A resource manager needs to consider employees’ skills, qualifications, experience, cost, availability, and specific interests before they are assigned to a project.

Allocating an experienced resource for a generic position can cause lower employee engagement and spike the project resource cost. On the contrary, a junior resource taking up an important role will create employee burnout and affect delivery.

The resource allocation method is an essential component of the project management process. Many successful companies have implemented a comprehensive resource allocation framework with the help of appropriate tools and techniques.

A 2017 PMI study states, “62% of organizations use resource management tools for resource allocation.“

This guide covers the essential aspects and objectives of resource allocation in project management. Before delving deep, let us start with the basics, such as the definition of resource allocation.

What is resource allocation in project management?

Resource allocation in project management is the process of identifying and assigning the best available resources with the right skills to every project for a specific period. It also monitors the resource’s workload throughout the project life cycle and helps reassign them if necessary.

Efficient allocation of resources ensures that the right employees are working on the right project at the right time and costs. It helps reduce costs, improve productivity and ensure the successful completion of projects within the stipulated time and budget.

It involved balancing competing requirements and priorities and determining the best plan of action to maximize the utilization of limited resources and improve ROI and profitability.

Knowing the definition and role of resource allocation in project management, let’s understand the key factors affecting the resource allocation process.

Key factors affecting resource allocation in project management

Certain aspects must be considered while assigning the right resources to suitable work and tasks. These elements can vary based on the project and its specifications. Listed below are some of the critical ones:

Project goals and objectives

The overall project goals and objectives play a significant role in determining how resources should be allocated. Assigning the resources must be aligned with the project’s desired outcomes and strategic priorities. Determining the projects’ goals and objectives helps align the resource allocation with the project’s strategic objectives, ensuring that the most critical tasks receive adequate resources.

Furthermore, project goals and objectives enable organizations to identify the types and quantities of resources required to accomplish the tasks. In addition, managers can evaluate the specific skills, expertise, equipment, materials, and budgetary needs necessary for the project’s success. Clear goals allow project managers to estimate the resource requirements and allocate resources accordingly and accurately.

Changes in project scope

Another critical factor influencing resource allocation is the changes in project scope. Scope changes lead to adjustments in project tasks, activities, and deliverables. Therefore, the number of employees required to work will also vary based on the changes. Hence, resource allocation decisions should consider the specific requirements for achieving project success.

Furthermore, changes in the project scope impact the availability of resources. For instance, if the project scope expands and requires new skills and expertise, more resources must be allocated. Contrarily, if the scope is reduced, the resources assigned to various tasks may become available for reallocation to other projects. Hence, project managers must consider resource availability and adjust allocations based on the scope to maintain a balanced resource pool.

Project dependencies

Often, the project tasks are interdependent, and the completion of one task will lead to the start of another. Hence, managers must appropriately allocate resources based on the dependencies to tasks and their availability, ensuring on-time project completion.

Furthermore, when multiple projects or tasks have the exact requirement for a specific resource, the allocation decisions must consider the availability and capacity of that resource. Managers must ensure the particular workforce is assigned in a way that fulfills the requirements without being overloaded or causing conflicts in resource availability.

Task or project prioritization

Managers must assess the criticality of the tasks or deliverables. Some projects may be of higher priority and require resources on an urgent basis. In such situations, managers must allocate resources based on the project or task priorities. This ensures that limited resources are assigned to critical tasks, maximizing project success.

Prioritizing projects and tasks enables firms to effectively manage time by identifying and allocating resources to time-sensitive tasks or projects. Resources can be assigned to critical tasks with deadlines, preventing delays and ensuring timely completion.

Resource availability and skills

The resources availability and skill sets are essential while allocating them. Resource attributes like expertise, experience, workload capacity, etc., must be considered to ensure the right resources are assigned to the appropriate tasks. This ensures successful task completion and enhances overall project performance.

Managers must assess the availability of resources that play an essential role in resource allocation. The allocation must be adjusted if a resource is unavailable during a specific period. Resource availability impacts the scheduling and sequencing of tasks and activities.

Meeting the project deadlines

Organizations need to keep up with the project timelines to maintain their profitability. Efficient resource allocation is crucial to meet project milestones and ensure timely delivery. Proper resource allocation ensures that the project progresses as per the plan, minimizing the risk of schedule delays.

Project deadlines influence resource availability and allocation. Resources must be allocated to align with the project schedule, ensuring they are available when needed. Resources allocated appropriately prevent bottlenecks and workforce shortages, enabling efficient task execution and on-time project delivery.

Risk assessment

Project risk assessment can influence resource allocation decisions. By assessing risks, managers can determine each risk’s likelihood and potential impact on the project’s objectives. Allocating resources to address potential risks helps ensure project success and reduce adverse effects.

