Project Resource Management: The Ultimate Guide

Lucija Bakić

February 1, 2024

Detailed screenshot of a project resource management software displaying a calendar view with tasks assigned to team members, indicating workloads for design, development, and rebranding tasks.

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 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 crucial for ensuring effective and efficient use of resources in agency project management, involving key steps such as planning, allocating, monitoring, and resource adjustment to support project objectives.
  • Different types of project resources, including human resources, time, and financial resources, must be managed to sustain an agency’s growth and stability.
  • Utilizing project resource management software like Productive can help agencies forecast resource needs, manage billable utilization, and reduce costs, enhancing project success and client satisfaction.
  • Addressing challenges such as resource planning for multiple projects, balancing billable hours, and maintaining transparency is essential for successful project resource management.

Defining Project Resource Management

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.

Main Types of Project Resources

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:

  • People: An agency’s workforce is its biggest asset — but it can also be the most difficult to manage. Handling your human resources includes everything from ensuring that employees are working on the right task at the right time, to providing them with continuous development and ensuring a healthy working environment.
  • Time: How are your employees spending your time? Finding the balance between dedicating enough time to billable tasks and key non-billable concerns is another crucial facet of your agency’s success.
  • Finances: Without finances, your agency cannot function properly. Good management of financial resources means ensuring that costs and expenses across projects are aligned with overarching business strategies. It also means monitoring your budgets and key performance indicators in real time and providing timely reports to project stakeholders.

Why Is Project Resource Management Important?

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 resource management 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:

  • Resource cost optimization. By ensuring that resources are used efficiently, projects can avoid wasting resources or overcommitting them, leading to significant cost savings. This includes having a full understanding of your human resources, minimizing idle time, and using their skills to support quick and quality delivery.
  • Scope creep. Scope creep, or the unplanned expansion of project scope, is a common challenge in project management. Although resource management doesn’t outright prevent scope creep, it can mitigate it. For one, good resource management provides full visibility of your resource capacity and limitations. This enables project managers to communicate this to clients and make decisions based on reliable data.
  • Inefficient workflows. Proper resource management aims to reduce downtime and bottlenecks in daily workflows. By continuously monitoring and adjusting resource allocations based on project progress and changing conditions, project managers can ensure that resources are being used in the most efficient way possible. This efficiency not only accelerates project timelines but also improves the overall productivity of the team.

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.

Essential Resource Management Tools

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

  • Specialized solutions: These types of tools usually focus on functionalities that help manage a specific agency resource, such as time or finances. This can include time tracking software or project accounting tools.
  • All-in-one tools: An all-in-one, or comprehensive tool, is a type of software that offers a range of integrated features, usually combining project, resource, and financial management.

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.

We used to have a project management tool, a time tracking tool, a support tool, a way we handled opportunities and sales-driven processes. Those were all separate tools that we had, and it wasn’t good. It also meant that all that data was being lost every time we switched between tools, or we had to find a way to normalize the data between them. And now, the fact that it’s all in one, it’s really a game changer.

Bryan Casler,
Vice President of Digital Strategy at 4Site Interactive Studios

Keep reading for an overview of how you can support your resource management with a popular all-in-one agency management tool.

Optimize Your Project Resource Management

Track billable hours, manage utilization rates, and balance workloads, all in one agency management platform.

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Productive – The Top All-in-One Agency Management Software

Productive is an agency management software solution for businesses 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.

1. Creating a Resource 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.

Screenshot of project resource management software with a focus on employee schedules, showing allocated hours for tasks like website rebranding and personal time blocks in a color-coded calendar format.


CREATE AN EASY-TO-MANAGE RESOURCE PLAN WITH PRODUCTIVE

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:

  • Entering specific hours per day
  • Selecting a percentage of overall employee capacity
  • Inputting total hours, without specifying daily work breakdowns

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.

Interface of project resource management software showing Design Team Scheduling for October 2021 with individual team member workloads, highlighting overbooking and hours allocated to various projects.


TURN ON HEATMAPS TO HELP GAUGE UTILIZATION

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:

  • Placeholders: Used to create bookings for external resources, such as contractors or freelancers.
  • Tentative bookings: Used to create various resource planning scenarios without impacting your resource availability.

