simultaneously.
Resource scheduling involves creating a timeline for when and where resources—like employees and equipment—will be used. A resource calendar can help ensure tasks and projects stay on track without scheduling conflicts.
Example: Scheduling a marketing team for a product launch campaign over 6 weeks.
Resource leveling helps you identify underused or over-allocated resources so you can redistribute them more efficiently. Sometimes, this might mean adjusting a project’s timeline to balance out costs or waiting for resources to become available.
Example: Shifting a deadline because key personnel are overbooked on another project.
Resource smoothing aims to spread out resource use more evenly over time. It helps prevent bottlenecks and ensures that deadlines are still met without overwhelming or underusing your resources. This often involves adjusting start and end dates to keep things flowing smoothly.
Example: Adjusting non-critical tasks to avoid overloading team members but still meeting key deadlines.
A solid resource management plan gives managers a strategic approach to ensure project success. Here’s why:
Accurately identify project needs
One common reason projects fail is overstaffing or using the wrong tools. This mismatch leads to operational risks, budget overruns, and breakdowns in collaboration. A strong resource management plan allows managers to pinpoint the exact resources needed to ensure the project runs smoothly.
Efficient use of business resources
Whether managing a project with five or a hundred people, having a clear plan improves resource allocation. For small to medium-sized enterprises (SMEs), efficient use of resources is critical for reducing waste and saving costs.
Mitigate project risks
Managers can easily monitor and control resource usage by clearly assigning responsibilities and identifying resources upfront. This approach reduces risks and increases the team's ability to handle unexpected challenges.
The benefits are undeniable. According to PMI surveys, companies can save up to 28 times their budget with tight resource control. Additionally, 83% of executives agree that optimizing resources is crucial to successful business growth strategies.
While each project may vary, a practical resource management plan generally includes these four essential parts:
In most projects, managers need to account for five main types of resources:
People are the most crucial resource in any project. To allocate them effectively, managers should consider three key factors:
Raw materials refer to the essential components needed to produce a project's final results. For example, steel and iron are essential for a construction project, and a database system is essential for programming a website.
Managers must ensure that raw materials are identified thoroughly and accurately to avoid unnecessary shortages during work. For this category, additional quantities are often calculated to prepare for potential risks in the production process, which may lead to more resources being used than originally planned.
Tools include equipment, software, and machinery that contribute to a project's “production” process. These tools aren’t limited to a company’s assets; depending on actual needs, they can also be external resources. Managers need to identify these and find appropriate ways to use them effectively.
Buying or renting are the two most common methods for using tools that the business doesn’t own. The cost is then factored directly into the project’s budget and allocated evenly across all tasks that require the tool.
In resource management planning, facilities refer to the location (and associated assets) where the project activities take place. This could range from a small 30m² room for an in-house marketing team to a 1000-hectare factory for a modern production line.
Identifying the right facilities can significantly reduce the financial burden on the project, as costs in this category are usually substantial and are directly factored into the initial project budget.
In addition to the four categories above, managers also need to consider other types of resources such as:
Once identified, the necessary resources for the project will be stored in a Resource Calendar – a table that estimates the actual usage of resources throughout the project. Managers can rely on this information to make informed decisions about resource allocation.
Below is a simple Resource Calendar, illustrating the resources needed to build a website:
In the best-case scenario, a project would already have all the necessary resources in place. However, this rarely happens. Therefore, managers must plan to acquire any missing resources based on the estimates in the Resource Calendar created earlier.
When planning to acquire resources, managers should consider the following four criteria:
It’s important to quantify resources in terms of amount and time usage. This prevents both shortages and overuse. If the estimation fails to cover all required resources, the purchasing process must be repeated until the project has everything it needs.
Typically, resource acquisition only happens in the early stages of a project. Once the project is running smoothly, shortages are less likely.
Each time resources are purchased, the project’s budget should be updated to reflect accurate expenditures, minimizing the risk of overspending.
Once all necessary resources are in place, managers must plan their use to avoid waste and ensure resources are deployed efficiently for high-priority tasks.
When multiple team members work together, miscommunication and blame-shifting can occur if things don’t go as planned. This can lead to a breakdown in collaboration, negatively affecting the project’s outcomes.
Managers need to assign tasks and responsibilities clearly to avoid this. A common method for this is the RACI Matrix, which helps clarify roles and ensure transparency.
RACI stands for:
For tools and equipment, depreciation should be recorded and factored into the overall project budget. If the resources are rented, they must be returned in the agreed-upon condition as per the contract.
Facilities, such as office space or production plants, must be maintained in good condition. Any damages should be accounted for, with repair costs added to the project budget.
For external service providers or contractors, managers should ensure all project plans and outcomes are transparently communicated to maintain smooth collaboration.
Finally, managers must monitor the use of resources to ensure they provide value for the project. One key metric is the utilization rate, calculated as the actual usage time of a resource divided by the total available time.
For example, if a machine is used for 24 out of 40 scheduled hours, the utilization rate is:
Utilization rate = 24 / 40 * 100% = 60%
The higher the rate, the more efficiently the resource is used. If the rate is below 20%, managers should consider replacing or removing the resource to prevent unnecessary costs.
Here’s a comprehensive resource management template for an e-commerce website development project. It includes all key aspects, such as human resources, software, hardware, and external services, tailored for the various stages of developing and launching an e-commerce website.
Feel free to use it as a reference for your own project.
Projects often fail due to mismatched or poorly managed resources, leading to operational risks and budget overruns. To avoid these pitfalls, you must create and maintain resource management plans. By efficiently allocating and controlling resources, managers can significantly improve your chances of project success and help your business thrive.