By assessing the potential risks, managers can have a backup plan for resources from the existing pool or contingency resources to address these unforeseen risks arising from unexpected events. For instance, in case of prolonged absence of a resource or unplanned attrition, a contingent workforce can be quickly replaced to ensure the projects are delivered on time.

Now that you’ve understood the factors affecting the resource allocation framework, let’s dive deep into some examples.

Examples of resource allocation in project management

An efficient resource allocation strategy allows the effective distribution of the available resources to several projects. However, this activity also requires regular updates to achieve the future goal of the organization.

A project manager often needs to carry out delivery responsibilities with fewer resources. So, how does project resource allocation under these circumstances happen? Does one identify each resource’s primary skill set and assign them to open positions, or is there a better way?

Let’s look at some of the specific resource allocation examples in a project:

• Let us take an example of resource allocation in an IT project. Architect positions are critical for delivery. They are expensive and less in numbers. They need to be involved at the beginning of the project for system design-related work. In this case, can I afford to dedicate an architect to a specific project, or do they need to work on multiple projects?
• The second example could be when a project manager tries to deliver several projects with fewer resources. Should I put some low-priority projects on hold or extend their timeline due to a resource crunch? Shall I allocate my existing resources only to high-priority projects?
• In another resource allocation example, let us assume that one has the required capacity and enough work. But, there is a mismatch in the skill set among the available resources. So, how do I effectively utilize the existing resources by building secondary skills? Can I risk allocating a resource that matches approximately 60% of the job description?
• There are many projects. But, the tasks do not require full-time involvement of the resources. In this situation, how do I ensure I do not over/under-allocate human resources?

These are all pertinent questions and do not have any standard answers. The decision on resource allocation in a matrix organization depends on its current situation and immediate priorities. At times, resources may need to be out rotated from a low-priority project with suitable backfill depending on business priority. These are examples of resource allocation problems in a dynamic business environment.

These are some of the resource allocation examples. Now, let’s learn about some of the problems of the resource allocation process.

What are common problems of resource allocation in project management?

Although resource managers initially conduct the allocation process, continuous change in project demands makes it daunting. Let us analyze some of the common resource allocation problems.

Use of legacy tools or spreadsheets

Many organizations still use homegrown half-baked solutions like spreadsheets for the project resource allocation process because it is readily available. Unfortunately, these legacy tools fail to provide accurate real-time data for resource allocation, leading to discrepancies and double bookings. In addition, spreadsheets are incredibly time-consuming, limiting, and a nightmare to maintain.

According to MarketWatch, “88% of spreadsheets have errors.”

Frequent changes in project scope

In an agile world, the project scope can change anytime during its lifecycle. Changes in project requirements can lead to fluctuating resource demands. So, frequent allocations to meet the dynamic demands become challenging without an updated resource schedule. The sudden closure of a large project will also increase the bench size, which can affect the bottom line.

Unable to predict resource availability

While allocating resources to a project, resource managers typically look at the existing workforce pool. Additionally, they need a backup contingency resource allocation plan rather than relying entirely on a specific person. For example, some team members can suddenly fall sick, or getting time out of a shared resource may be challenging because of other commitments. Since resource availability can suddenly change, it can be a roadblock in project resource allocation.

Project uncertainties causing delays

Even after meticulously ticking all the checkboxes, such as project scope and constraints, uncertainties can crop up anytime during the project lifecycle. There could be a delay in the project start date, and you may need to block specific resources without billing. Project managers must promptly respond to these uncertainties, e.g., dynamic resource allocation, including juggling resources within projects or reassigning them.

Limited resources in a multi-project environment

Some organizations run multiple projects simultaneously, sharing limited resources to complete the delivery. Negotiating with other project managers over the same resources could lead to a change in project priorities for one of them. However, it also means that one of the other projects gets stalled and eventually delayed.

Lack of knowledge and communication

Sometimes, project managers lack business knowledge. Due to communication gaps among the team members, they cannot estimate the resource requirements on time. With the incorrect resource demand, the project lands up with either an excess or shortfall of resources. It gets noticed during the execution, and the project can get adversely impacted. Excess resources will blow up the project cost, whereas fewer resources can cause delivery delays.

Location and time zone differences

Due to globalization, many organizations have implemented an onsite/offshore/nearshore strategy to control costs. Resources are allocated in different geographies covering different time zones for the same project. As a result, there is a lack of coordination between the key members, which can cause project delays. Limited overlapping business hours between the two countries can only provide a small window for essential meetings and knowledge sharing.

Since you are clear about the various resource allocation problems, let’s see how beneficial it is in project management.

Importance of resource allocation in project management

The unavailability of a critical resource can cause project delays and adversely affect overall task dependencies.

