6/Allocating Resources to the Project

6/Allocating Resources to the Project

Chapter 6

Allocating Resources to the Project

This chapter extends the previous one on scheduling into the area of allocating resources among the activities of a project, or among multiple projects competing for the same resources. The chapter begins with a discussion of expediting project completion times and highlights that by selectively choosing which activities to crash and by how much, we can determine the minimum cost for all possible project completion time. The use of Excels Solver optimization routine to facilitate this analysis is also presented. Next, the chapter moves on to the topic of resource loading and in particular highlights the problems of overscheduling resources. The topics of resource leveling and resource allocation naturally follow in the subsequent sections. Finally, the chapter concludes with an overview of several of the concepts Goldratt raises in his provocative book Critical Chain.

Cases and Readings

A case appropriate to the subject of this chapter is:

Harvard: 9-613-020 Space Constructors, Inc. This 3-page case involves a simple project where partial crashing has already been planned but more, and less, crashing is also to be considered. The network has some special characteristics that offer some worthwhile lessons for the student.Answers to Review Questions

1. There can be a variety of reasons why resource allocation is of concern to the PM despite having a properly completed action plan. For example, often the action plan only lists general categories of resource requirements such as engineering, purchasing, marketing, and production. In these cases, the project manager must still arrange to get the specific resources (e.g., personnel) needed. Furthermore, the action plan may only specify how much of the resource is needed and precedence between the activities relationships, it may not specify exactly when the PM will need these resources. Finally, although the action plan specifies the amount of a resource needed for a particular project, there may not be a mechanism in use that balances the load of resources across multiple projects. This can lead to conflicts and the creation of bottleneck resources.

2. A project with a fixed delivery date can vary the level of resources used to meet a firm project completion date. A project with a fixed limit on resource usage cannot obtain additional resources but can possibly delay the project completion date. The reason this distinction is important is that it specifies which of the fundamental trade-offs the project manager can exercise. In the case of projects with fixed delivery dates, only performance and cost (resource usage) can be varied. In projects with fixed resource usage levels, only schedule and performance can be varied.

3. Fast-tracking is a technique whereby key stages of the project are overlapped. In the construction industry, this might entail beginning construction before the design and planning are finished. In the pharmaceutical industry this may entail developing the production process as the new drugs are being developed and tested.

4. Information that should be entered into a resources calendar include the resources availability (e.g., days in week available, total hours available per week, hours available each day), times the resource will not be available (e.g., lunch, weekends, holidays, vacations, scheduled maintenance), and resource cost (e.g., cost per unit of usage, cost for overtime and overuse, known changes in future resource cost).

5. In project oriented firms there is much more uncertainty about the timing of resource needs since the resources primarily move between projects rather than moving between projects and a functional department. Therefore, extra resource capacity is needed as a buffer given the greater level of uncertainty present.

6. Although the arrival and departure times may be carefully scheduled, we all know that actual arrivals and departures often deviate significantly from these schedules. Therefore, a significant amount of uncertainty is present and greatly complicates the ability of the airport control system to handle arrivals and departures. Indeed unplanned events (e.g., weather delays, equipment malfunctions, late flight crews, and so on) often cascade through the system further compounding the problem. Therefore, excess capacity in control towers is needed as a buffer given this level of uncertainty. Clearly, the cost of not having this capacity greatly exceeds the cost of some idle capacity.

7. The PM that is short of secretarial resources does not face that great of a problem as this type of resource is relatively abundant and not usually critical to the projects ultimate success or failure. The PM that is short of a Walt faces a much more daunting problem because a Walt is a scarce resource that is important to the projects successful completion and there are no readily available substitutes for a Walt.

8. One reason it is important to ensure the resource calendars are on the same time base is because task duration is not usually dictated by the number of labor hours required to complete the task, but rather by the calendar time required to complete it.

9. The three criteria are schedule slippage, resource utilization, and in-process inventory. Schedule slippage measures the delay suffered by projects as a result of the application of a resource allocation priority rule. Resource utilization is a measure of the total resource cost (including costs such as the cost of hiring, firing, and maintaining resource inventories) under different allocation rules. In-process inventory cost is a measure of the amount of unfinished work in the system.10. In a job shop allocating resources (equipment and workers) to jobs or orders is required. In projects, a similar allocation is required where specific resources must be allocated to tasks and activities which represent the jobs.

