Project Resource Management: The Ultimate Guide

In an agency, managing your employees, time, and finances is everything. Here’s how you can do this by optimizing your project resource management.

This article will discuss the basics of project resource management, its key concepts and practices, and how to best use project resource management software to streamline the process.

Key Takeaways

Project resource management is a foundational aspect of agency project management. While project management tracks and manages task progress, resource management ensures that the resources assigned to these tasks are used effectively and efficiently. This includes allocating the right people to a project and ensuring that you can cover up any resource gaps that might occur due to external or internal risks.

The main steps of managing resources include planning, scheduling, and allocating resources in a way that supports project requirements and objectives. It also involves monitoring and making necessary adjustments to avoid resource shortages and conflicts and ensure timely project completion.

A term adjacent to resource management is capacity planning. It usually refers to a broader process of gauging an agency’s capacity to take on more projects and initiatives. Learn more by reading our Guide to Capacity Planning.

Resource types depend on your specific industry. For production-based industries such as manufacturing or construction, resources must consider things like machines, raw materials, and the logistical requirements for producing and delivering physical goods efficiently and effectively.

In service-based industries, good capacity planning can be hard to gauge, as you’re often dealing with intangible factors, such as quality or client satisfaction. However, there are some resources that can be more closely measured and tracked. This includes:

See more: Financial Management in Project Management

Effective project resource management can bring many benefits. This includes more successful project delivery and smoother agency operations.

This is backed up by data, as survey results by the Panorama Consulting Group show that 83% of agencies that track ROI met their project expectations with the right resource management software. The main benefits of enterprise resource planning included increased productivity or efficiency (78%), removing silos (78%), improved customer experience (70%), real-time data (66%), and standardization (58%).

But how does project resource management contribute to all of these factors? By helping agencies address the following challenges:

In short, the ultimate goal of project resource management is to improve project outcomes. By optimizing resource use and aligning it closely with project goals, agencies are that much closer to achieving their desired outcomes.

We can distinguish between different types of resource management software. The two main categories include:

While smaller agencies might see the appeal of specialized tools – such as reduced platform complexity, and often less cost due to limited features – consider the benefits of an all-in-one solution.

As your agency grows, you’ll need more robust support for your increasingly complex agency operations.

An all-in-one tool helps cut down on the amount of tech you need to manage day-to-day agency processes. Furthermore, it ensures your data is standardized across all client engagements (also check out: ERP system meaning and top examples).

Keep reading for an overview of how you can support your resource management with enterprise project management software.

Productive is a management system for agencies of all shapes and sizes, including consultancies, marketing agencies, creative agencies, and development companies.

It has various features that support the smooth running of your agency, such as resource scheduling, financial tracking, sales management, and various team collaboration capabilities.

Let’s take a closer look at Productive’s resource management capabilities in the following section, starting with creating an effective resource management plan.

A resource plan is the foundation of your agency’s resource management strategy. It’s a detailed schedule that specifies which resources are used for which project tasks, during specific periods of time.

Productive’s Resource Planning offers precisely this — a reactive schedule that makes creating time bookings for your project teams easy. You can book employees by:

Since Productive also incorporates time off management, this means that you won’t be able to allocate employees that have already booked their holidays. Making changes to the bookings is simple — use drag-and-drop to reallocate your resources, or use options for splitting up or repeating your bookings.

You can group your resources with custom fields, splitting them up by team, skill, seniority, and more, to get more accurate insights into your real capacity. Furthermore, you can filter views in multiple ways, such as making them project or client-centric, in order to simplify high-level planning.

Other essential features include:

Billable utilization is a crucial metric in gauging the effectiveness and efficiency of your resources. It’s the ratio of billable hours worked vs total hours worked by your employees. Industry benchmarks suggest a ratio of 70-90% for production staff and 60-80% for account management (Promethean Research).

With Productive, you can visualize your utilization across various key metrics. For example, you can analyze your utilization per seniority or per team, since you’re likely to have different criteria depending on the category of your resource.

For creative agencies that offer various services, such as web design, development, or testing, you can view utilization for each to guide your hiring and sales strategies (see also: software for creative agencies). Additionally, check utilization per month to pinpoint patterns such as seasonality and act accordingly.

With Productive, you can also forecast your utilization to view your capacity for upcoming periods of time. This helps you determine which projects you have enough resources for, and where you might have to consider finding external staff or reallocating employees.

Check out a utilization of resources example in Productive:

Resource forecasting enables project managers to anticipate necessary resources and their availability, ensuring efficient project execution. By effectively predicting resource needs, managers can align their allocation of resources with project timelines and objectives to improve the chances of project success.

We’ve mentioned Productive’s capability for forecasting your resource utilization. However, Productive can also help you visualize and forecast other key agency metrics, such as profit margins and revenue. By using data on your cost rates and billable hours, you can view these analytics across your project duration. When you update your resource bookings, this is reflected in your data.

You can use these insights to make data-driven decisions for your projects. For example, what happens to your project based budgeting when you create an additional booking or switch between team members? Now you can have the answer to these questions and more, in real time.

As an all-in-one tool, Productive offers capabilities that go beyond resource planning. This includes key features such as:

Other capabilities include Sales, Reporting, Automations, Purchase Orders, and Docs.

