Resource Contraint

A resource constraint is any limitation or risk related to resources allocated

to projects. Identifying these resource management restrictions is part of
the project planning process. Resource constraints can disrupt your project
and impede effective delivery.

Resource constraints occur when project managers do not have enough resources
to meet the demands and outcome of a project. A project may face limited
resources in terms of human resources, materials, equipment, or finances.
Constraints include deficits, limitations, and risks in the project plan that affect the
availability, capacity, and accessibility of those resources, and mean they cannot
match the resource demand.

Why are resource constraints important in project

management?
Poor planning of project resources results in poor project outcomes, including low-
quality work, failed project completion, and loss of business opportunities in future
projects.

Every phase in project planning has to account for potential limitations and strive
for evenly distributed resources. The resource manager needs to coordinate with
project managers to handle project constraints that may arise.

A wise resource management process requires putting the project resources to the
right tasks in managing resource constraints. The optimal time to allocate resources
is months before embarking on the project, so that potential resource constraints
can be resolved and resource risk averted.

Types of constraints on resource availability

They are several types of constraints involved in resource planning. The three most
critical resource constraints are known as the triple constraints or the iron triangle.

The triple constraint refers to the three foremost resource constraints in project
planning: cost, time, and scope.
Cost constraints
Project finances might be the most important determinant of project success since
they affect every phase of resource planning. Financial constraints determine the
capacity, availability, and allocation of the other resources.

For example, if you need to get highly skilled and sufficient workforce resources,
the resource costs will be a central factor governing whether this is possible. If you
need to bring in additional resources for temporary support to the project, again the
costs will be a deciding factor. Even when selecting high-quality material for the
project tasks, the cost will be one of the highest determinants.

Time constraint
Time is a critical factor in planning projects. The time allocated for projects from
the planning phase to the outcome can affect the quality of the results.

Project management tools that help you track time spent on project tasks can go a
long way in mitigating time constraints and ensuring timely completion of the
project. Having a visual representation of resource availability helps you allocate
and align your teams and resources to meet tight deadlines without compromising
quality.

Scope constraint
Project scope - its size and extent - is an important factor in resource planning for
project management. A clear understanding of the project scope will help you
handle resource constraints and allocation without compromising the final result.

The project scope also includes the complexity of tasks involved and the skills
required to meet the demand. This influences when you may need to bring in
external resources to fulfill specific tasks or find new hires.
Causes of constraints in resource management
The causes of resource constraints in project management can either be external or
internal. External causes are outside the organization, while internal causes are
within. The external causes can contribute to the internal ones.

Resource availability
Resource availability, accessibility, capacity, and cost can be a cause of constraint.
Cost deficits can affect resource constraints, which can lead to quality constraints.

Lack of resources is an external cause, but it has an impact on the internal

environment of the team. It leads to limited capacity and accessibility of things
such as labor and material, which can affect projects and staff.

Quality constraint
Quality goes hand in hand with the capacity and the management of project
resources. The demand for quality plays a big role in constraints, especially when
there are limits in the time frame given. Quick turnarounds and tight deadlines can
lead to a compromise of the finished product, especially when the project cost is
limited.

Customer needs
Customer satisfaction is a key measure of project success, and achieving it can put
constraints on the project resources. Typically, it comes in the form of needing
high-quality results in a fixed time period with low costs - each of which represents
a resource constraint!

How to handle resource constraints

As a project manager, handling the constraints in your project resources is a
constant balancing act. Here are some tips experienced project managers use in
practice.
Collaborate with the client
Being open with your customer about the project constraints and how these impact
the outcomes is key to managing expectations. Having a strategy in place between
important stakeholders during resource allocation is essential.

This collaboration should extend beyond the project planning phase. By updating
the customer at regular milestones and bringing feedback on board, you can
determine whether the project is progressing in the right direction and make
adjustments if necessary - avoiding last-minute changes with overworked
resources.

Use resource optimization tools

When you are working with limited resources, resource optimization is vital. By
optimizing the resource allocation in their projects and teams, a project manager
can find creative solutions to mitigate the resource constraints.

This may include, for example, deciding which projects are prioritized, or deciding
which members of the team are allocated to different projects.

Always have a contingency plan

A contingency plan is a risk management tactic. It involves anticipating problem
scenarios and preparing for them. Project management software tools can be useful
in drawing projections during the project.

The contingency plans you need depend on the project limitations you've
identified. They may include rationing materials, expanding the project team, or
cutting costs.

Approach resource constraints strategically

When dealing with resource constraints, some project managers will go with the
old-school approach: nose to the grindstone, more hours, more sweat. While this
may bring you short-term results, it won't stick with your workforce for long.
This may seem counterproductive, but try allocating 80% of your people's time on
projects, instead of 100%.

Welfare maximization

Welfare maximisation refers to the policy which looks after the welfare of the society and
its people.
2:Its main focus is to provide opportunities to all people equitably.
3:This ensures that there is fair distribution of goods and services among the rich and the
poor.