11. The student syndrome refers to situations in which people wait until the last possible minute to begin a task. Its name is derived from the belief that students often delay the start of an assignment until just before it is due.

Suggested Answers to Discussion Questions

12. The fundamental trade-off in crashing a project is between schedule and budget. Specifically, crashing entails employing additional resources (cost) in order to reduce the projects completion time. If it is decided to crash a project other trade-offs may be necessary in terms of the completion time of other projects and perhaps the performance of this and other projects.

13. The main advantages of labor pools versus dedicating workers to specific projects are less waiting time for key resources, the ability to level resource usage, and the ability to substitute one worker for another should one become unavailable. Potential drawbacks include workers who do not identify with a particular project and who may not be well trained in specific tasks required by the assignment. Further, there are fewer opportunities for job enlargement. All of these may lead to lower levels of job satisfaction, as well as lower morale and motivation.

14. Starting a task as late as possible preserves resources and delays cash flows as long as possible. Allocating resources to tasks with the shortest durations first maximizes the number of tasks that can be completed within a certain time period. The minimum slack priority rule is used to minimize the number of late activities.

15. Just as a project consists of tasks and activities with precedence relationships, a superproject can be thought of as consisting of a group of projects with precedence relationships. In the superproject, psuedoactivities are used to show the precedence relationships among the projects. These precedence relationships may be actual technological constraints (e.g., the product development project must be completed before the process development project) or simply a reflection of managements priorities. The reason for creating a superproject is to help identify important relationships and dependencies across the projects and use this information to better plan the usage of key resources.

16. Traditionally, in project management the concept of the critical path is used. More specifically, the critical path is defined as the path(s) that if delayed will delay the completion of the entire project. One shortcoming of the critical path approach is that it only considers task precedence information and does not consider issues related to resource usage. The critical chain addresses this concern and considers both technical precedence relationships as well as the resources that will be used to complete the tasks. Therefore, the critical chain refers to the longest chain of consecutively dependent events including both technological as well as resource dependencies.

The critical chain works by defining two sources that can delay the completion of the project. One source of delay is uncertainty in the tasks that comprise the critical chain. A project buffer is added to guard against these uncertainties. The second source of delay is uncertainty in the tasks external to the critical chain. A feeding buffer is added to these paths to help ensure they do not delay the tasks on the critical chain.

17. In this case it would be best to borrow from project A. According to Figure 6-20, as a Type 1 project, fewer resources will have little impact on project As performance as it nears completion. Conversely, as a Type 2 project, taking resources away from project B as it nears completion will dramatically reduce its performance.

18. There is a delicate balance between setting goals that people believe are impossible to achieve and therefore result in demotivating the team versus stretch goals that really push the team and serve to motivate the team. The project manager should not set goals that have extremely low probabilities of success, but may find it desirable to set goals that do have a reasonable chance of not being met (say 40 to 60 percent).

Solutions to Problems19.

a.

b. Project Duration = 14 days, critical path A-C-D-E-G

c. Resources X and W are over utilized

d. Project Duration after leveling = 17 days. The critical path is A-C-D-F-G.

e. Adding an additional X resource would shorten the project by 2 days, the new duration after leveling only the W resource would be 15 days.

The project duration is 13 days when the resources work weekends and after leveling.

a.

The critical path is B-C-E-H. The project duration and cost for the all normal level of project activity is 20 days and $400, respectively.

b. The crash costs per day for all activities are shown in column F.

c. The spreadsheet below was created to find the optimal way of getting to an 18-day delivery time. As shown, the total normal cost is $400 (cell C14) and the total crash cost is $80 (cell I14) for a total project cost of $480 (cell B2). The 18 day duration was achieved by crashing activity H 2 days (cell H13).

The optimal solution using Solver was found in the following way:

Cell I14 was specified as the target cell to minimize.

The ranges H6:H13 and B18:B22 were specified as the changing cells.

The following constraints were added:

H6:H13 < G6:G13 (maximum amount each activity can be crashed)

B18 > J7 (node 2)

B19 > B18 + J8 (node 3)

B19 > J6 (node 3)

B20 > B19 + J9 (node 4)

B21 > B18 + J11 (node 5)

B21 > B19 + J10 (node 5)

B22 > B20 + J12 (node 6)

B22 > B21 + J13 (node 6)

B22 < B1 (node 6 project deadline)

H6:H13 > 0 and B18:B22 > 0 (all decision variables must be > 0)

The Assume linear model check box was also selected.

d. The optimal 16-day project duration can be found by entering 16 in cell B1 and then resolving using Solver. The optimal solution calls for crashing activity H 3 days, B 1 day, and D 1 day. The cost of completing the project in 16 days is $400 + $230 = $630.e. If all activities are crashed as much as possible, the project can be completed in 14 days. Entering 14 in cell B1 and resolving, it is discovered that the project can be completed in 14 days at a cost of $400 + $ 400 = $800.

f. See solutions to c e above.

