Everything you need to know about Resource Histogram for Project Management

• What is a Resource Histogram?
• Why Use a Resource Histogram?
• What Can You Do With a Resource Histogram? An Introduction to Resource Leveling and Smoothing
• How to Build a Resource Histogram on Excel/Google Sheets?

Project management is a complicated beast, mainly because it requires monitoring resources. And resources – whether people, time, or money – can rapidly disappear. However, with a resource histogram, project managers (PMs) don’t have to panic. That’s because they know exactly where the budget is going daily and where they might tweak things to get the project back on track. 

Resource histograms are just one way PMs streamline processes and protect themselves from unexpected situations. Fortunately, companies seem to be catching up to the importance of being prepared. According to the Project Management Institute (PMI), wasted funding due to poor project management (e.g., budget overshoots, scope creep, and missed deadlines) has declined to 9.4 percent in 2021 compared with 11.4 percent in 2020. 

In this overview, we’ll walk you through your burning questions about resource histograms, how to build and implement one, and how you can take advantage of these tools to get the best results possible.

What Is a Resource Histogram?

A resource histogram is a visualization and statistical tool used to manage resources. Typically, a simple table might give you an idea of how your resources are monitored daily, but it’s hard to visualize information that way. (Also, let’s face it, tables can be boring). By turning your tables into resource histograms, you can easily see at a glance how well you’re keeping everything on track and if daily costs are exceeding the budget.

You might have guessed it, but the first step is establishing the resource cutoff per day. Without this clarity, it can be very easy to overshoot spending or over-allocate. Next is creating a “table of dependencies,” where details like types of activities, how long these activities will take, and how much they will cost per day are recorded. From this information, you can create a Gantt chart to visualize the data. 

Most people stop at this part. But if you take a step further and create a histogram, then you can have a better guide on when to move resources around or when to delay the due dates. We highly recommend two great videos from Engineer4Free that explain this concept really well. But, don’t worry, we will explain everything in this blog.

Video #1: Resource histogram explained for project management

Video 2: Resource constraining example with resource histogram

However, to give you a better context, we will explain the concept further with some nuance.

Why Use a Resource Histogram?

Aside from getting a cool visualization tool, resource histograms give you detailed information on the progress of your projects. In particular, some tasks are too complex and have many components; without a resource histogram, it’s like getting lost in a maze. The Gantt chart below demonstrates how you can have multiple activities/resources that overlap on a project. 

In this video, you can watch how a Professional Services Automation/Project Management Software replace a Resource Histogram with no effort.

When to Use a Resource Histogram?

The PM can use a resource histogram throughout the project. It can be a handy tool, even if it takes time and effort to create one in Excel. (It can even be manually created on paper, but it would be time-consuming and error-prone).

The resource histogram can help PMs figure out how profitable a particular activity is and which activities are interdependent. They can also monitor different processes and make data-based decisions. For example, they can determine which part of the project might benefit from added resources or have been over-allocated for quite some time.

Below are other examples of when a resource histogram is most beneficial.

• You have a limited budget and must stick to it to the last dollar. Sometimes, budgets are incredibly tight, and overspending even for a few hundred dollars can lead to the dreaded scope creep (when unplanned tasks keep adding up, most of which were not initially included in the budget allocation).
• You want to limit the number of daily resources assign for a project. For example, you have a specific role that executes a particular task and want to monitor that these tasks/roles don’t excessively overlap or get unnecessarily duplicated.

To demonstrate this, let’s say we have five parent tasks for the whole project.

In the table of dependencies below, you can see that each task/role is clearly specified per day, along with their corresponding budgets. Being detailed as much as possible helps to create relevant and accurate histograms.

This is the kind of table that is simple to do like this, but it’s a nightmare for a 6 months project. This is the kind of report that a PSA Software can generate quickly.

Pros and Cons of a Resource Histogram

While resource histograms are very useful, they also have certain limitations. For one, it feels outdated and should have been automated long ago. But resource histograms do serve a purpose, and PMs continue to benefit from this simple but informational tool. 

Pros:

• They allow users to compare and contrast data easily.
• The data can cover a long period range (e.g., monthly or annually).
• They have commonly used tools, and references are easy to find.

Cons:

• It can be difficult to compare different categories because histograms work best with one dataset over a long period.
• They can require a lot of file space just to display basic information.
• They can present misleading or incomplete data if the parameters are not clarified in the first place. 

What can you do with a Resource Histogram?

Resource histograms enable PMs to do two main strategies: resource leveling and resource smoothing. 

Introduction to Resource leveling

Let’s say you discovered through your resource histogram that there are three days where the project exceeds the daily budget or time limit. PMs can then re-shuffle major activities to move some tasks to the days below the resource limits, leveling the playing field and avoiding strains on teams.