The resource management process is a comprehensive approach that encompasses several critical steps:

1. Resource Analysis: This initial step involves identifying the types and quantities of resources needed for the project. It assesses the current availability of resources and identifies any gaps between what is available and what is required.

2. Resource Planning: Once the resource needs are understood, resource planning involves developing strategies to ensure that the right resources are available at the right time and place. This includes planning for resource acquisition, allocation, and utilization throughout the project lifecycle (learn more about workload management).

3. Monitoring Resources: Constant monitoring is essential to ensure resources are being used as planned. This step involves tracking the utilization of resources, evaluating their performance, and ensuring they contribute to completing project goals.

4. Change Management: Changes are often inevitable, even in the best-planned projects. Effective resource management requires flexibility to adapt to these changes. This includes ensuring easy reallocation between different projects, adjusting schedules, and making other necessary modifications to stay aligned with the project’s needs.

Check out a resource planning example:

While you’re going through the project resource management process, you’ll need to use several key techniques to develop a successful capacity model. These include:

Resource management is sometimes undertaken by the specialized role of a resource manager. However, in smaller agencies, you’ll more frequently see project managers handling this as part of their responsibilities. This means collaborating closely with team and department leads, as well as clients, in order to ensure that resources are aligned with project requirements (check out more managerial roles examples).

In a larger agency or enterprise, the role of a project and resource management might be separate. Here, the project manager will concentrate on achieving specific project goals within a set timeframe, while the resource manager will focus on resource allocation and utilization across multiple projects. Resource management requires a strategic mindset for adapting to shifting priorities and resource availability while ensuring effectiveness.

While we’ve covered the benefits of resource management, as well as the best software to achieve them, there’s still a significant topic left to talk about.

What are some of the main difficulties in achieving successful project resource management? And even more importantly, how do you mitigate or avoid them?

According to research by Wellingtone, attempting to run too many projects was among the number one challenge for agencies in 2020. The reasons for this can be twofold — being aware of resource shortage and hoping to deliver a project regardless, or having insufficient data to understand the real picture of your agency’s resources.

Another frequent problem is the lack of oversight. For example, a key team member might leave the agency without the leaders resolving their leftover workload effectively. According to Harvard Business Review, “many organizations lack mechanisms to identify, measure, and manage the demands that initiatives place on the managers and employees who are expected to do the work”.

So, how can you best resolve this issue to ensure that you don’t find yourself in a tight spot in the future?

Managing and forecasting your utilization is one way to improve your project portfolio management. With a project resource management software like Productive, you can gauge your resource availability for upcoming periods, and make informed decisions on whether you’re able to take on more client engagements.

For example:

Read the full story: Resource Planning For Professionals: Managing 350+ People Using Productive

By accurately forecasting resource needs and translating them into actionable hiring strategies, agencies can maintain a balance between current capabilities and future project commitments. This promotes sustainable growth and operational efficiency.

Another frequently encountered issue is putting too much importance on delivering billable hours. While having high utilization is important, as working on client projects is essential to your agency’s healthy cash flow, ignoring crucial non-billable tasks can be just as detrimental to your growth.

These non-billable tasks can include:

These non-billable activities are essential for driving innovation, staying competitive, and enhancing the skill set of the workforce, which in turn leads to the delivery of higher-quality services. Additionally, they are crucial for building and maintaining client relationships and ensuring smooth internal operations.

Therefore, striking a balance between billable and non-billable activities is key to sustaining an agency’s development, reputation, and financial stability in the long run.

Lack of transparency and communication can be detrimental to your projects on multiple levels.

On one hand, you have collaboration between project team members. If there is a lack of alignment between different teams and departments, this can lead to overlapping workloads, resource conflicts, or a lack of balance in how teams are utilized. This can result in disruptions in your project progress, which can impact your finances or delay important deadlines.

When it comes to working with clients, miscommunication can lead to various issues, including scope creep or, ultimately, client dissatisfaction. This can impact your likelihood of cooperating with the same client on long-term initiatives.

One way to resolve this is to implement a project resource management software solution that can provide project updates and data in real time. For example, with Productive you can manage key agency metrics in real time, such as profit margins or budget burn. You can deliver these insights to your clients. You can also invite your clients to your projects free of charge. They can view and comment on tasks, or even view their budgets with specific permissions.

Another great thing about Productive is that it serves as your central hub of project information. You can communicate on tasks to keep all project progress updates in one place. You can also use Docs to keep all crucial documentation in one place, collaborate with teammates, and even create tasks directly from pages.

Another strategy is to conduct a project post-mortem after you’ve completed your deliverables — the idea is to go through various mistakes and challenges to foster honest feedback and improvements.

In short, fostering a collaborative environment not only enhances team coordination and client engagement but can also improve efficiency and client satisfaction.

Effective project resource management is the key to the success and growth of any agency. It ensures optimal utilization of resources, balances billable and non-billable tasks, and maintains clear communication and transparency.

Implementing a comprehensive project resource management software, like Productive, can significantly streamline these processes. Such tools enhance project efficiency and team collaboration and also provide valuable insights for informed decision-making. This can lead to improved client satisfaction and business outcomes.

If you’re looking for a resource management solution that can support business performance, consider booking a demo with Productive.