According to PMI, “50% of projects fail to deliver on time, out of which 23% cite poor resource allocation as the primary cause.”

A systematic resource allocation process ensures that resources are available when required. Let’s look at some benefits of resource allocation in project management.

Minimizes project resource cost significantly

Resource allocation tool helps you to identify and allocate the best-fit resource instead of first-visible resources. It enables you to deploy cost-effective global resources across matrix boundaries, reducing project resource costs significantly. Resource allocation in project management maintains profitability by uniformly distributing resources across all projects instead of assigning them to a high-priority one.

Deloitte Global Cost Survey reveals “Cost reduction scores over other business initiatives.”

Maximizes profitable resource utilization

Simply allocating resources to projects does not ensure profitability. They could be working on non-billable or mundane operational tasks. Businesses must ensure optimum resource utilization, and resource allocation helps achieve that and more. Resource managers can take corrective measures to avoid under or overallocation of resources in advance using real-time information and forecasting methods. Mobilizing resources from non-billable work and allocating them to strategic/billable work ensures profitability.

This article helps you understand the limitations of legacy systems and how a modern resource management solution will assist your business

Enables finding the right resource using centralized visibility

A resource allocation system captures resource-related information in real-time and consolidates it on a centralized platform. 360-degree visibility helps allocate resources to projects based on qualifications, skills, experience, availability, costs, and other selection criteria. Centralized visibility and real-time updates avoid data redundancy and discrepancies that could lead to double-booking chaos. It is one of the significant benefits of resource allocation.

Delivers projects on time and within budget

Delivering projects on time and within budget ensures project success, increases client satisfaction, and maintains your organization’s reputation. In addition, if resources are allocated efficiently, it can eliminate the under or over-skilled project resources. Under-skilled resources cause project delays, whereas overqualified team members can spike project resource costs. Therefore, resource allocation is critical to project management.

Diversifies employee skill sets for increased billability

Encouraging employees to possess multiple skills enhances their billability. Allocating resources to different projects allows them to build secondary skills in addition to sharpening their primary skills. Focused training programs and on-the- job-experience further help them to improve their capabilities. Secondary skills are handy to make them billable if they are not deployable using primary skills.

Solves resource constraints with smart allocation techniques

In a multi-project environment, intelligent allocation of resources involves generating more ROI using the existing pool. What-if analysis allows you to build different scenarios and simulate each using the resource constraints. After comparing and analyzing each scenario, resource managers can help arrive at the best possible outcome. It can then be applied to the project allocation schedule.

Improves employee engagement and productivity

One of the resource allocation best practices involves assigning resources to project tasks based on their skills and interests. Providing an environment for self-development, skill-building, and staying abreast with current technology trends motivates them. Resource managers can effectively manage the bench and improve overall billability by giving them the right opportunities. The employees also feel more responsible and take ownership of their jobs, which increases engagement and productivity.

These are some of the significant benefits of resource allocation in project management. Let’s know some telltale signs that help organizations improve the resource allocation process.

4 signs you need to streamline your resource allocation

Improper resource allocation will put projects at a higher risk of encountering missed deadlines, lower productivity, increased costs, etc. Below are some essential signs of poor allocation in an organization:

Unavailability of critical resources

Frequent unavailability of critical resources indicates poor resource allocation that can disrupt projects. It can occur due to booking many critical resources to a project, leaving the other projects with fewer niche-skilled resources. Further, critical resources are highly demanded and often moved between different projects to fulfill ad-hoc demands. Therefore, project managers may sometimes be unwilling to release them to keep them readily available for future similar work, causing a lack of critical resources in a multi-project environment. All these scenarios indicate the need to make resource allocation transparent and all-encompassing.

Non-uniform workload distribution

If certain resources are overwhelmed with too many projects/ tasks while others are underutilized, it implies uneven workload distribution, indicating inefficient resource allocation. When employees are booked to projects exceeding their capacity, it will cause stress and burnout. Likewise, when resources are scheduled to project/ tasks below their capacity, it will lower their morale and lead to disengagement. This uneven workload distribution will eventually lead to poor project outcomes.

Lowered performance and productivity

When there is a dip in the performance and productivity of employees, it is a sign of poor resource allocation in organizations. When a critical resource is deployed to low-priority or mundane tasks, they will feel undervalued and disengaged. Conversely, when an under-skilled employee is assigned to high-priority projects, it will cause stress, exhaustion, and burnout. Both situations will eventually hamper the project’s progress and the final deliverable quality.

Frequent project failures and client dissatisfaction

“According to Wellington report, only 34% of organizations complete projects on time and within the budget.”

Project failure is an indication of improper resource allocation. It can stem from deploying under/over-skilled employees to projects, setting unrealistic deadlines, resource under/overutilization, etc., causing budget and schedule overruns, productivity issues, and project failures. When projects fail, clients may also feel that the organization has not delivered as committed, resulting in dissatisfaction and loss of repeat business.