When to use resource leveling

Resource leveling basically ensures that resources are spread evenly throughout all the client’s projects. Here are some examples of when to apply this technique. 

• To maximize resources. As we described earlier, projects can have multiple tasks, and companies can have various projects simultaneously. With resource leveling, PMs can ensure that resources are re-allocated as needed. 
• To give teams work-life balance. For groups overworking or exceeding time limits, PMs can either bring in other employees to help or push back the timeline to accommodate incontrollable delays (e.g., experiments and test results). 
• To manage client expectations and output quality. PMs can efficiently update their clients on how resources are allocated while maintaining the quality of every deliverable. 

Resource leveling examples

Here are more concrete situations where resource leveling works best:

Moving a project completion date.

Let’s say a user interface (UI) developer team is refreshing an e-commerce website for re-launch within the week. However, a bug fix has been delayed for a couple of days. Since it is very critical to ensure that all bugs have been fixed beforehand, the PM can choose to extend the deadline to the following week. To make up for the lost time, the PM can maybe tweak the due dates of some minor tasks.

Moving a project start date.

A large project is due to start by next week, but the requirements/specifications from the client are still not complete. The PM communicates to the client that since they don’t have all the needed information yet, they will have to start a few days later. The PM then gives the client choices on how they want to re-allocate resources to compensate for the lost time caused by the client’s delay. 

Short on staffing.

A team of software engineers got sick at the same time, and a project needs to be delivered to the client by next week. The PM can then re-allocate some of the engineers from the other projects that are not due yet to help out in the meantime.

Introduction to Resource smoothing

Resource smoothing is usually done after resource leveling. In leveling, the primary constraint is resources; in smoothing, it’s time or schedule. After everything has been re-allocated, PMs saw that there were still some workdays that exceeded the limit within the new plan. The PM can then re-allocate tasks and teams without major re-shuffles, particularly in critical activities. 

Want to learn more about Resource smoothing and leveling? 

When to use resource smoothing

Smoothing ensures that things are going according to plan and that the project won’t have any more significant shifts or scope creep. Here are some examples of when to use resource smoothing.

• The project deadline is set in stone. PMs can look at their histograms and ensure that work hours and labor are evenly allocated across the remaining days/months.
• The critical paths/activities are not going to be affected. As long as the main tasks are going along as scheduled, then some small re-shuffles (a day or two) will be fine.
• Some minor activities can be paused within their timeframe. To make room for other more crucial tasks, some activities can be slightly delayed without much impact on the overall project timeline.

Resource smoothing examples

To better visualize how this technique works, here are some sample situations where resource smoothing works best.

1. The project is due within the week, and the PM sees that everyone seems to be working overtime on Wednesday. The PM can re-allocate the excess work hours to the other weekdays to smooth out the schedule.
2. A website banner is due for review on Monday, but the Design Manager is on leave and will return on Wednesday. The PM can pause the review until the manager returns. Fortunately, the manager will still be able to finish the task before the banner’s scheduled to release on Friday.

How to Build a Resource Histogram on Excel/Google Sheets?

First of all, it’s much more simple to use a project management software or a PSA software to manage those. But I know that some of you are still using excel for those report. Now that we’ve gone through the background and essential characteristics of resource histograms, let’s look at how we can build them. We’ll start with a relatively simple example. First, we need to create a table of dependencies on Microsoft Excel. For example, the table below shows the number of employees required per month.

Next, select the entire table, including the titles and headings, and click the Insert tab. Under Column, select the Stacked Column in 3-D (under 3-D Column). (You can also choose the 2-D version, but in general, stacked columns work best).

Our table of dependencies should be transformed into this:

Source: Watch the complete video from Eugene O’Loughlin on how to Create a Resource Histogram in Excel.

As we can see from this basic resource histogram, additional information can be included, like extending the months or adding more roles/employees. This way, PMs can immediately see the months where employees would be needed more (e.g., July-September on the sample histogram). The team can then prepare in advance for these periods, including hiring additional staff if required.

Another way to read this histogram is if there’s an employee limit. For example, the client only wants to pay for 10 employees max for this project. By referring to the histogram, PMs can choose to shuffle specific tasks so that they are performed in the first quarter or last quarter of the year, where resource allocation is much lower.

For more information on how to build resource histograms in Excel, you can check this video out.

Resource histograms can be simple to create but can give valuable detail. It all depends on how PMs want to use and adjust them to the project’s needs.

Are you interested in a resource management tool for your business?

You don’t need to be an excel wiz to do this kind of report. This is why a solution like Klient can help you out. If you want a resource management tool that’s automated, flexible, and highly customizable, Klient can build one to tailor it to the needs of your business. We can help you take control and manage staffing, and allocate tasks appropriately and intuitively.

We’d love to help you out. Schedule a demo with us.