Estimate Project Resources: 11 Essential Steps

Editorial Team

Estimate Project Resource

It would help if you had a definite estimate of the project resources for successful project execution. Resources is a general term for all the assets required for an organization’s successful functioning or meeting given objectives.

Therefore, resources cut across the supply of money, materials, staff, and any other asset that goes into the project’s execution. However, knowing how to estimate all the resources required for a given project may not be as easy as it sounds.

One needs to estimate resources to allocate them to each activity on the project list. This article will look at some of the steps to help you come up with the best resource estimates. However, before we delve further into this, let’s look at the different types of resources.

Types of Resources

You have to know the different types of resources now that they must be identified when coming up with an estimate. Here are the common types of resources needed for different projects:

1.    Labor

Labor is normally divided into three main categories: direct, indirect, and overhead labor. Direct labor refers to work that translates into production. It is the direct input needed for production. When estimating direct labor, one must calculate the hourly or monthly unit rate of the laborer divided by the number of days or hours spent on the project.

Direct labor also attracts benefits, retirement contributions, expenses, and bonuses given to the employee. On the other hand, indirect labor includes the work needed to meet the deliverables, but it does not translate into production, unlike direct labor.

This type of labor may entail quality control, project management, and supervision. It is normally included in project costs estimates to give an accurate value of the budget needed for the project’s execution.

The last type of labor is the overhead labor which mostly includes the organizational administration costs such as the CEOs’ salaries that, even though not directly attributed to the project, may at times be paid for by all the projects.

Standard practice is to calculate the organizational administration expense yearly and divide it among all the employees to come up with a unit rate. This is normally added to the direct labor rate.

2.    Tools & Equipment

These are all the items needed for the delivery of the final product. For a construction project, the tools and equipment may include the excavators, drill, and any other machine needed for successful project completion.

For software-related projects, the tools and equipment include all the software needed during the project’s progression. When estimating the tools and equipment needed for a project, you may have to factor in those that the company may have to outsource.

Generally, these tools and equipment are used for more than one project, and therefore, when coming up with the estimates, you should remember to factor in the available ones. An important hack is to divide the cost of the tools and equipment over a low number of projects to have a realistic estimate of what will be spent on them.

3.    Materials and Supplies

The material and items are part of the finished product. They are normally quoted in units. While coming up with their estimates, it is advisable to calculate the exact quantity and also make room for a little extra to take into account wastages. This is one of the reasons why project managers are advised to include a contingency fund in their project budget estimates.

An important point to note is that not all projects will need material and supplies. Therefore, first, understand your project before defining the types of resources needed. Anything else that goes into the project can be classified as fixed-cost items. These may include subcontractors in engineering projects.

Note that large projects attract more resources. These may attract different costs such as overtime pay and the purchase of facilities. Therefore, while drafting the resource estimate, you must take all these into account, or else it will be incomplete.

Steps to Estimate Project Resources

1.    Identify The Scope and Magnitude of Your Project

It would help if you had a clear understanding of the project scope before beginning the process of resource estimation. What does the project entail? What are the related activities, timelines, and deliverables? Knowing what your project entails will help you understand the number and magnitude of resources needed for the project.

2.    Check Resource Availability

You cannot have a clear estimate of the resources required in a given project without establishing whether they are available or not and in what quantities. Remember, every project requires relevant and quality resources, or else all the objectives will never be met.

Therefore, start by first considering the availability of resources that are needed in the project. Do you have adequate staffing? Do you have the right number of equipment? This will give you a precise estimate of the number of resources you should outsource.

Using a resource calendar will simplify this step. This can either be a simple or an actual calendar within a given software. Reviewing the resource availability will help you know the limit you can reach when allocating the resource.

3.    Review the WBS and Activity List

Remember, the resources needed for a given project are part of the WBS and activity list. This is the work breakdown structure, essential for getting the project off the ground. However, note that this may be too confusing if you are a new project manager. Therefore, audit WBS and activity list after reviewing resource availability.

4.    Identify the Readily Available Resources

After reviewing the resource availability, the WBS, and the activity list, you need to identify the potentially available resources. Out of all the resources, which ones can be set free to help you meet the objectives of the project?

Therefore, think about the available staff and equipment that can be set aside and directed towards the project’s execution. When identifying potentially available resources, do not include the ones that have to be outsourced.