These are some essential signs that will help organizations improve resource allocations. To overcome these issues, let’s understand the best resource allocation methods in project management.

What are the resource allocation methods in project management?

Resources can be either fully or partially available. Resource managers need to consider this while making allocation decisions that ensure optimum utilization.
So, how do you allocate human resources in a complex project environment? This section describes the essential resource allocation steps in project management.

Create a project plan using an appropriate tool

It is necessary to divide each project into several tasks and create their dependencies. This process is known as the work breakdown structure (WBS), the minimum requirement in starting a project plan. Two tasks can be executed sequentially or in parallel based on their relationship.

The critical path within a project plan determines the minimum time required to complete the project. This information can be used within a project management tool to provide a Gantt chart view. Resource allocation is integral to this process because resources are assigned to each task for completion.

Identify resource requirements for project tasks

Once the project is successfully divided into tasks, the resources available can be assigned as appropriate. The task may require human and non-human resources, depending on the nature of the work. For human resources, it is necessary to identify skills and competencies. For a non-human resource such as machinery, determine the equipment specifications before allocating a task.

PwC Project Management Insights states, “30% of project failure results from lack of resources.”

Find available resources with matching skill set

Using resource allocation software, one can quickly identify the availability of a resource within the pool for matching skills. Searching for equipment with matching specifications can also be used for a specific duration. In addition, the allocation tool provides a mechanism to update each resource’s skills and competencies in real time with proper verification.

Bridge the demand-capacity gap using multiple channels

One can hire or use contingency resources if a human resource with matching requirements does not exist. Similarly, if the equipment is unavailable, it can be taken on lease or procured, depending on the resourcing strategy. All relevant costs need to be factored into project financials. The resource allocation process begins once the resources are selected for a specific project.

Allocate resources as per demand

Once the project resources are identified and established, they are assigned to specific tasks. Sometimes, the resources may not be available when needed to perform the task. If you opt for a new hire for a specific task, the person may decide not to join at the last moment.

It may be necessary to have a backup plan for this resource. For critical positions, the person could be asked to join a little early to be available when work starts.

Re-allocate resources between projects if required

Re-allocation of resources is necessary during the project life cycle for various reasons. For example, a resource may have performance issues that may need replacement. A resource with niche skills may be required in another high-priority project.
So, one needs to out-rotate the person with a suitable backfill so the current project does not suffer. Some of the positions can fall vacant due to attrition and need replacing. The project manager also can rotate resources within the same project with different roles.

Track and monitor resource usage

It is necessary to track the performance of each resource to implement an effective resource allocation process. In an ideal situation, there must not be under/ overallocation of resources or over/underutilization of the workforce.

However, it is tough to ensure this for every resource when you have a large pool to manage. The experience of the project manager and some amount of subjectivity play a significant role in deciding this. The dashboards and reports from resource allocation software can help in decision-making.

Now that the strategies are clear, we move on to know how to combat the runtime resource allocation challenges.

How to solve runtime resource allocation challenges?

Most of the allocation of resources related to activities occurs during a project’s initiation phase. The projects can be short-term or long-term, and resource demand can vary. The project may require additional resources, or some existing resources may need to be rolled out. But what happens if the initial resource allocation goes wrong as you have onboarded incompatible resources quickly?

It can create a significant stumbling block in the delivery and must be course-corrected ASAP. We refer to this situation as a runtime resource allocation challenge. Following resource optimization techniques can mitigate some of these challenges as a part of a new resource allocation strategy.

Resource leveling

In this case, the start and finish dates of the projects are adjusted based on resource constraints. One can adjust the project timeline, but it isn’t easy to get additional resources. For example, research projects may have this kind of flexibility. The manager must rework and create a revised schedule to identify the new completion date using available resources.

Resource smoothing

There is no flexibility around the project timeline in resource smoothing, and the work must be completed within a specific time. However, the project manager can add and remove resources during the lifecycle as required to deliver the time-bound project. Resource availability is assumed.

Additional mentoring using SME

If the existing resources do not meet the 100% requirement, they can be given additional learning opportunities on the job. Positions requiring multiple skills are challenging to fulfill.

A person meeting a certain percentage of the requirement can be given a chance with additional mentoring. It is provided by identified subject matter experts (SMEs) to fast-track his competencies. The SMEs could be either external persons or someone within the project.

Independent audit

An independent audit can be carried out if there are governance issues that have resulted in an improper allocation of resources. Experienced project managers usually do this within the organization or with the help of consulting firms. The person concerned needs to engage with the client and the internal team to get the project back on track.

