A STUDY ON RESOURCE ALLOCATION

INTRODUCTION:

Resource allocation is a central management activity that allows for strategy

execution. A resource allocation is plan for using available resources, especially
human resources in the near term, to achieve goals for the future. It is the process
of allocating resources among the various projects or business units.

Resource allocation is the assignment of available resources to various uses. In the

context of an entire economy, resources can be allocated by various means, such as
markets or central

planning.

In project

management,

resource

allocation

or resource management is the scheduling of activities and the resources required

by those activities while taking into consideration both the resource availability
and the project time.

Resource allocation is a major management activity that allows for strategy

execution. Organization do not use strategic management approach for decision

making, resource allocation is often based on political or personal factors. Strategic

management enables resources to be allocated according to priorities established
by annual objectives. Nothing could be more detrimental to strategic management
and to organizational success than for resources to be allocated in ways not
consistent with priorities indicated by approved annual objectives.

All organization has at least four types of resources that can be used to achieve
desired objectives:

Financial resources
Physical resources
Human resources &
Technological Resources

Allocating resources to particular divisions and departments does not mean that
strategies will be successfully implemented. A number of factors commonly
prohibit effective resource allocation, including an over protection of resources, too
great an emphasis on short run financial criteria, organizational politics, vague
strategy targets, a reluctance to take risks, and a lack of sufficient knowledge.

The real value of any resource allocation program lies in the resulting
accomplishment of an organizations objectives. Effective resources allocation does
not guarantee successful strategy implementation because programs, personnel,

controls, and commitment must breathe life in to resources provided. Strategic

management itself sometimes referred to as a resource allocation process.

DEIFNITION OF RESOURCE ALLOCATION:

Resource allocation is a process and strategy involving a company deciding where
scarce resources should be used in the production of goods or services. A resource
can be considered any factor of production, which is something used to produce
goods or services. Resources include such things as labour, real estate, machinery,
tools and equipment, technology, and natural resources, as well as financial
resources, such as money.

METHODS OF RESOURCE ALLOCATION:

 In an economist's world, resources are optimally allocated when they are

used to produce goods and services that match consumers' needs and wants
at the lowest possible cost of production.
Efficiency of production means fewer resources are expended in producing
goods and services, which allows resources to be used for other economic
activities, such as further production, savings, and investment.
This basically boils down to creating what customers want as cheaply and
efficiently as possible.

A list of eight different price mechanisms critical to an understanding of

politico-economic and socio-economic allocation. Although it is difficult to
give a clear characterization of the importance of different methods of
distribution in a modern society, the following approaches are considered to
be the major means of allocation of resources:

(1) The economic market with a price system;

(2) Voting procedures;

(3) Bidding;

(4) Bargaining;

(5) Allocation by higher authority, fiat, or dictatorship;

(6) Allocation by force, fraud, and deceit;

(7) Allocation by custom, including gifts and inheritance; and

(8) Allocation by chance.

Though simple, the list suggests different approaches used in many politicoeconomic systems, including less-developed countries and societies without
democratic institutions.

RESOURCE ALLOCATION PROCESS & STRATEGIES:

STRATEGIC PLANNING:

Resource allocation begins at strategic planning when a company

formulates its vision and goals for the future. The vision and strategic goals are
accomplished through achievement of objectives. For example, a consumer
electronics company's goal may be to become the market leader in computer
tablets. An objective towards this goal is the design and promotion of an innovative
tablet.

BUDGETING:

Once you have set your objective, you will need to allocate sufficient
resources to accomplish it. In practical terms, this is often a matter of project
budgeting. In our example, the company will allocate money for market research to
determine unmet consumer needs and wants for a computer tablet, money for
product design and development, funds for production, and money for promotional
activities, such as advertising. Each department may take its budgeted funds and

allocate those resources for more specific purposes, such as hiring employees,
commissioning marketing studies, and buying raw materials and components.

LOGISTICAL MANAGEMENT:

Resources have to be moved to where they need to be in order to

accomplish the company's objectives that will bring it closer to its strategic goal.
Logistics is the process by which a company manages the flow of resources
coming into the company, flowing inside the company, and flowing out of the
company.

MONITORING AND EVALUATION:

Monitoring evaluation ensures that resources are allocated in cost

effective and efficient manner. This can be accomplished through careful logistical
management and proper accounting & auditing.

RESOURCE ALLOCATION PATTERN:

Resource Management is a very important part of Real-time and Embedded

software design. This article discusses commonly used Resource Allocation
Patterns. The discussion is divided into two parts:

I.