21.

Activity Duration Successors Critical Followers Slack A 4 D D 6

B 3 C, D C, D 0

C 7 D D 0

D 5 None None 0

a. Task B has the shortest duration.

b. Tasks B, C, and D all have zero slack.

c. Task B has the largest number of critical followers

d. Task B has the largest number of successors.

22.

Activity Slack Followers Critical Followers Duration Latest Start Time C 3 F, I None 3 8

D 2 G, H, J H, J 4 7

a. D has the least amount of slack and therefore would get the facility first using this rule.

b. D has the most followers and would get the facility first.

c. D has the most critical followers and would get the facility first.

d. C has a smaller duration and would get the facility first.

e. With the as late as possible priority rule, the latest start times are used. In this case activity C has a LST of 8 and D has a LST of 7. In using this rule it only makes sense to assign the facility to the resource with the earliest LST or activity D.

Incidents for Discussion Suggested Answers

PenquinNet Software Engineering Company: The project manager will need to know all the activities, their normal times and precedences, their resource requirements (by group, learning curve applied, and by time period), the resource capacity and availability, and the individual resource costs. She should then employ the CPM program in a simulation mode to see how the resource allocations will appear under normal circumstances (her original estimate). Then, she should check the performance if there are project delays, learning curve slow downs, etc. Next, she should see if moving resources among activities to level the resources might improve the projects completion time. She should also see if substituting more experienced additional resources would improve the projects performance. She must also identify the additional cost for all the different circumstances.

Southern Kentucky University Bookstore: No. The projects are not combined and the minimum slack on one may receive resources when its slack is more than the minimum slack on another project. Also, the interactions between these projects are important and must be accounted for by scheduling this as a multiproject plan. Peak resource loads need to be determined in advance and leveled. The overall project schedule should be determined with the resource utilization of each area in mind.

Suggested Case Analyses and Solutions

St. Dismas Assisted Living Facility Resource Usage Part IVTeaching Purpose: In this installment students are required to develop Gantt charts for the resources and prepare a resource calendar using MSP.

1. Prepare a Gantt chart with resources for the action plan Dr. Alison submitted. Begin this project on January 2. Prepare a resource calendar for Dr. Alison.

The following is the Gantt chart of the action plan presented in the case. This Gantt chart was prepared using MSP with a resource calendar for Dr. Alison and Dr. Link with a workweek of Monday through Friday, and a daily schedule of 8 a.m. to 5 p.m. with an hour of non-working time for lunch. The resource calendar was applied using the Change Working Time under the Tools menu in MSP. (The issue of scheduling the Test of the assessment tool will be addressed in answer #3 & #4). (Note: the case stated to start the project on January 2, if students use the year 2000, the project will actually begin work on January 3rd, as January 2nd is a non-working day. If students use January 2, 2001 (or later), the project will start on January 2nd. The start date used in these examples is January 2, 2000, to coincide with the year that the case started.)

The following is the standard resource calendar used for Dr. Alison for all of the tasks defined by the action plan. Since the case outlined that a resource scheduling conflict would only pertain to the task of Testing the assessment tool, it is not appropriate to constrain Dr. Alison on the project for any other tasks. (The following printout excerpt was prepared using the Reports feature in MSP). The issue of how to handle the specific scheduling constraint will be addressed in answer #3 below.

2. How would you handle Dr. Alisons resource problem?

The resource issue that Dr. Alison has should be handled by adjusting the project schedule to allow for the scheduling constraints.

The case states that Dr. Alison can perform all of the project steps within his 8 a.m. to 5 p.m. normal work week, however he will only be able to perform the Test of the assessment tool during his administrative time on Wednesdays from 8 a.m. to 12 p.m. Since that step is important to the success of the project, it is necessary to adjust the project plan to reflect Dr. Alisons scheduling conflict. It is not appropriate to add another resource, or overallocate Dr. Allison to get this task done within the time frame specified.