Welfare economics is the study of how the allocation of resources and goods
affects social welfare. This relates directly to the study of economic efficiency and
income distribution, as well as how these two factors affect the overall well-being
of people in the economy.

Microeconomics :

Microeconomics is the study of decisions made by people and businesses regarding the
allocation of resources and prices of goods and services. The government decides the
regulation for taxes. Microeconomics focuses on the supply that determines the price level of
the economy.

It uses the bottom-up strategy to analyse the economy. In other words, microeconomics tries
to understand human’s choices and allocation of resources. It does not decide what are the
changes taking place in the market, instead, it explains why there are changes happening in
the market.

The key role of microeconomics is to examine how a company could maximise its production
and capacity, so that it could lower the prices and compete in its industry. A lot of
microeconomics information can be obtained from the financial statements.

The key factors of microeconomics are as follows:

  Demand, supply, and equilibrium
 Production theory
 Costs of production
 Labour economics

Examples: Individual demand, and price of a product.

What is Macroeconomics?
Macroeconomics is a branch of economics that depicts a substantial picture. It scrutinises
itself with the economy at a massive scale, and several issues of an economy are considered.
The issues confronted by an economy and the headway that it makes are measured and
apprehended as a part and parcel of macroeconomics.

Macroeconomics studies the association between various countries regarding how the
policies of one nation have an upshot on the other. It circumscribes within its scope,
analysing the success and failure of the government strategies.

In macroeconomics, we normally survey the association of the nation’s total manufacture and
the degree of employment with certain features like cost prices, wage rates, rates of interest,
profits, etc., by concentrating on a single imaginary good and what happens to it.

The important concepts covered under macroeconomics are as follows:

1. Capitalist nation
2. Investment expenditure
3. Revenue

Examples: Aggregate demand, and national income.

Top 7 Differences Between Microeconomics And Macroeconomics

Let us look at some of the points of difference between Microeconomics and
Macroeconomics

Microeconomics Macroeconomics

Meaning

Microeconomics is the branch of Economics that is
related to the study of individual, household and firm’s
behaviour in decision making and allocation of the
resources. It comprises markets of goods and services
and deals with economic issues.
Macroeconomics is the branch of Economics that deals with
the study of the behaviour and performance of the economy
in total. The most important factors studied in
macroeconomics involve gross domestic product (GDP),
unemployment, inflation and growth rate etc.
 Area of study

Microeconomics studies the particular market segment Macroeconomics studies the whole economy, that covers
of the economy several market segments

Deals with

Macroeconomics deals with various issues like national

Microeconomics deals with various issues like demand,
income, distribution, employment, general price level,
supply, factor pricing, product pricing, economic
money, and more.
welfare, production, consumption, and more.

Business Application

It is applied to internal issues. It is applied to environmental and external issues.

Scope

It covers several issues like demand, supply, factor

It covers several issues like distribution, national income,
pricing, product pricing, economic welfare, production,
employment, money, general price level, and more.
consumption, and more.

Significance

It is useful in regulating the prices of a product It perpetuates firmness in the broad price level, and solves
alongside the prices of factors of production (labour, the major issues of the economy like deflation, inflation,
land, entrepreneur, capital, and more) within the rising prices (reflation), unemployment, and poverty as a
economy. whole.

Limitations

It is based on impractical presuppositions, i.e., in It has been scrutinised that the misconception of
microeconomics, it is presumed that there is full composition’ incorporates, which sometimes fails to
employment in the community, which is not at all prove accurate because it is feasible that what is true for
 aggregate (comprehensive) may not be true for
feasible.
individuals as well.

What is a Production Possibilities Curve

In business, a production possibility curve (PPC) is made to evaluate the performance of a
manufacturing system when two commodities are manufactured together. The management
utilises this graph to plan the perfect proportion of goods to produce in order to reduce the
wastage and costs while maximising profits.

The diagram or graph explains the units of goods that a company can produce if all the
resources are utilised productively. Therefore, a single commodity’s maximum
manufacturing probability is arranged on the X-axis and that of the other commodity on the
Y-axis. Here, the curve is represented to show the number of products that can be created
with limited resources, while pausing the use of technology in between.

In the graph, the line sloping down also depicts the trade-off between producing commodity
A and commodity B. When a firm diverts its resources to produce commodity B, the
production of commodity A reduces.

A point above the curve indicates the unattainable with the available resources. A point
below the curve means that the production is not utilising 100 percent of the business’
resources.
Production Possibilities Curve Example

The production of 20,000 watermelons and 1,20,000 pineapples is shown on point B in the
graph. If the production of watermelons needs to be more, then the production of
pineapples should be less. On the graph, point C indicates that if the production of
watermelons has to be 45,000, then the company can deliver only 85,000 pineapples. With
this trade-off, the curve shows the idea of opportunity cost.

The production possibility curve also shows the choice of society between two different
products.

Circular flow of economic activities

Production Possibilities Curve Diagram