Resource Allocation Algorithms

II.

Distributed Resource Allocation

I.

RESOURCE ALLOCATION ALGORITHMS:

This section covers some of the resource allocation algorithms that are
commonly encountered in Real time systems. These algorithms are:

a. Hottest First
b. Coldest First
c. Load Balancing
d. Future Resource Booking

a. HOTTEST FIRST:

In hottest first resource allocation, the resource last released is allocated on next
resource request. To implement this last in first out, LIFO type of allocation, the
list of free resources is maintained as a stack. An allocation request is serviced
by popping a free resource from the stack. When a resource is freed, it is
pushed on the free resource list.

The disadvantage of this scheme is that there will be uneven utilization of

resources. The resources at the top of the stack will be used all the time. If the
resource allocation leads to wear and tear, the frequently allocated resources
will experience a lot of wear and tear. This scheme would be primarily used in
scenarios where allocating a resource involves considerable setup before use.
With this technique, under light load only a few resources would be getting
used, so other resources would be powered down or operated in low power
mode.

b. COLDEST FIRST:

In coldest first resource allocation, the resource not allocated for maximum
time is allocated first. To implement this first in first out, FIFO type of

allocation, the resource allocating entity keeps the free resources in a queue. A
resource allocation request is serviced by removing a resource from the head of
the queue. A freed resource is returned to the free list by adding it to the tail of
the queue.

The main advantage of this scheme is that there is even utilization of resources.
Also, freed resource does not get reused for quite a while, so inconsistencies in
resource management can be easily resolved via audits.

c. LOAD BALANCING:

In situations involving multiple resource groups, load balancing is used. A

resource group is controlled by a local resource controller. In this technique, the
resource allocator first determines the lightly loaded resource group. Then, the
resource controller of the lightly loaded resource group performs the actual
resource allocation. The main objective of resource allocations is to distribute
the load evenly amongst resource controllers.

d. FUTURE RESOURCE BOOKING:

Each resource allocation is for a specified time. The resource allocation is only
valid till the specified time is reached. When the specified time is reached, the
resource is considered to be free. Thus the resource does not need to be freed
explicitly.

This technique is used in scenarios where a particular resource needs to be

allocated for short duration to multiple entities in the future. When an allocation
request is received, the booking status of the resource is searched to find the
earliest time in future when the resource request can be serviced. Resource
booking tables are updated with the start and end time of each resource
allocation.

II.

DISTRIBUTED RESOURCE ALLOCATION:

Most Real time systems are distributed across multiple processors. Different
techniques are used to manage resource allocation in such distributed systems.
Some of these techniques are discussed below. They are:

i.

Centralized Resource Allocation

ii.

Hierarchical Resource Allocation

iii.

Bi-Directional Resource Allocation

iv.

Random Access

i.

CENTRALIZED RESOURCE ALLOCATION:

In this technique, a centralized allocator keeps track of all the available

resources. All entities send messages requesting resources and the allocator
respond with the allocated resources. The main advantage of this scheme is
simplicity. However, the disadvantage is that as the system size increases, the
centralized allocator gets heavily loaded and becomes a bottleneck.

ii.

HIERARCHICAL RESOURCE ALLOCATION:

In this technique, the resource allocation is done in multiple steps. First, the
centralized allocator takes the high level resource allocation decision. Then, it

passes on the allocation request to the secondary allocator which takes the
detailed resource allocation decision.

The advantage of this scheme is that the centralized allocator is not burdened
with the detailed resource allocation decisions. This technique could be
implemented in multiple levels of hierarchical resource allocations.

iii.

BI- DIRECTIONAL RESOURCE ALLOCATION:

This scheme allows two independent allocators to allocate the same set of
resources. It is used in situations like bi-directional trunk groups. The switch at
each end of the trunk group allocates the trunks from one specific end. This
logic avoids both ends allocating the same resource under light and medium
load. However, under heavy load, there is a possibility of both ends allocating
the same resource. This situation is resolved by a fixed arbitration algorithm
leading to one of the switches withdrawing its claim on the resource.

iv.

RANDOM ACCESS:

Whenever a resource needs to be shared between multiple entities which cannot

synchronize to each other and they do not have access to a centralized allocator,
designers have to resort to random access to the resource. Here all the entities
needing the resource just assume that they have the resource and use it. If two
or more entities use the resource at the same time, none of them gets service
and all the entities retry again after a random back off timer.