There are several different ways to set a resource constraint on the Test the tool task, Step #4 in the action plan. MSP 2000 allows you to create a specific calendar for a step in an action plan. Simply create a New calendar in the Tools menu, Change working time section. In the new calendar create a schedule that has its working time as Wednesdays, 8 a.m. to 12 p.m., and all other days as non-working. Then you apply this calendar to step 4 in the action plan. (This is done by selecting the task information box for Step #4, going to the Advanced tab, and selecting the new calendar you just created. These steps are all outlined in the Help section, under Assigning a calendar to a task.) Once you apply the new calendar, MSP will automatically adjust the Gantt chart to reflect the changes in the schedule. [If students are using MSP98, the schedule constraint can be incorporated into the project by adjusting Dr. Alisons resource calendar for only the time period that this step takes place (Jan 19 Jan 26).]3. Given Dr. Alisons availability, how long will it take to complete testing of the assessment tool?

Based on Dr. Alisons availability to complete the step Test of the assessment tool, Step #4 will now take from January 19, 2000 January 26, 2000. Please note that the tasks duration remains at 6 hours, however with Dr. Alison only available to work on the step from 8 a.m. 12 p.m. one day a week, the step will now take an extra calendar week to complete. Without the constraint the task could begin as soon as Step #3 was completed, January 14. However, with the constraint applied, Step #4 can not begin until the following Wednesday when Dr. Alison is available, and he can only work 4 hours on that day, so another 2 hours the following Wednesday is necessary to complete the task.

4. Prepare a Gantt chart for Dr. Alisons plan incorporating any changes you recommend.

The Gantt chart below shows the scheduling changes adjusted for the availability of Dr. Alison to complete step #4 in the action plan.

or with a more detailed view of the calendar

Charter Financial BankTeaching Purpose: This case provides students with opportunity to evaluate alternative crashing strategies.

1. What is the cost of completing this project if no overtime is used? How long will it take to complete the project?

The network diagram shown below can be constructed from the information in the case. The time to complete the project at a normal level of activity is 43 days and the cost is $100,650.

2. What is the shortest amount of time in which the project can be completed? What is the cost of completing the project in the shortest amount of time?When all the activities are crashed their maximum amount, the project is completed in 30 days. In the spreadsheet below, Solver was used to find the least costly way to crash the project such that it was finished in 30 days. Column H details the amount each activity was crashed. The incremental cost required to shorten the project these 13 days is $26,250 (cell I13).

Using Solver required the following steps:

Cell I13 was specified as the target cell to minimize.

The changing cells included the ranges I6:I12 and B17:B23.

In addition to specifying Assume linear model the following constraints were entered:

H6:H12 < G6:G12 (limit on the amount each activity can be crashed)

B17:B23 > 0 & H6:H12 > 0 (nonnegativity constraints)

B17 > J6 (node 2)

B18 > B17 + J7 (node 3)

B19 > B18 + J8 (node 4)

B20 > B19 + J9 (node 5)

B20 > B21 (node 5)

B20 > B22 (node 5)

B21 > B19 + J10 (node 6)

B22 > B19 + J11 (node 7)

B23 > B20 + J12 (node 8)

B23 < B1 (deadline specified)

3. Suppose that the benchmarking study actually required 13 days as opposed to the 10 days originally estimated. What actions would you take to keep the project on a normal schedule?The spreadsheet presented in question 2 can be modified such that the benchmarking studys normal and crash times are now 13 days implying that this task can no longer be crashed. Then the spreadsheet can be resolved using Solver and specifying a deadline of 43 days. As shown in the spreadsheet, below the project can still be completed in 43 days by crashing the Plan task by 2 days and the Test task by 1 day. The cost of crashing these two tasks will increase the project cost by $3,000.

4. Suppose the President wanted the website launched in 35 days. What actions would you take to meet this deadline? How much extra would it cost to complete the project in 35 days?The spreadsheet presented in question 2 can again be modified. This time 35 is entered in cell B1 and the problem resolved with Solver. Column H in the spreadsheet below details the amounts the various activities should be crashed to meet the 35-day deadline. The extra cost of reducing this project 8 days (43 35) is $12,150.

Test Questions

True/False and Multiple Choice

F 1. ___ When crashing a project, the variance of the crashed activity time is the same as

the variance of the normal activity time.

T 2. ___ When crashing a project, the variance of the crashed activity time is usually

different from the variance of the normal activity time.