2. Managing Billable Utilization

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).

Snapshot of a project resource management software displaying a summary table of billable versus worked hours by department and individual team members, with percentage ratios indicating efficiency or overwork.


PRODUCTIVE PROVIDES KEY INSIGHTS INTO YOUR RESOURCE EFFICIENCY

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. 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.

Find out more about managing your utilization by watching the webinar below:

3. Resource Forecasting

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.

Graphical dashboard of a rebranding campaign in project resource management software, showing a bar graph of weekly hours worked against a timeline, and panels summarizing time, budget, and invoicing details.


PRODUCTIVE’S FORECASTING DELIVERS INSIGHTS INTO KEY AGENCY METRICS

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 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.

Related: Project Budget Management 101: Manage Your Finances Successfully

We’ve always known, on a monthly basis, how we’re doing as a company. But knowing on a per project level, in real time—we never really had that visibility. You guys do a good job of providing that. If you look at it on a yearly basis, it does give us the ability to look, per client and per project where do we really stand.

Orion Jensen,
CEO at Clear Launch

Additional Features

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

  • Project Management: Track your project progress and streamline collaboration with Productive’s project views and easy task management. This includes Gantt, Kanban, List, and Calendar. Tasks include to-dos, subtasks, and milestones, as well as automatic notifications that can be customized for frequency and devices.
  • Time Tracking: Productive’s time tracking helps you keep track of your non-billable and billable hours while simplifying the administrative part of the process. You can create entries by tracking time directly from tasks with a timer, inputting your hours manually, or even syncing them automatically with your resource bookings.
  • Budgeting & Billing: Build and manage budgets of all types with Productive, including hourly, fixed-price, hybrid, and retainer. For complex projects, split your budgets up into phases. Then, create invoices and send them from the platform, or copy them to Xero or QuickBooks with Productive’s Integrations.

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

Overview of the Resource Management Process

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.

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.

Learn how to manage your resource planning process:

Core Resource Management Techniques and Terms

While you’re going through the project resource management process, you’ll need to use several key techniques and concepts. These include:

  • Gap Analysis: A technique used to identify the difference between current resource capabilities and project requirements, usually performed during the project initiation phase.
  • Resource Allocation: Resource allocation is the process of assigning resources to various project tasks. The key is to balance your resources to ensure that the project can proceed successfully toward its completion.
  • Resource Leveling: This is a specific technique used to address disruptions in resource allocation. It involves adjusting the project schedule to ensure a balanced distribution of demand across resources, often by delaying tasks.
  • Resource Smoothing: Another specific resource management technique, resource smoothing refers to balancing resources with the aim of keeping project schedules on track. This is usually done by considering task and resource dependencies.
  • Resource Forecasting: This involves predicting future resource requirements based on current project trends and data. It helps proactively plan resource needs to avoid shortages and promote successful project delivery.

The Project Manager Vs Resource Manager

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.

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.

The Main Challenges of Managing Resources

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?

1. Tackling Too Many Projects at the Same Time

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 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:

We have team X, whose Scheduled/Available ratio is 110% when looking into the upcoming quarter. This means that we’ll need an extra 10% of our current capacity to be able to do the work we have scheduled. Then we translate those percentages into the numbers of full time employees we actually need and signal this to HR so that they can start with the hiring process.

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.

2. Overemphasizing Billable Hours

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:

  • Pitching for new projects
  • Research and development
  • Employee education and skill set building
  • Various administrative tasks

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.

Interface of project resource management software with a 'Track time for today' feature, showing time spent on marketing tasks including social media posts and content development, with a live timer running.


MANAGE YOUR BILLABLE HOURS WITH PRODUCTIVE

3. Lack of Transparency and Communication

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.

Project resource management software displaying 'Social Media Posts' with layout options highlighted, and tasks sorted into 'Not Started' and 'Done' categories, labeled with tags such as 'Agency' and urgency levels.


KEEP TRACK OF PROJECT PROGRESS WITH PRODUCTIVE

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.

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

Related: Workforce Planning: The Complete Guide to Optimizing Your Team

Takeaway: Effective Resource Planning for Agencies

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.

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Lucija Bakić

Content Specialist

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