You might be surprised at the impact a few optimizations can deliver. Whatever the size of your business, the ROI of resource management can be transformational.
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Resource management amplifies and improves everything it touches in professional service firms – from operational efficiency and project outcomes, to staff retention and succession planning.
Yet a survey by the Resource Management Institute found that only 52% of respondents consider resource management a strategic driver in their company. That leaves 48% missing out. Let’s fix that today by proving the remarkable ROI of resource management once and for all.
Whether you’re new to resource management and curious about the ROI – or a diehard devotee looking to build a better business case – we’ve got everything you need to know about why resource management is worth investing in.
There are significant financial benefits for organizations that optimize their resource management – both in terms of profitability and cost control.
Operationally speaking, centralized resource management helps projects run closer to budget and schedule, improves project outcomes through accurately matching talent to tasks, reduces bench time, increases utilization, and reduces the high cost of staff turnover.
Strategically, it aligns resources to business objectives, surfaces capacity for additional work, matches resource supply to demand, mitigates resourcing risk, and helps leaders make better decisions for their business.
The table above shows some ways resource management controls costs, increases revenue, and delivers strong financial return on investment. Given the chilly economic climate right now, let’s take a detailed look at how resource management controls costs.
In a project-based business, your human capital is your biggest asset and one of your highest costs. You need to maximize your return on that investment.
That means monitoring utilization rates to ensure you’re not wasting money on avoidable, non-billable bench time. When staff are under-utilized, they’re burning money rather than earning it, and that undermines profitability.
Effective resource management provides data and tools for optimizing utilization. But that doesn’t mean scheduling human resources to 100% capacity with billable work (more on that in the next section).
This gives staff a balanced workload where they’re productive and making money but also able to attend to essential non-billable activities – such as meetings and training – that are fundamental to project delivery, professional development, and client outcomes.
Plus, resource management data supports workforce planning, which means senior managers can match staff supply to future demand, preventing overstaffing. And accurate scheduling and workload management minimize the need for overtime, reducing additional payroll expenses.
According to the 2024 Global Talent Trends report published by Mercer, 82% of employees are at risk of burnout – but only half of employers design work with wellbeing in mind.
Employee burnout poses significant risks, both morally and financially. Humanizing resource management isn’t just an ethical imperative, it makes good business sense too. Burned-out employees become less engaged and productive, leading to worse project outcomes, plus increased turnover and absenteeism.
The cost of replacing a salaried employee is estimated at 6 to 9 months of their annual salary. This includes direct recruitment and onboarding expenses, as well as lost productivity during the transition period. Using resource management to balance workload reduces the risk of burnout and the associated costs.
But it isn’t just about reducing churn. Resource management can increase employee retention too. For example, by strategically allocating human capital to projects that match their personal passions and professional development goals. This can increase satisfaction, engagement, and performance – as well as upskilling staff along the way. Win-win.
Of course, even with magnetic retention strategies, every business still needs to recruit some time. New roles need filling and retirees need replacing. And that can be a significant source of unnecessary costs. For example, needing to use expensive temporary contractors to plug urgent gaps, or hiring in external talent rather than upskilling internally.
Resource management plays a crucial role in this sort of strategic workforce planning. Data collected through resource management lets businesses identify resource demand in good time so that HR colleagues can optimize recruitment and development processes, and save money as a result.
Resource management doesn’t just maximize your profitability through cost savings. It can make you more money too by optimizing project delivery. Here are 4 ways resource management can directly boost profit for your project-based business.
We’ve already explained how underutilization undermines your profit margin. But can you quantify the value of boosting utilization? The Resource Management Institute has done just that. It calculates that a 1-point increase in resource utilization can create over $1,000,000 uplift in revenue each year. If that’s not a reason to take resource management seriously, we don’t know what is.
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Resource management tools and techniques help businesses plan and execute projects more effectively. By analyzing historical data on past allocations and project performance, you can improve forecasting for future projects. This improves your budgeting, and scheduling, and leads to more accurate project quotes and invoices. So you can bill for the work you’ve actually done.
Resource management also involves risk management and mitigation – identifying any resourcing issues that could derail a project. This includes recognizing skill gaps, overcommitment of resources, and potential bottlenecks. By proactively addressing these risks, you can develop contingency plans to keep the project on track – and prevent any costs arising from the unexpected. Plus, by allocating the right people to the right projects, you staff the project with the skills it needs, reducing the risk of costly rework.