You need to first plan with what you have before considering other avenues.

5.    Review Historical Data

Historical data plays a huge role in project resource estimation and the development of a budget. Therefore, while estimating the resources that your project team will require in a given project, make sure that you uncover history about the reuse of resources.

Remember, your current project is likely not the first of its kind in the organization. You will realize many more if you look harder. If there is a previous project similar to the current one, check the types of resources utilized.

Though not entirely, chances are that you will use the same resources in your current project. Also, using historical data gives you a defined starting point. You will not be starting from zero, especially if your organization has executed several projects.

However, make sure that you identify a similar project. Do not rely on data from a totally different project, as you will be making an inaccurate comparison.

6.    What are The Organizational Policies?

When estimating project resources, you need to review organizational policies on resource usage to know the limits you can go. Different organizations have policies and rules on how to ask for resources, assign projects, monitor work, and so on.

Therefore, make sure that you know the company’s resource usage policies to reduce the chances of making an inaccurate estimate. While estimating the project resources, also remember to use relevant tools to monitor the project phases, give project team members and facilitate time reporting.

7.    Seek Expert Help

It would help if you involved experts in giving you the correct judgment of the needed and available resources. This includes the skills and experience to be looked at in the candidate based on the project activities. The experts know what to look for in the right employee and how the project team can be set up.

Most companies have subject matter experts to help in such situations. However, you can also outsource expert help to ensure that you come up with accurate estimates. The experts will also help you come up with the best project team, which is a plus.

Remember, being the project manager does not mean that you should do everything alone. Always be ready to involve as many experts as possible to come up with accurate predictions. Always try as much as possible to be open to outside suggestions.

8.    Make/ Buy Decisions

Once you have involved expert opinion to come up with a recommendation of the resources needed, it’s time to decide how to get them. If the resource has to be outsourced, you should consider whether it will be leased or hired.

A simple hack is to determine its versatility. If the organization can still use the resource for future projects, it would be wise to buy it to save yourself the constant cost and pressure of re-hiring. However, if the resource is project-specific with no possibility of future usage, it would be wise to lease it.

Also, ensure that you involve other team members in the make/buy decisions. Other people should feel that they are part of the decision-making process to encourage accountability.

9.    Break Down the Project Activity Further to Clear any Complexities

If there still exist some complexities even after following all these steps, you need to break down the project activity further. What determines the number of resources needed in a given project is the number of activities involved.

Some activities may be hard to estimate even with a clear WBS and activity list. Therefore, to enhance easier estimation, break down project activity further.

10. Quantify the Resource Requirement

When estimating the resources required for a given project, you must evaluate the resource necessities by activity. How many resources will be needed for the different roles involved in the project?    Therefore, after coming up with the different resources required, quantify them by the different activities.

11. Develop a Hierarchical Structure of the Resources

This is normally known as the Resource Breakdown Structure, popularly known as RBS. After carefully executing these ten steps, it is time to come up with a definite list of everything you will need to meet the project objectives.

Ensure that you break down the list by function and type. It should also include the people needed for the completion of the given project. It extends to the management tools, equipment, and materials all needed for the given project.

Keep in mind that the RBS is hierarchical to help you as a project manager organize the resources and find their relationship. It helps project teams stick to the budget allocated for the given project.

How to make a Resource Breakdown Structure

The RBS normally has a similar format to the WBS. It includes all the resources that you will need for the successful completion of the project. When coming with the RBS, the project manager must consider the schedule, risk register, cost estimates, and other related organizational processes.

It normally resembles a tree diagram, with the final deliverable of the project at the top followed by resource breakdown, all arranged before the overall heading of the project. The resources are further broken down into branches which are basically the types of resources.

You can include the site, equipment, and the project team in the RBS. However, if you need something different, you can work with a spreadsheet to create a horizontal list of resources. Remember to include the resource number on the left and the resource categories across the spreadsheet. These should indicate their categories, types, quantities, and notes.

12. Update the Project Documents

Once you have come up with a definite list of all the resource estimates, note them down in the project document. Keep in mind that project management involves lots of documentation and record-keeping.


Project resource estimation is an important part of project planning. You need to identify all the required projects in a given project and determine their availability before it kicks off. Therefore, make sure that you fully understand the project activities to determine what will be needed for project success accurately.