Resource Allocation

What is Resource Allocation?

Also known as resource scheduling, resource allocation is the process of assigning resources to various tasks or activities for a specific period. Its goal is to ensure that resources are assigned to 100% of their capacity for maximum utilization and efficiency. Resource allocation covers both tangible assets like hardware and soft assets like intellectual capital and balances them and helps them work together in support of overall business goals. The availability of resources is a major consideration when allocating because they could either be fully or partially available. This should be accounted for at the onset to avoid delays and other setbacks.

Why is Resource Allocation Important?

Resource allocation is a vital part of planning for any project or initiative because it helps prepare for implementation by ensuring that there are available resources. Additionally, it allows for scheduling resources early on and provides insight into the progress of the project. Covering even the allocation of tasks and manpower, resource allocation helps prioritize projects, makes operations management more efficient, and ultimately improves business performance. Resource allocation is different from resource utilization, which simply helps in creating KPI’s that help measure team efficiency in light of how it uses available resources over a certain period.


Aside from helping enhance ROI through optimum resource utilization, resource allocation also helps achieve the following:

  • Maximize the use of resources
  • Significantly reduce project costs
  • Enhance client satisfaction through successful product delivery
  • Improve employee engagement through efficient processes
  • Achieve the best possible outcome using existing resources

How to Create a Resource Allocation Strategy

Resource allocation is essentially the planning of how available resources will be used. It covers several aspects because resources may refer to the equipment you’re using to the people working with you on a project. It’s vital that you consider all these aspects to ensure the success of a project or initiative. Below are a few things to consider:

  • Determine the scope.
    You have to know how vast a project is to properly calculate how much resources you need. The clearer the project scope, the better you can plan and allocate resources. This is an important first step that should be done at the onset of any project  because it will help avoid resource problems along the way.
  • Know what resources are available.
    After the scope has been determined, it’s also important to know what resources you already have so you know what other resources need to be acquired. You also need to consider the space where the tasks for this project are to be performed, and who’s going to perform them. Before allocating resources, you first need to list down the resources you need and plan how to acquire them.
  • Look at a project or initiative as a whole.
    Processes are good—vital, even—but focusing too much on processes takes away from viewing the project as a project, instead of a set of processes that need to be completed. Checking processes is important so you can see the progress of the project, but you should also check the other aspects of the project, like the health and morale of your employees, the condition of the equipment, and the feasibility of project goals. The whole is more than just the sum of its parts, so you should have a holistic view of the project and not just the parts that make it up.
  • Don’t over-allocate.
    There are managers who over-allocate in an effort to avoid a lack of resources in the middle of a project. While this may seem like a strategy based on forethought, it’s actually the opposite. It shows that you didn’t plan enough at the beginning of the project to know how to properly allocate resources. Poor planning leads to a host of problems like team burnout, ballooning costs, and project delays.

Leverage technology.
Resource allocation involves also planning for changes mid-project that can affect the way resources are used. To determine where to reallocate resources, digital tools like a digital adoption platform can help you visualize where resources are needed the most. Getting the right data from resource and project reports also requires a platform where this data can be processed, analyzed, and transformed into actionable insights.

Dynamic Resource Allocation

Dynamic resource application is a method of resource allocation typically used in human resources that provides allowances for possible changes in the project plan. It helps in modifying or creating workflows that will integrate project changes and simulate possible consequences so you can adjust or make new plans accordingly. Changes in project and resource plans, however, can be a complicated affair, and having the right data, and the tools to manage it, can help simplify the process. This is where digital adoption comes in; when employees have the ability to maximize the use of available tools and software, they help open up opportunities for innovation and continuous improvement. In the same manner, when resources are allocated dynamically, an organization can achieve the following:

  • Maximize divisibility of resources
    Sharing resources is possible through dynamically planning their allocation, which means they can be used or scheduled elsewhere as necessary, even within the duration of a project.
  • Enhance flexibility through skill-based planning
    In human resource application, the typical approach is allocating specific people to certain aspects of a project. While this is useful in some situations and industries, its use sacrifices flexibility. Through skill-based planning, people can be replaced and re-allocated as necessary.
  • Link resource allocation plans to project plans
    This is where data and planning come together. Linking resource allocation plans to project plans is vital but challenging without the right tools in place. Dynamic resource allocation combined with the right software will help you view both plans side by side and make changes accordingly.

Resource Allocation Examples

Resource allocation is a process that’s integrated in various industries with slightly different use cases. Below are a few of the most common use cases.

Resource Allocation in Economics

Resource allocation in economics is, basically, the assignment of currently available resources to a variety of uses as needed. It’s mainly focused on identifying the ideal conditions under which resource allocation mechanisms lead to Pareto efficiency. Pareto efficiency, named after Italian economist and political scientist Vilfredo Pareto, refers to a condition where resources are allocated in the most economically efficient manner possible. In Pareto-efficient outcomes, no economic changes can be made for the betterment of a certain party without making at least one other party worse off. As such, economical efficiency in this sense doesn’t imply fairness or equality.

Resource Allocation in Project Management

Project management is a broad area of expertise that covers a number of smaller disciplines, one of which is resource allocation. Resource allocation in project management helps in providing a clear picture of how much work has to be done to achieve project goals, even going so far as to analyze existing risks of a certain project. Most importantly, it helps manage and control the workload so employees won’t feel burned out and lose sight of the projects larger goals.

Resource Allocation in Healthcare

Resource allocation in healthcare is the distribution of health-related materials and services among a variety of people and use cases. It’s classified under two levels of decision making:

  • Micro-allocation
    Micro-allocation covers decisions made on an individual level, like “patient selection.” Patient selection is the process of determining who among a set of patients who need a particular scarce service or resource should receive it. It sometimes also makes decisions for individual patients regarding which among a number of potentially beneficial treatments they should get, especially when the time to make a decision is limited .
  • Macro-allocation
    Macro-allocation involves decisions made on a larger scale, determining the amount of resources to be allocated to particular types of healthcare services. It also helps make crucial decisions regarding budgets and spending of healthcare institutions or even nations regarding how much resources should be allocated to particular institutions or specific curative medicine.

Resource Allocation in SaaS

Software-as-a-Service (SaaS) resource allocation refers to how cloud-based web applications and other SaaS offerings allocate software services to users. SaaS resource-sharing applications are used to facilitate resource allocation using repositories or databases, which also aid in isolating and storing user data and software customizations in a logical manner. SaaS resource sharing falls under two main models:

  • Shared repository model
    This is implemented by partitioning multiple types of user data contained in a single database. This allows the logical isolation of each user of the SaaS application via a unique identifier. This allows for database queries to retrieve and manage data for each user based on their unique identifier.

Dedicated repository model
This model deploys a separate logical database for each SaaS application user. This model is ideal for applications with a small number of users, allowing for a more efficient allocation of resources. It is more costly to maintain but provides better security than a shared repository in terms of data storage and sharing.

Resource Allocation in Digital Transformation

Digital transformation is an arduous process that requires careful planning and allocation of resources. To guarantee success, an effective resource allocation strategy should be in place early on. Human resource is a vital element of resource allocation toward digital transformation, especially the allocation of knowledgeable and technically proficient personnel into vital aspects of the business. Outsourcing specific capabilities to SaaS providers is a feasible solution in cases where those capabilities can’t be effectively developed in-house. Hiring and training new people or teams may also be necessary to facilitate digital transformation, but this takes time and effort that some organizations can’t afford. Ultimately, the key is not to try and do everything yourself and optimize resource allocation according to your business needs.

Updated: October 05, 2022

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