If the resource allocation strategy is flawed at the beginning of the project, it can derail the overall delivery objective. Moreover, it is expensive to revisit the allocation of resources when the project is in execution mode. Every project manager would like to avoid such a situation. But unfortunately, this can happen due to many factors beyond their control.

These are some of the best ways to solve runtime resource allocation challenges. Let’s delve into how ideal resource management can benefit resource allocation.

How can resource management software help streamline resource allocation?

An enterprise-grade resource management system provides advanced features and functionalities that help organizations allocate resources and achieve sustainability and profitability effectively.

Here’s how-

The tool’s 360-degree visibility enables managers to allocate resources efficiently based on their skills, qualifications, availability, experience, etc. Additionally, it helps assign cost-effective global resources to projects to maintain the quality of deliverables and profitability.

Furthermore, forecasting and capacity planning enables managers to forecast pipeline project demand. The capacity vs. demand reports help identify shortage/ excess of resources and allow managers to take appropriate measures to bridge the gap. This will ensure a 100% fill rate for projects to happen on time.

Additionally, real-time BI reports and dashboards like utilization heatmaps and forecast vs. actual time/cost reports enable managers to prevent overallocation and underutilization, ensuring uniform workload distribution. Furthermore, managers can effectively mobilize resources from non-billable to billable or strategic work to ensure they are optimally utilized.

Moreover, the system’s open seat feature allows managers to create and publish positions across the firm. Accordingly, interested candidates can apply for the work, and managers can select the appropriate ones, saving time to identify the right resource and enable effective allocation.

Lastly, the tool’s what-if-analysis feature helps managers create various resource plans, compare their outcomes, and implement the most viable one on the actual schedule, facilitating successful allocation.

Thus, modern resource management software with advanced capabilities can help in effective resource allocation in an organization.

Summary of resource planning and allocation

In conclusion, we describe some of the resource allocation best practices:

Do’s

• Know the scope of your projects before carrying out resource planning and allocation. Is it a big or small project, long or short?
• Use proper resource planning and allocation tools to get a 360-degree view of all resources. It includes their skill, availability, booking details, etc.
• Establish a well-documented resource-requesting process
• Get visibility of your pipeline projects in advance. Plan allocation with ghost resources that can be replaced by existing resources later.
• Build a strategy for contingent resources and freelancers in addition to full-time resources. Establish a few vendor organizations that can provide resources quickly. In addition, they can be utilized for short-term assignments.
• Encourage employees to acquire multiple secondary skills in addition to their primary skills. It will help to place them in a billable role.
• Encourage project managers to accept a certain number of resources matching 60-70% of actual requirements. The remaining skills can be acquired on the job.
• Plan for runtime resource allocation for some of the high-priority projects.
• Track your resource scheduling in project management details using allocation reports. Then, plan for the resources getting rolled off from the project on specific dates.
• Have an overall risk and mitigation strategy on resource allocation for individual skill sets with particular emphasis on niche skills

Don’ts

• Do not over or under-allocate resources. Burn rates will ultimately result in unplanned attrition.
• Balance the resource allocation activities across the organization. Do not give priority to certain projects at the cost of others.
• Do not allocate contingency resources for long-term or strategic projects. These positions need to be filled with regular full-time employees.
• Avoid hiring regular employees if you have short-term requirements and do not have visibility for future work. The contingent workforce can do this; otherwise, this will result in a higher bench.
• Reduce the hiring/firing cycle for the resources. It will give a bad reputation to the organization. However, it can be controlled using effective resource capacity planning.
• Do not assign critical or expensive resources to non-billable activities. This will be a waste of their skill set. Instead, junior resources or trainees can pick up non-billable tasks.
• All the high performers should not be allocated to a single project. Each project must have a combination of high achievers, some average, junior resources, and contingency staff. It will help to create a proper band mix and increase profitability.

Glossary

The SAVIOM solution

SAVIOM is the market leader in offering the most powerful and configurable solutions for managing enterprise resources efficiently and effectively. Having more than 20 years of experience, this Australian-based MNC has a global presence in over 50 countries and has helped more than 100 customers address their business needs. SAVIOM also provides smart solutions for project portfolio management, professional service automation, and workforce planning software.

Please contact us to discuss your business challenges and significantly reduce project resource costs!

The above growth is attributed to several macroeconomic factors, such as the increasing complexity of tax regulations, globalization, increased financial frauds and risk awareness, etc. Therefore, there is a growing demand for audit and accounting services as companies worldwide strive to protect their profit margins and stay ahead of the competition.

However, audit & accounting firms face numerous resourcing challenges, such as skill gaps, inability to meet seasonal demands, unplanned attrition, etc. That’s why effective resource planning is the need of the hour to future-proof and optimize the audit and accounting workforce.

This blog discusses the various steps you can implement to create an efficient resource planning in audit and accounting firms.

