Copyright 2009 John Wiley & Sons, Inc.

Chapter 9

Resource Allocation

Critical Path Method—Crashing a Project

Time and cost are interrelatedThe faster an activity is completed, the

more it costsChange the schedule and you change

the budgetThus many activities can be speeded

up by spending more money

What is Crashing / Crunching?

To speed up, or expedite, a project Of course, the resources to do this must be

available Crunching a project changes the schedule

for all activities This will have an impact on schedules for all

the subcontractors Crunching a project often introduces

unanticipated problems

Activity Slope

Time Normal - TimeCrash

Cost Normal -Cost Crash Slope

An Example of Two-Time CPM

Table 9-1

Activity Slopes—Cost per Period for Crashing

Table 9-2

Crashing the Project

Figure 9-1a

Seven Day Schedule

Figure 9-1b

Six Day Schedule

Figure 9-1c

Five Day Schedule

Figure 9-1d

Four Day Schedule

Figure 9-1e

Cost-Crash Curve

Figure 9-2

The Resource Allocation Problem

As discussed, CPM/PERT ignore resource utilization and availability

With external resources, this may not be a problem

It is, however, a concern with internal resources

Schedules need to be evaluated in terms of both time and resources

Resource Allocation

It is common to see the resource allocation problem in terms of manpower, but it can apply to equipment and capital as well

Resource allocation in project management is very similar to capacity planning in production management

Both the approaches to the problem and potential solutions to the problem are very similar

Resource Loading

Resource loading describes the amount of resources an existing schedule requires

Gives an understanding of the demands a project will make of a firm’s resources

Resource A

Figure 9-6a

Resource B

Figure 9-6b

Resource Leveling

Less hands-on management is requiredMay be able to use just-in-time

inventory Improves moraleFewer personnel problems

Resource Leveling Continued

When an activity has slack, we can move that activity to shift its resource usage

May also be possible to alter the sequence of activities to levelize resources

Small projects can be levelized by hand Software can levelize resources for larger

projects Large projects with multiple resources are

very complex to levelize

Constrained Resource Scheduling

Heuristic Approach

An approach, such as a rule of thumb, that yields a good solution that may or may not be optimal.

Optimization Approach

An approach, such as linear programming, that yields the one best solution.

Heuristic Methods

The only feasible way on large projects While not optimal, the schedules are very

good Take the CPM/PERT schedule as a baseline They sequentially step through the schedule

trying to move resource requirements around to levelize them

Resources are moved around based on one or more priority rules

Common Priority Rules

As soon as possible As late as possible Shortest task first Most resources first Minimum slack first Most critical followers Most successors Arbitrary

Heuristic Methods Continued

These are just the common onesThere are many moreThe heuristic can either start at the

beginning and work forwardsOr it can start at the end and work

backwards

Optimization Methods

Finds the one best solutionUses either linear programming or

enumerationNot all projects can be optimizedApproaches only work with small to

medium projects

Multi-Project Scheduling and Resource Allocation

Scheduling and resource allocation problems increase with more than one project

The greater the number of projects, the greater the problems

One way is to consider each project as part of a much larger project

However, different projects have different goals so combining may not make sense

Must also tell us if there are resources to tackle new projects we are considering

Standards to Measure Schedule Effectiveness

1. Schedule slippage

2. Resource utilization

3. In-process inventory

Schedule Slippage

The time past a project’s due date when the project is completed

Slippage may cause penalties Different projects will have different penalties Expediting one project can cause others to

slip Taking on a new project can cause existing

projects to slip

Resource Utilization

The percentage of a resource that is actually used

We want a schedule that smoothes out the dips and peaks of resource utilization

This is especially true of labor, where hiring and firing is expensive

In-Process Inventory

This is the amount of work waiting to be processed because there is a shortage of some resource

Similar to WIP in manufacturingThe cost here is holding cost

Heuristic Techniques

Multi-projects are too complex for optimization approaches

Many of the heuristics are extensions of the ones used for one project

Additional Priority Rules

Resource scheduling methodMinimum late finish timeGreatest resource demandGreatest resource utilizationMost possible jobs

Goldratt’s Critical Chain

1. Optimism2. Capacity should be equal to demand3. The “Student Syndrome”4. Multitasking to reduce idle time5. Assuming network complexity makes no difference6. Management cutting time to “motivate” workers7. Game playing 8. Early finishes not canceling out late finishes