Hi Isha,

First Modified the trigger,for best practice.

trigger createAllocationsForLead on Project__c (after insert) {
List<Allocation__c> lstApplication = new List<Allocation__c>();
  for(Project__c newPro:Trigger.new)
  {
      
          Allocation__c all=new Allocation__c();
          all.Assigned_User__c=newPro.Project_Lead__c;
          all.Project__c=newPro.id;
          all.Start_Date__c=newPro.Actual_Start_Date__c;
          all.End_Date__c =newPro.Actual_End_Date__c;
          all.Location__c=newPro.Project_Type__c;   
          all.Role__c='Project Lead';

          lstApplication .add(all);
  }

insert lstApplication;
}

and @@@@@@@@@@@@Test method @@@@@@@@

@isTest
private class TestcreateAllocationsForLead {
 
  static testMethod void myUnitTest() {

Test.startTest();

Lead newLead = new Lead();
newLead.Name = 'testLead';
newLead.Email= 'test@gmail.com';
newLead.Company = 'test company';
insert newLead;// if some more field is mandatory , set value;

Project__c project = new Project__c(); 

project.Actual_Start_Date__c = Date.today();

project.Actual_End_Date__c = Date.today();

project.Project_Lead__c = newLead.Id;

insert project; //// before insert if some more field is mandatory , set value;

List<Allocation__c> all = [Select Id Project__c From Allocation__c where Project__c=:project.Id];

System.assertEquals(1, all.size());

Test.stopTest();

}

}

Thanks 

Satya

Response me  if it post helps you