But first, let’s understand the benefits.

Significance of resource planning in the audit and accounting sector

Resources are the crux of audit and accounting service firms since they generate revenue by charging their clients for the consultants’ expertise and time. Therefore, firms need an efficient resource plan to maximize the billable utilization of their skilled personnel and improve profitability.

Since this sector experiences seasonal fluctuations, resource planning enables firms to meet the sudden rise and fall in demand by comparing the project requirements against capacity. Additionally, it helps bridge the skill gaps in advance, ensuring consultants’ availability before the project’s onset, thus eliminating last-minute firefighting.

In addition, efficient resource planning helps managers create the right mix of permanent and contingent audit and accounting personnel. For example, an upcoming assignment requires a forensic auditor to evaluate a firm’s financial records and collect evidence for legal proceedings. With efficient resource planning, managers can easily deploy a contingent forensic auditor depending on the duration of the assignment, minimizing project resourcing costs.

Overall, resource planning is critical for audit and accounting firms to identify and allocate competent personnel to projects at the right time and cost and deliver high-quality services to clients. In addition, it helps firms to stay competitive in a rapidly changing market and adapt to new challenges and opportunities.

Given the significance of resource planning in the accounting and auditing industry, the following are the best strategies to make it efficient.

Best practices to implement a resource plan in audit and accounting firms

Robust resource planning is the backbone of every project since it redefines business efficiency and helps unlock the workforce’s full potential.

Here’s how you can implement an effective resource plan.

Forecast and bridge capacity gaps of consultants for pipeline assignments

Most accounting/audit projects have a shorter timeline, and usually, practitioners work on multiple projects simultaneously. Therefore, consulting managers in audit and accounting firms must plan the pipeline assignments by analyzing the resource requirements. They must also implement suitable measures proactively to bridge the capacity vs. demand gap.

For example, a pipeline audit assignment needs five auditors to complete the tasks successfully. If the manager has ten available auditors, they can bring forward other projects for the extra five auditors or sell their capacity at a discounted rate. Alternatively, if they only have three auditors, a shortfall of two employees can be resolved with internal channels like implementing out rotation and backfill strategy or training/upskilling. If needed, managers can also request HR to initiate project-specific or skill-based hiring to avoid last-minute firefighting.

Identify and allocate cost-effective audit/accounting personnel to projects

Since the accounting sector often utilizes high-cost specialized resources such as actuaries and tax analysts, it is significant to consider the overall resourcing budget while planning to protect the profit margins. In addition, resource planning enables firms to identify cost-effective auditors/accountants with skills matching project requirements once they receive a resource request.

For example- instead of assigning a senior advisory lead to evaluate business transactions, managers can identify and allocate a skilled junior counterpart for the same. It will significantly reduce the resourcing cost, ensuring successful project delivery within the budget. In addition, they should have a sufficient lead time for carrying out planned hiring activities and create an optimum resource mix preventing budget overruns.

Create the right mix of permanent and contingent audit/accounting staff

The demands for specific skills, such as tax advisory, consultants, etc., witness a surge during the financial year-end. Based on the project nature, firms can form a blended workforce to meet these sudden peaks. During this period, contingent workforce can provide additional support to permanent resources or offer specialized services, allowing firms to fulfill client demands more effectively.

For example, an auditing/accounting firm bags a short-term project on filing client’s tax returns and forms. Here, the managers can allocate a freelancer tax analyst and complete the project within the budget. On the other hand, firms can recruit full-time employees for long-term projects, such as the annual auditing for an insurance company for the next 7 years. This will enable organizations to achieve their goals by keeping costs in check, boosting profitability and sustainability.

Set utilization targets for accounting consultants and track them periodically

As mentioned above, audit and accounting firms usually depend on external and internal resources for project delivery. However, if the utilization targets for the accounting employees are not well-defined, it creates operational inefficiencies and low productivity. Therefore, firms need to set utilization targets for permanent and contingent staff to ensure maximum billability.

For instance, the utilization target of permanent consultants can be set around 70 – 80 % of their capacity so that they can be involved in billable and other important non-billable tasks. On the contrary, an on-demand resource’s utilization rate can be set close to 100% because they are usually hired to perform a specialized function for the short term. These measures ensure that both internal and on-demand audit and accounting staff are optimally utilized. In addition, managers should track their utilization levels periodically and implement measures to prevent under/over-utilization.

Implement training and upskilling programs on a regular basis

The rapid emergence of technologies, such as AI, ML, Blockchain, etc., has made it mandatory for accounts/auditors to stay abreast with the latest skills and technology.

A survey reveals that “57% of accountants find technology literacy the most critical additional skill for future employees in this field.”

