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RESOURCE ALLOCATION

INTRODUCTION
Resource allocation is the process of assigning and managing assets in a manner that supports
an organization's strategic goals.Resource allocation includes managing tangible assets such
as hardware to make the best use of softer assets such as human capital. Resource allocation
involves balancing competing needs and priorities and determining the most effective course
of action in order to maximize the effective use of limited resources and gain the best return
on investment.

Definition of Resource Allocation

Resource allocation is a process and strategy involving a company deciding where scarce
resources should be used in the production of goods or services. A resource can be considered
any factor of production, which is something used to produce goods or services. Resources
include such things as labor, real estate, machinery, tools and equipment, technology, and
natural resources, as well as financial resources, such as money.

Method of Resource Allocation

In an economist's perfect world, which doesn't exist, of course, resources are optimally
allocated when they are used to produce goods and services that match consumers' needs and
wants at the lowest possible cost of production. Efficiency of production means fewer
resources are expended in producing goods and services, which allows resources to be used
for other economic activities, such as further production, savings, and investment. This
basically boils down to creating what customers want as cheaply and efficiently as possible.

Resource Allocation Process & Strategies

Strategic planning: Resource allocation begins at strategic planning when a company


formulates its vision and goals for the future. The vision and strategic goals are accomplished
through achievement of objectives. For example, a consumer electronics company's goal may
be to become the market leader in computer tablets. An objective towards this goal is the
design and promotion of an innovative tablet.

Budgeting: Once you have set your objective, you will need to allocate sufficient resources
to accomplish it. In practical terms, this is often a matter of project budgeting. In our
example, the company will allocate money for market research to determine unmet consumer
needs and wants for a computer tablet, money for product design and development, funds for
production, and money for promotional activities, such as advertising. Each department may
take its budgeted funds and allocate those resources for more specific purposes, such as
hiring employees, commissioning marketing studies, and buying raw materials and
components.

Logistical management: Resources have to be moved to where they need to be in order


to accomplish the company's objectives that will bring it closer to its strategic goal. Logistics
is the process by which a company manages the flow of resources coming into the company,
flowing inside the company, and flowing out of the company.

Resource An economic or productive factor required toaccomplish an activity, or as means


to undertakean enterprise and achieve desired outcome.

The Three Most Basic Resources

LandIncludes all natural resources (gifts of nature) used in theproduction process, such as
arable land, forests, mineral and oildeposits, and water resources.LaborConsists of the
physical and mental talents of individuals used inproducing goods and services.CapitalRefers
not to money but to tools, machinery, andother productive equipment.

OtherResources
Energy
Entrepreneurship
Information
Expertise
Management
Time
Resources in Project Management
Budget
People
Technology
Time
Space
Tools
Equipment
and etc.
Resource Allocation Resource allocation is used to assign the available resources in an
economic way .In project management, resource allocation is the scheduling of activities
and the resources required by those activities while taking into consideration both the
resource availability and the project time.
Resource Allocation Plan
1.Basic Allocation Decision
2.Contingency mechanisms
1. Basic allocation decision
The choice of which items to fund in the plan
What level of funding it should receive
Which to leave unfunded
The resources are allocated to some items, not toothers
2. Contingency mechanisms
There is a priority ranking of items excluded from the plan, showing which items to
fund if more resources should become available
There is a priority ranking of some items included in theplan, showing which items
should be sacrificed if totalfunding must be reduced.
Example of Resource Allocation for Jobs
Assume that the active resource plan is called Night Plan. 3 Job classes: DW Consumer
Group OLTP Consumer Group Other Consumer Group
Resource levelling A project management technique used to examine unbalanced use of
resources (usually people or equipment)over time, and for resolving over-allocations or
conflicts. Leveling resources involves redistributing an imbalance of allocated work. It
assists project team members by keeping them from becoming overwhelmed, working
overtime, or running into project burnout.
Resource leveling .If DW Consumer Group do not fully use the allocated 60%, the
unused portion is available for use by jobs in OLTP and Other Consumer Group.
Resource levelling The Two Key Elements of Resource Leveling:1. As the main aim of
resource leveling is to allocate resource efficiently, so that the project can be completed in
the given time period. Hence, resource leveling can be broken down into two main areas;
projects that can be completed by using up all resources which are available and projects
that can be completed with limited resources.2. Projects which use limited resources can
be extended for over a period of time until the resources required are available. If then
again, the number of projects that an organization undertakes exceeds the resources
available. Then its wiser to postpone the project for a later date.
Resource Over-allocationOver-allocation of a resource is when a resourcehas been
assigned more work than can becompleted during normal work hours. Resourceallocation
often leads to overtime andoverspending on financial resources.
Techniques for Avoiding Resource Overload
1. Resource Leveling 2. Prioritize Projects 3. Linking Tasks 4. Leaving Breathing Room
5. Avoid the Putting out fires approach to project management
1. Resource Leveling In this method, the project manager can either level resources by
hand (complicated, but perhaps more sound) or use a software program such as Microsoft
Project to level resources for you.
2. Prioritize Projects By prioritizing projects, when a resource allocation overload is
apparent or a task conflict exists, it can be resolved without piling pressure on the
individual or team (or requiring the individual or team to put in a couple twelve-hour
days).
3. Linking Tasks Linking tasks is more of a logistical solution. If the resource has been
assigned to research the markets for project A and project B, these tasks could be linked.
In this manner, when it appears that a resource has been over- allocated, really the tasks
are similar enough to count for two projects. By linking these tasks from the different
projects, the problem can be resolved.
4. Leaving Breathing Room When scheduling the project, it is vital to leave breathing
room between tasks. However, it is important to not under-allocate resources as this could
lead to a loss of budget monies meaning resource allocations problems will affect your
projects health. A fine balance must be achieved between breathing room and not moving
forward quickly enough.

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