Importance of Resource Analysis in Project Management and How can a Resource Management Software Help?

Are you planning to launch a new product or service to your existing portfolio? How will you go about it? Taking on any new project or launching a new product requires adding to your internal team. Before doing so, you should conduct research and do resource analysis to gauge how you can do that. In simpler words, a resource analysis is a way by which organizations understand the competencies they have, what is the availability of people, and how well are they being utilized. As resources are the most vital part of business growth, it is imperative to find if your existing resource availability is good enough to cater to the projects in the pipeline or not. In this article, we will discuss the ways you can perform resource analysis and its importance in project management. Because your team is the main resource, let’s also look at how resource management software can help measure the team’s performance, and progress, and enable thorough resource analysis.

Resource Analysis and its Importance

Resource analysis is a strategic technique to identify the resources needed to assist and attain the delivery of a project effectively. Resource analysis includes comprehending and considering how the available resources are managed and utilized throughout the project lifecycle to gain a successful outcome. In the resource analysis process, you need to:

  • Review the existing resources available at any given time period
  • Understand the key competencies and strengths needed for a task/project
  • Consider using a management approach
  • Establish a budget for resourcing

Resource analysis helps organizations in bridging the gap between having resources at hand and utilizing them effectively. Read on to understand how you can go about conducting resource analysis.

How to Approach Resource Analysis?

1.     Success

Success is the most important factor in any project. Thus, it is important to understand what is meant by success in terms of your project and what all do you and your team need to do to achieve it. This could include various things; however, as a project manager, you should be aware of what those are. It could include the understanding of resource availability, estimations, planning, allocation, calculating profit margin, making schedules, etc.

2.     Break the delivery into smaller chunks or phases

Resource analysis can be a complex task to master if you have a large project at hand with a tough deadline. However, one trick that always works is to break down the final delivery into smaller chunks or milestones. For example, the project begins with the initiation phase, then you understand product or project technical specifications, and move to the development phase. After the development is over, the project or product passes through quality assurance and then finally, customer review or testing before it is sign-off. After you have broken down the project into different milestones or phases, it becomes easier to work in a structured manner and identify the resources required at each stage.

3.     Determine success criteria for all the stages/milestones

After you have broken down the project into phases, it will help you to decide how many, what type of resources you need, and the skills required. However, you must also ensure that all the phases have the success criteria mentioned. A good way to achieve this is by making sure that each milestone has estimates on how much time and effort it will take for it to complete. Thus, the success criteria will be attained when that deadline in the estimate is met.

4.     Best practices for gauging the resources required

To understand the resource requirement for a new project, you should:

  • Make sure that you have accurate details about the project and engagement before planning and scheduling resources for it.
  • Continuously track and measure the performance as per the pre-determined success criteria for each milestone. This will enable you to decide if more resources are needed to complete the project on time and if things are on track as planned according to the deadlines.
  • Always ensure that you and your team analyse the past mistakes and learnings from the previous projects. In case there was a delay in a project, or it required additional resources during some phase, find out the reason for it and make sure to add that learning as a best practice going forward.
  1. Conduct an earned value analysis (EVA)

Earned Value Analysis (EVA) is used in advanced project management to check the overall health of your projects. It also ensures that the effort and budget remain on track. However, you should remember that this metric considers your entire project and doesn’t take into account the individual contributions of each resource. Tracking the EVA is a good idea to check if all is on track. In case it’s not, then you analyse further and find the reasons. If done traditionally, resource analysis requires some mathematical calculations and complex equations to comprehend. But with resource management software, resource analysis becomes a cakewalk as you can do it in a few easy steps.

  1. Track resource utilization

Resource utilization is a key metric to track and measure how the available resources are being utilized. Resources include team members, equipment and tools, facilities, funds, etc. Measuring the resource utilization rate enables you as a project manager to evaluate and check your team’s performance, and productivity, and figure out ways to improve it. It also helps in making sure that all the existing resources are optimally utilized. Therefore, resource utilization becomes your checkpoint to track the performance of existing resources, how their skills and effort are used, and whether your allocation is correct. This metric also offers you the flexibility to allocate your resources to multiple projects at one time. You can calculate resource utilization for a team member or your entire team by using this formula:

Resource utilization = Busy time / Available time

In a practical sense, this metric also helps team leads to accurately measure productivity and also billing efficiency. You can easily determine if your pricing is done correctly and if your organization is making a profit or not. While juggling resources between multiple projects and within teams, you need to consider cross-collaboration. But it is also important to ensure that no resources are over or under-booked.

  1. Check the resource availability before allocating resources

If renewable resources like human resources, machinery, equipment, tools, and facility are available for your pipeline projects for a certain schedule, then there is resource availability. By renewable resources, we mean the particular assets that need to be replenished on an ongoing basis. After doing a skill mapping, the resource managers should ideally check the availability of various resources and then plan them for a project. The right resource management software not only does accurate resource analysis but also offers availability reports, which enable in the creation of detailed and accurate project plans.

Impacts of incorrect resource analysis and underestimating the resources required

  1. Delays

Imagine if you estimated 7 resources to complete a project in a certain time but you actually required 10. This underestimation will definitely delay the project and may also result in derailing the delivery.  If you don’t have the required number of resources for each milestone of the project, there is a huge risk of missing deadlines and your stakeholder being dissatisfied.

  1. Financial implications

Budget is mostly a top priority in project management. If your resource analysis isn’t done accurately, you can end up losing money or suffering due to cost overruns. For instance, if the deadline is not being met or pushed back, you may need to hire more resources to complete it and end up losing money. Or if the project is delivered late, the client may levy a penalty or not pay in full which may have a negative cost impact.

  1. Dissatisfied stakeholders

Your stakeholders will be unhappy and dissatisfied if your project is delayed or you deliver a shabby quality. Both of these possibilities are when you underestimate your resource requirement, or your resource analysis is incorrect. Therefore, it is of utmost importance to ensure that you don’t underestimate or miscalculate the resource analysis. This will ensure that all your stakeholders are engaged and satisfied.

How can eResource Scheduler Help with Resource Analysis?

Imagine if you had a tool that would provide you with various reports, data, and dashboards to make your resource analysis easy? Besides, a software that helps you to use your resources optimally, manage efficient staffing, and also identify the best people for your projects. eResource Scheduler is an AI-enabled resource management tool that can be of great help. The tool offers detailed availability reports that help you find the right employees as per your requirements, and skills needed after checking their availability. Resource utilization data helps to track the performance, and productivity of each employee and the entire team on a daily, monthly, or quarterly basis. eResource Scheduler also aids project and resource managers in drafting hiring plans based on forecasted gaps and excesses. So, if you wish to nail a perfect resource analysis and plan, sign up for a free trial of this top-rated tool and ensure perfect resourcing decisions.

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