For this, accounting managers can formulate several training/upskilling programs, IDPs, etc., to align the workforce’s skills with the latest trends. For instance, CAs can be trained in data analytics, which will help them generate financial reports quickly and accurately using multiple data like revenue, expenses, and account budgets.

They can also implement other learning methods, such as peer-to-peer coaching, job shadowing, etc., for the audit and accounting staff. It will prepare them to take up multi-faceted projects in the future and diversify their portfolios. Further, these initiatives will help bridge existing skill gaps, and improve performance, enabling the firms to stay relevant in the digital age.

Facilitate succession planning for critical consultants.

Research reveals- 94 percent of employers report that succession plan has a positive impact on their employees’ engagement.

If critical resources, such as senior auditors, accounts officers, partners, etc., suddenly retire or resign, the projects can derail in the absence of succession planning. It, in turn, can cause revenue losses and negatively impact client experiences for accounting service organizations. To avert this situation, firms can leverage effective resource planning to review key accounting/auditing roles and resources.

Consulting managers can also track the performance of every consultant to identify the ones to be considered for promotion to senior/strategic positions. Moreover, they can also upskill and train the audit and accounting staff to take up higher roles. In addition, it enhances the level of engagement of audit and accounting personnel since they are more focused and eager to take on critical responsibilities. This way, effective succession planning ensures smooth role transition and business continuation.

Empower auditors/accountants to choose the project of their interest

A study reveals- “1 in 3 professionals reveal that boredom is the primary reason to leave their jobs.”

The above stats hold true for the audit and accounting sectors as well. Most accounting professionals work on similar projects that become monotonous over time, affecting their engagement and productivity. To avoid this, managers can give employees the choice to work on assignments matching their interests by publishing open positions with relevant project details periodically.

This would enable audit and accounting employees to show interest and apply for suitable open positions. Managers can then choose the best-fit consultants for the projects. By working on the projects of their interest, professionals will be more motivated, enhancing their performance. Furthermore, it will increase autonomy and help with their career trajectory, resulting in improved retention.

Now that the strategies are understood, let’s know how an advanced resource management solution will help streamline the resource planning process.

How can a modern ERM tool streamline resource planning in audit and accounting firms?

Advanced resource management software provides efficient resource planning capabilities that help audit and accounting firms utilize their resources optimally.

Here’s how-

• It offers 360-degree visibility into audit and accounting projects/non-project activities such as BAU/admin, leaves, etc. Besides, the software helps maintain up-to-date competency and skill information that facilitates the competent allocation of consultants.
• The multidimensional sorting feature, along with advanced filters, helps managers uniformly distribute the employees according to the work requirements.
• Moreover, the forecast vs. actual and utilization reports helps accounting supervisors implement corrective measures and eliminate under/over utilization. It also helps them mobilize skilled accountants from non-billable or admin/BAU work to billable or high-priority projects.
• The modeling and simulation technique enables accounting managers to create and compare various project scenarios and determine the best-fit resource plan.
• The accounting/audit managers can use the open seat feature of the tool to publish various open positions. It will empower auditors/accountants to choose projects of their interest, thus improving engagement and productivity.
• Further, the tool’s collaboration feature helps managers share the lesson-learned reports after completing the project. This report can be referred to by others while working on similar audit/accounting projects and improve resource planning and cost estimations.

This way, modern resource management software can help streamline resource planning in audit and accounting firms.

The Bottom Line

“Planning is bringing the future into the present so that you can do something about it now.” ― Alan Lakein, author

Rightly said, it is essential for audit and accounting firms to create an effective resource plan. It will help unleash the maximum potential of resources and increase their productivity and engagement. However, it is only possible when organizations use robust ERM software to identify and mitigate bottlenecks early. It will help optimize and futureproof the audit & accounting workforce against market volatility, ensuring profitability and sustainability.

So, what’s your strategy to streamline your firm’s resource planning?

The SAVIOM Solution

SAVIOM is the market leader in offering the most powerful and configurable solution for managing your enterprise resources effectively and efficiently. With over 20 years of experience, this Australian-based MNC has created its global presence across 50 countries and helped more than 100 customers achieve their business goals. SAVIOM also has highly customizable products for project portfolio management, professional service automation, and workforce planning software based on business requirements.

A plethora of skills is required when companies have multiple projects pertaining to diverse fields on their radar. While these skills might be overlapping in different project requirements, a matrixed organization allows you to form cross-functional teams. In fact, a survey from Gallup states that 84% of employees are matrixed. 

Focusing employees on a unified mission, a matrixed organization is more nimble and facilitates employees to move from team to team as project demands. This approach helps managers reduce resourcing costs and eliminates the need to sub-contract additional resources by allocating the ones with the required expertise from different divisions.  In order to maximize success, project managers need to place a request to the line managers for the required member well ahead in time.