The main disadvantage of this technique is that the random access channel
works well only when the overall contention for the random access channel is
very small. As contention increases, hardly any resource requests are serviced.

FACTORS AFECTING RESOURCE ALLOCATION:

The factors that affect resource allocation are:
i.
ii.
iii.
iv.

i.

The objectives of the organisation

Preference of dominant strategists
Internal politics
External influences

OBJECTIVES OF THE ORGANISATION:

Objective setting is a complex process. There are number of objectives, some are
official (or explicit) while others are operative (or implicit). Employees of any
organisation tend to judge the importance given by strategist to tasks on the basis
of amount of resources allocated to them. If the chairperson of a company, while
resenting the annual report, makes a recording of persuasive in speaking or writing
on the virtues of human resources but the actual resource allocation does not reflect
the importance given to these resources, then the human resource development is
certainly not a priority strategic task. Operative objectives tend to affect the pattern
of resource allocation to the maximum extent.

ii.

PREFERNCE OF DOMINANT STRATEGISTS:

The dominant strategists most often the chief executive officer tends to affect the
process of resource allocation. Their preferences are reflected in the way how
resources get allocated. Perceptive strategic business units, divisional, and
departmental heads know that such preferences matter and try to present their
demands in line with them or attempt creating interest in the dominant strategists
for their demands so that resources can be attracted easily.

iii.

INTERNAL POLITICES:

The ownership of resources is often misconstrued as possession of power. Those

departmental units which are able to attract more resources are perceived as being
more powerful. Executives who are in a position to affect the process of resource
allocation in their favour are received to be more effective. These perceptions make
resource allocation a rational political process. Internal politics within the
organisation, therefore affects the process of resource allocation.

iv.

EXTERNAL INFLUENCES:

Apart from internal politics external influences also affects resource allocation.
These influences arise due to government policy and stipulations, the demand of
external shareholders, financial institution, community, and others. For instance,
conditions imposed by legal requirements on companies may require additional
investments in labour welfare and security, pollution control and safety equipment,
or energy conservation. The shareholders may expect a higher dividend or bonus
shares and resources may have to be diverted to them. Financial institutions may
impose restrictions or require companies to invest in technology upgradation. The
discharging of social responsibilities such as contribution to community services
may require allocation of funds. Thus external influences affect the process of
resource allocation considerably.

If we look back to the factors described previously, it is easy to recognise that

in the absence of clear strategic priorities, the process of resource allocation could
be distorted to a great extent. If strategies are made explicit at different levels,

objectives are clearly laid down, and strategic priorities are defined unambiguously
then balanced of allocation of resources is more likely.

DIFFICULTIES IN RESOURCE ALLOCATION:

Peter Drucker put forward the idea that the job of an effective manager has there
components:
Analysing available opportunities to produce results and developing an
understanding of their costs
Committing resources to pursue the most promising opportunities and
When some activities lead to results and others do not, deciding which
should receive more resources and which should be abandoned altogether.
Drucker described the third component as the most painful step. In this
subsection, it deals with that painful step makes the process of resource
allocation so difficult.
The previous subsection described the factors that affect the process of
resource allocation. These factors, combined with the fact that the resource
allocation process is highly complex, create serval difficult for the
strategists. The four major difficulties are:
a. Scarcity of resources
b. Restriction on generating resources
c. Overstatement of needs and
d. Tendency to imitate competitors

a. SCARCITY OF RESOURCES:
The major difficulty arises due to scarcity of resources. Financial,
physical, and human resources are hard to find. Firms will usually face
difficulties in procuring finance. Even if finance is available, the cost of
capital is a constraint. Those firms that enjoy investor confidence and high
creditworthiness process a competitive advantage as it increases their
resource generation capability. Physical resources would consist of assets
such as land, machinery, and equipment. In developing countries like India,
many capital goods have to be imported, the government may no longer
impose many conditions but it does place a burden on the firms finances
and this places a restriction on firms wishing to procure physical resources.
Human resources are seemingly in abundance in India but the problem
arises due to non availability of skills that are specially required. Highly
specialised IT and compute professional, advertising personnel, and
telecom, power, and insurance experts are scare in India. This places severe
restrictions on firms wishing to attract and retain personnel. The availability
of scarce resources is very real problem faced in resource allocation.

b. RESTICITIONS ON GENERATING RSORCES:

Within the organisation there are several difficulties encountered in resource
allocation. The usual budgeting for existing strategic business units,

divisions, departments places restrictions on generating resources for newer

units and those with a greater potential for growth. This is often seen in the
case of bureaucracies such as government departments. Here the usual way
of resource allocation is fixed percentage of increase over the previous years
budget allocation irrespective of the needs of the departments or the projects
that they handle. The results are restriction on generating resources for
allocating to new departments and the projects that might be in greater and
more in urgent need of resources.

c. OVERSTATEMENT OF NEEDS:
Another frequent problem, especially in a bottom up approach to resource
allocation is of overstatement of the needs for resources. The budgeting and
corporate planning departments may have to face their executives who do
not get resources according to their expectation. Such negative reactions
may hamper the process of strategic planning itself. When strategic
budgeting is used for resource allocation, powerful units may be divested of
resources for reallocation to potential units. Budget battle may ensure if
resource allocation affects vested interest.

d: TENDENCY TO IMITATE COMPETITORS:

It is interesting to observe that companies in an industry tend to intimate their

competitors in terms of resource allocation. No wonder companies are industries
are often so alike internally. There might have been strong reasons in the beginning
to do so when the competitive strategies might have been similar. But as
companies move from one strategy to the next, often the resource allocation
patterns fail to respond to the strategic changes. Different companies following
different strategies may have similar resource allocation process and identical
resource configurations. This does not really make sense and tends to hurt the
capability to develop competitive advantage especially when differentiation
strategies might be followed.

TYPES OF RESOURCE ALLOACTION:

The different types of resource allocation are:

1. ALLOCATION BY MERIT:

 This can be seen as a rewards system of sorts. This view suggests that
rewards should be distributed according to productivity, effort, or
demonstrated ability.

o In the work place, this can be seen as salary increases, promotions,

and even layoffs.

o In the college environment, this can be seen as the distribution of

grades. As not everyone can receive an A for classes, the grades need
to be distributed reflecting a students understanding of the subject.

In aspects where a necessity is involved, such as food, shelter, and water,

this system breaks down. In impoverished countries, for example, few
would argue for denying children food because they are not as productive as
adults.

2. ALLOCATION BY SOCIAL WORTH:

Allocation by social worth tends to take a practical view toward resources,

directing them toward those who appear most likely to contribute to the
common good. This view suggests that resources should move in directions

that ultimately do the greatest good for the largest number of people.
Criteria for social worth can include age, seniority, rank, and expertise.

o In the work place, this can be seen as layoffs. Generally speaking, a

senior worker will not be fired over a new worker.

o In the college environment, this can be seen as the distribution of

money to labs. Labs for graduate students and upperclassmen tend to
be better than freshman labs.

Allocation by social worth breaks down when the criteria for worth ignores
basic human rights. For example, wealth is sometimes used to measure
social worth, especially in countries with market economies. This attitude
can cause food, energy, education, medical attention, and social influence to
"flow uphill," thereby making severe imbalances in essential resources even
worse.

3. ALLOCATION BY NEED:

 Allocation by need tends to view resources in terms of basic human rights.

This view suggests that every person has the same right to some minimal
level of a given resource. Obvious examples include food, shelter, and
clothes.

o In the work place, this can be seen when a company diverts funds to a
division in that company who's equipment is outdated.

o In the college environment, this can be seen as scholarships given to

students who otherwise would not be able to attend college.

Allocation by need breaks down when this criterion is applied so strictly that
it removes the incentive to produce. It's usually true that people work
hardest when they believe they will enjoy the fruits of their labours. This is
also the same reason why socialism doesn't work.

4. ALLOCATION BY EQUAL OR RANDOM ASSIGNMENT:

 Allocation by equal or random assignment takes the view that no rational,

unbiased way can be found to distribute resources. This is the default
allocation method when no other allocation method works.

o The most obvious example of this is a lottery. When there is no

obvious way to distribute resources, a simple lottery can prove to be
the "fairest" way.

Allocation by random assignment breaks down when each portion of a

resource is simply to small to do any good. For example, dividing antibiotics
into small doses during an epidemic could make each dose so small that no
one benefits.

No simple rules for allocation can guarantee fairness under all

circumstances. The ultimate decision depends heavily on exactly what needs to be
distributed and on the specific details of each situation. The Candy case study is a
perfect example of resource allocation.

