9.2 Techniques for Allocating Resources

Before managers can organize and lead in order to implement the goals, they must have resources, which are the assets of the organization.

There are four techniques for allocating resources:

Budgeting

A budget is a numerical plan for allocating resources to specific activities.

Managers typically prepare budgets for revenues, expenses, and large capital expenditures such as equipment, and budgets for non-dollar numbers for dollar amounts such as weekly persons-hours and monthly capacity utilization.

Budgets are one planning technique that most managers, regardless of organizational level, use.

It is an important managerial activity because it forces financial discipline and structure throughout the organization.

Scheduling

This is about allocating resources by detailing what activities have to be done, the order in which they are to be completed, who is to do each, and when they are to be completed.

Some useful scheduling devices are:

9.2 Techniques for Allocating Resources

Gantt Charts. It is a bar graph with time on the horizontal axis and the activities to be scheduled on the vertical axis. The bars show output, both planned and actual, over a period of time. It visually shows when tasks are supposed to be done and compares that with the actual progress on each.

Load charts: It is a modified Gantt chart. Instead of listing on the vertical axis, load charts list either entire departments or specific resources. This arrangement allows managers to plan and control capacity utilization. Load charts schedule capacity by work areas.

9.2 Techniques for Allocating Resources

PERT network analysis: The earlier two types of charts are useful as long as the activities being scheduled are few in number and independent of each other. The Program Evaluation and review Technique (PERT) is highly appropriate in coordinating hundreds or even thousands of activities, some of which must be done simultaneously and some of which cannot begin until preceding activities have been completed. A PERT network is a flowchart diagram that depicts the sequence of activities needed to complete a project and the time or costs associated with each activity. Therefore, a manager must think through what has to be done, determine which events depend on one another, and identify potential trouble spots.