Let’s understand the basic concept of resource requesting before delving into the details: 

1.What is resource requesting?

When a specific skill set is required to complete a project, the project manager in charge reaches out to the resource manager of the firm, who then reaches out to the team leads to find the particular resource with required competencies. This entire process is known as resource requesting. If the traditional approach of relying on office directories is followed to request resources, project managers get stuck in endless trails of emails. They are directed to multiple leads and by the time their request is fulfilled, they lose their track of time. Moreover, if these authorities are no longer present in the organization and there is no definite system to update it, the managers will not know who to respond to. 

Now, how do you break these silos? How do you coordinate with resource managers and other line managers and allocate resources on time? 

With an advanced resource management software solution in place, resource managers gain enterprise-wide visibility of the workforce and activities pinned to their schedule. Using these tools, you can make the cumbersome process of resource requests simpler and faster. Here are the ways to do it in a breeze: 

1.1 Forecast the demand in advance 

Even though the matrix organizational system has solved problems of the past, it has brought some of its own too. Often project managers get notified of new requirements at the eleventh hour. This becomes an issue when a firm follows a matrixed structure. Resources are likely to be allocated to multiple projects already in flight. Last-minute requests decrease the likelihood of finding the right person, leading to project delays and compromising project quality. The solution is to stay proactive and forecast the demand for resources in advance to the resource managers

When management tools are incorporated with business intelligence, projects can be pipelined and an approximate demand for resources, and their competencies can be extracted using forecasted reports. By leveraging these reports, project managers can request resources from resource managers and settle their resource demand ahead of the curve. Moreover, you can bridge the capacity vs demand gap and avoid any resource crunch down the line. 

1.2 Confirm the relative priority of the project 

How do managers thrive within highly matrixed organizations? 

Constant coordination between line and project managers can ensure smooth functioning. This is of the utmost importance when you are requesting resources. In a diversified company, when several projects are being worked upon and you need to allocate resources for your project, you need to ensure if it’s a high-priority one. Also, make sure to evaluate the time-sensitivity of your project with other projects inline. If there is a priority shift in between, there is a chance for you to mobilize those resources to your project tasks.

When equipped with a tool that maintains a single source of truth, resource managers can get a fix on the order of priority of projects as they can be marked as “likely”, “unlikely”, “tentative” and many more. Based on this data, they can figure out the right resource required for the job. Since a matrix structure focuses on overall business objectives, deploying resources to the projects that add more value is necessary. Hence, a sophisticated system in place that strengthens their decision making makes matrix management more efficient. 

1.3 Place the demand for the required skill set

After defining the roles and responsibilities while planning a project, project managers first need to allocate the right resources to the right tasks. While doing so, if a resource with the required skill set is not available in your resource pool, you can direct your request for the particular skill to another resource pool. The most important step is to ensure that the resource requested aligns with the competencies your project demands for its success. 

Resource managers need clarity on the skill set, the timeline for which resources are required, and if there are any specific certifications required. Only when project managers make the competencies known and clear, can they find the right resource for the right job.

1.4 Check resources’ availability

Every project has a defined timeline. To streamline project planning and ensure that the project is carried out smoothly, managers should stay pre-informed of resources’ availability down the line. You don’t want last-minute absenteeism that can hinder your projects’ progress. Hence, while requesting resources, state the timeline you require the resource for. 

This was a major challenge when traditional practices of calling around and dispatching multiple emails were followed. However, with organization-wide visibility, resource managers can check every employees’ availability using the resource scheduling tool and reserve the resources. These tools are essential when you have a matrixed organization because, with multiple lines of authority, management can become a more complex process.

1.5 Bridge the communication gap

Since matrix organizations aim to establish cross-functional teamwork, collaboration and communication become their key strengths. Only when there is effective communication between project, resource, and other line managers, can there be an efficiency in resource allocation. How can this be established? 

When a channelized resource requesting system is followed, there is restricted access to managers and that keeps them from stepping on each other’s feet. This avoids any unnecessary inter-departmental clashes between the managers. In addition, resources will get clarity on their reporting lines like the project manager will take care of their tasks’ progress and everything else will be taken care of by the line managers. Moreover, complete transparency on resource requirements and project priorities makes the allocation process smooth and easy. There are many benefits to following a systemized protocol and refraining from creating silos in the organization. 

2. The advantages of matrixed organizations

Workforce planning and demand management for managers become easier in matrixed organizations. When there is the flexibility to allocate inter-departmental resources to project tasks, hiring expenses, and resourcing costs are reduced. In addition, managers can tap into resources’ potential and broaden their skill set.  So, make the most of a matrixed structure, introduce a streamlined resource request process, and enhance your project management efficiency. What’s more?  With a system this dynamic and flexible, you will see an improvement in collaboration and higher employee engagement will follow!