ALIGNING RESOURCE ALLOCATION TO STRATEGY:

 Resource allocation deals with the procurement, commitment and

distribution of resources.
A major task of top managers is resource allocation. Strategy guides
manager in making decisions about resource allocation.
It lay down clear priorities among competing plans, programmes and
projects.
In course of day - to day, routine work, managers are distracted
enough to be diverted away from strategic tasks.
A good strategy serves the purpose of telling the managers clearly
where their priorities lie. In the absence of guidance from the strategy,
manager can easily end up misallocating resources.
Misallocation of resources can take place in two ways.
First resources might get allocated to tasks that are really not
necessary from the strategic point of view.
Second task that are strategically important may be starved of
resources. In both these cases, resources that are often scarce get
wasted. In other words, aligning resource allocation to strategy means
putting your money where your mouth is.
Another challenge before managers in resource allocation is that of
trade offs.
Since resources are scarce and organisational tasks that demand
resources are often too many, manger end up making difficult trade
off in the process of resource allocation.

 The process of trade - off requires hard to be made. For example,

there may be a situation where scarcity of resources means that
money available for investment may be limited. That limited amount
of money needs to be allocated to competing projects, each of which
demands the attention of managers. In deciding which projects to
fund and which projects to postpone or abandon, managers would
naturally need to have a clear priority.
Another example could be of scarce human resources. There may be a
high demand for well qualified, component IT professionals to put to
work on several projects. But the number of such professionals
available with the organisation may be limited. In such a situation
there should be a clear priority set so that available IT professionals
could be put to work on strategically important projects.
The basic challenge before the strategist is how to allocate scarce
resources

to

competitive

strategic

tasks

that

lead

to

the

accomplishment of organisational objectives and the realisation of

strategic intent.
It would be easier for strategists to allocate resources if the strategic
priorities are clear.

WHAT IS RESOURCE OVER - ALLOCATION?

Over-allocation of a resource is when a resource has been assigned more work than
can be completed during normal work hours. Resource allocation often leads to
overtime and overspending on financial resources.

WHY RESOURCE ALLOCATION IS IMPORTANT?

Over - allocation is most likely to occur when there are multiple projects in a
company or when software is used to allocate tasks to resources. Over - allocation
occurs is when project managers have been encouraged to meet unreasonable
expectations. Project managers then push their resource allocation beyond
obtainable limits in order to meet constrained schedules and budgets. Over allocation puts unreasonable pressure on resources and can be costly not only in
overtime monies but in resource burnout.

TECHNIQUES FOR AVOIDING RESOURCES OVERLOAD:

The most obvious way resource overload can be avoided is by setting up a project
schedule that is realistic. Avoid pushing employees through an unreasonable or
aggressive project schedule as a first defence. Schedule the project in a realistic
way as part of effective project plans.

Here are five other ways to avoid resource allocation overload in your projects:

1.

RESOURCE LEVELING:
In this method, the project manager can either level resources by hand
(complicated, but perhaps more sound) or use a software program such
as Microsoft projects to level resources for you. This method requires the
project manager to be truly on top of his or her game, and to recognize areas for
concern before they become problematic.

2. PRIORITIZE PROJECTS:

By prioritizing projects, when a resource allocation overload is apparent or a

task conflict exists, it can be resolved without piling pressure on the
individual or team (or requiring the individual or team to put in a couple
twelve-hour days).In this way, when you find your resources have been
overloaded, decisions as to which tasks they should focus on are easier to
make.
3. LINKING TASKS:
Linking tasks is more of a logistical solution. If the resource has been
assigned to research the markets for project A and project B, these tasks
could be linked. In this manner, when it appears that a resource has been
over-allocated, really the tasks are similar enough to count for two projects.
By linking these tasks from the different projects, the problem can be
resolved.

4. LEAVING BREATHING ROOM:

When scheduling the project, it is vital to leave breathing room between
tasks however, it is important to not under-allocate resources as this could
lead to a loss of budget monies meaning resource allocations problems will

affect your project's health. A fine balance must be achieved between

breathing room and not moving forward quickly enough.

5. AVOID THE PUTTING OUT FIRES APPROACH TO PROJECT

MANAGEMENT:
If your team is consistently putting out fires, it makes it difficult to focus on
the project. Moreover, by putting out fires, the team becomes knee-deep in
ash, while project tasks pile up. This is where project management
techniques such as scrum come in handy.

How you plan your resource allocation is key in keeping your project on track and
on budget with the outcomes you expect. If you have problems with resource
allocation or your teams are complaining of burnout or being overworked, consider
reviewing your resource management skills to keep your projects healthy.

CONCLUSION:

 The chief executive officer has a major role to play in managing the
process of resource allocation.
Strategic management is based on a participative mode and the
communication of the strategic plan to all executives creates a congenial
environment where resource allocation decisions may be taken amicably.
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