T 3. ___ Task durations will typically change when overallocated resources are leveled

by Microsoft Project.

F 4. ___ Task durations should remain the same when resources are leveled by Microsoft

Project.

F 5. ___ All resource overallocations should be eliminated before beginning a project.

F 6. ___ Task durations are always determined by resource availability.

T 7. ___ The minimum slack rule is usually the best rule to follow when assigning

resources to multiple projects.

T 8. ___ As originally developed, PERT does not address resource utilization and

availability.

F 9. ___ Additional resources should not be added to the project during periods when

some resources are overallocated.

F 10. ___ As originally developed, CPM does not include a method to relate the project

schedule to the level of physical resources allocated.

T 11. ___ Preparing a resource loading report is an excellent way of developing a

rough project plan to help reduce excess demands on certain resources.

F 12. ___ Time and cost are the two constraints on resource allocation.

F 13. ___ Showing the amount of a resource needed on a schedule during a specific time

period is called resource slope.

T 14. ___ A task that requires a fixed amount of time and fixed quantities of

resources is called system constrained.

F 15. ___ If the minimum slack priority rule is used, resources would be devoted to tasks

with the shortest duration first.

F 16. ___ If the shortest duration first priority rule is used, resources would be devoted to

tasks with the minimum slack.

b 17. ___ What is meant by Fast Tracking a project?

a. adding more resources to the project to shorten its duration

b. starting the project before the design and planning phases are completed

c. a synonym for crashing a project

d. cutting the duration of tasks on the project

e. none of the above

c 18. ___ Under what conditions would you need to level resources?

a. when there are constraints on resource availability

b. when resource calendars conflict with the project schedule

c. when resources are overallocated to a project

d. when resources are shared among projects

e. under any of the above conditions

b 19. ___ The purpose of resource leveling is to:

a. allow for scarce resources to be assigned to a task

b. smooth demands for resources

c. ensure no overtime will be needed

d. preserve a particularly valuable resource

e. all of the above

d 20. ___ In general, the best priority rule to use for constrained resource allocation is:

a. shortest task first

b. longest task first

c. most successors first

d. minimum slack task first

e. most resources needed first

d 21. ___ The scheduling method that begins with the normal project schedule of

activities and then crashes selected activities, one at a time, in order to

decrease the projects duration at minimum cost is called?

a. PERT

b. GERT

c. Q-GERT

d. CPM

e. Gantt

b 22. ___ Showing the amount of a resource needed on a schedule during a specific time

period is called?

a. a resource slope

b. resource loading

c. a crash diagram

d. a resource allocation table

e. GERT

Short Answer

23. Define the term Resource Loading.

Assigning specific resources to work on activities of a project at a specific time.

24. When and why would you use a labor pool on projects?

When an organization is conducting many projects at the same time with like resource requirements. The cost of adding or laying off resources assigned to one project is high. It is sometimes better to pull resources from a pool when needed.

25. Why would you want to have excess resource capacity on your project?

When your resources are scheduled with no excess capacity, a resource might become unavailable due to vacation or sick leave. Anytime when task duration or schedule is uncertain.

26. What is resource leveling?

A process that aims to minimize the variations in resource usage and scheduling by shifting tasks--usually within their slack allowances.

Problem

27. Given the following project, all times are in weeks:

ActivityPredecessorsNormal TimeNormal CostCrash TimeCrash Cost

A--54003600

B--53001500

CA104005700

DB74002600

EA63002500

FC, D116005900

a. Draw the network, find the critical path, time, and cost for an all-normal level of project activity.

b. Calculate the crash cost-per-day (all activities may be partially crashed).

c. Find the all-crash schedule and cost.

d. Find the least-cost plan for the all crash time schedule.

Solution:a.

The critical path is A-C-F. The time and cost for an all-normal level of project activity is 26 weeks and $2400, respectively.

b. The crash cost-per-day for the activities are shown in the spreadsheet below:

c. The all-crash schedule and cost are 13 weeks and $6200 ($2400 + $3800), respectively.

d. The project can be completed in 13 weeks by following the crash schedule shown in column H in the spreadsheet below. This solution reduces the crashing cost from $3800 to $960 for a total project cost of $3360.

6

5

4

3

2

1

A

B

C

D

E

G

H

F

1

2

Benchmarking

3

Plan

Design

4

6

5

7

Pages

DB

Forms

Test

8est

1

2

3

4

5

A

B

C

E

F

D

9293