Resource management data – particularly around availability, capacity, and utilization – lets you surface any time and talent that’s going to waste. Something our CEO Tim Copeland hates to see! Once you’re aware of this spare capacity, you can put it to use – perhaps taking on additional projects you didn’t think you could squeeze in. Imagine the impact on your business revenue if you could take on one more project each year…
It’s well known that retaining clients is more cost-effective than acquiring them. In fact, it’s estimated that it costs 4x more to acquire customers than to retain them. So it makes financial sense to aim for high client satisfaction and retention. Resource management gives you the best chance at this by allocating the optimal team, doing great work, sticking to budget, and delivering on time.
Satisfied clients can also become advocates for your business and boost your reputation. This all translates into repeat business, higher revenue, and reduced cost of acquisition.
The ROI of resource management is indisputable, if you have the data to show for it. Tracking resource data is crucial to show the quantifiable impact of your initiatives. And, unless you love poring over spreadsheets, you’ll need a suitable resource management platform to do the heavy lifting.
Resource management software – like Runn – can collect, analyze, and visualize the data you need automatically. No wasting time with formulas or pivot tables – just straight to the insights you need.
Here are five different ways to present resource management ROI to stakeholders.
Everyone loves a good makeover - and it's no different in business. Compare key metrics before and after implementing your resource management improvements to highlight the quantifiable improvements in utilization rate, billable utilization, etc.
If you’re a left-brain thinker, you’ll love diving into the stats. But right-brain thinkers might prefer a more narrative approach. Develop case studies that tell the story of how resource management has transformed project or financial performance. Include the challenge, strategy, and outcomes, as well as quotes from key stakeholders on the transformation.
Don’t just measure the stuff you can quantify – that’s a common resource management mistake – as not all the benefits in resource management are quantifiable. So take stock of qualitative data too.
Nothing like a bit of friendly rivalry to get stakeholders on board. Benchmarking against industry standards provides valuable context for assessing the effectiveness of your resource management practices. Compare your business performance against sector standards to see if you’re performing above or below par.
If a picture’s worth a thousand words, data visualization is worth a thousand spreadsheet cells. It’s instant enlightenment for busy people who’d rather not wade through rows and columns to gain insights. Charts, graphs, and heat maps are the way to go.
According to research from Wellingtone, resource management is one of the biggest challenges that project managers face. But it doesn’t have to be. The problem isn’t that resource management is difficult, it’s that project managers don’t have the right tools and support to do it well. Here are our tips for embedding resource management and maximizing your ROI.
You need stakeholders on your side if you want resource management success – especially in change management situations. Your senior management needs to be on board and ready to cascade the benefits down the organization, and you need operational teams to be excited about what resource management means for them.
We’ve got some tips below about how to communicate the benefits and ROI of resource management to stakeholders. And we’ve written extensively on getting senior buy-in for resource management elsewhere. If you want to know more:
Successful resource management depends on data. Metrics like resource utilization rates, project profitability, client and staff satisfaction, time to fill vacancies, etc help you monitor and optimize your people practices – and measure the ROI of your resource management. You can find five essential resource management KPIs here.
By monitoring and benchmarking resource management data, you can begin to identify areas for improvement. As well as demonstrate the ROI of your new initiatives.
We’re not going to be coy here. Resource management platforms aren’t just nice to have, they’re an essential investment. And it’s not just us saying it. The Project Management Institute’s Book of Knowledge advises that:
Resource management software [...] can help plan, organize, and manage resource pools and develop resource estimates. Depending on the sophistication of the software, resource breakdown structures, resource availability, resource rates, and various resource calendars can be defined to assist in optimizing resource utilization."
You see, resource planning using Excel isn’t sustainable or scalable. Above a dozen resources and you’ll really struggle to get the data you need for confident, accurate allocations. In a dynamic project landscape, the information in spreadsheets is out-of-date as soon as you close the tab. Plus it takes too long to extract actionable insights.
A resource management platform, on the other hand, empowers you to act quickly and confidently. If you want to know more, check out how Runn compares to using spreadsheets for resource management.
If you want better resource utilization, more accurate capacity planning, higher staff retention – and more – we’d love to hear from you.
Key features include:
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