MANAGING PROJECT RESOURCES

Project CrashingThe process of accelerating a project is referred as crashing.Crashing a project relates to resource commitment; the more resources expended, the faster the project will finish.There are several reasons to crash a project:

Initial schedule was too optimistic Market needs change and the project is in demand earlier than anticipatedThe project has slipped considerably behind scheduleThere are contractual late penalties

Project CrashingPrincipal methods for crashing are:

Improving existing resources’ productivityChanging work methodsIncreasing the quantity of resources

Increasing the quantity of resources is the most commonly used method for project crashing. There are 2 approaches:

Working current resources for longer hours (overtime, weekend work, etc.)Adding more personnel

Project Crashing

Cost

Activity Duration

Normal

Crashed

Crashed Normal

CrashPoint

NormalPoint

Cost

Activity Duration

Normal

Crashed

Crashed Normal

CrashPoint

NormalPoint

Time-Cost Trade-Offs for Crashing Activities

Fully expedited (no expense is spared)

Project CrashingIn analyzing crash options, the goal is to find the point at which time and cost trade-offs are optimized.

Various combinations of time-cost trade-offs for crash options can be determined by using the following formula:

Slope = crash cost – normal cost normal time – crash time

Project Crashing ExampleSUPPOSE:

NORMAL ACTIVITY DURATION = 8 WEEKSNORMAL COST = $14,000CRASHED ACTIVITY DURATION = 5 WEEKSCRASHED COST = $23,000

THE ACTIVITY COST SLOPE = 23,000 – 14,000 OR $9,000 = $3,000 per week

8 – 5 3

Cease crashing whenthe target completion time is reachedthe crash cost exceeds the penalty cost

Project Crashing Example Normal Crashed

Activity Duration Cost Duration CostA 4 days $1,000 3 days $2,000B 5 days $2,500 3 days $5,000C 3 days $750 2 days $1,200D 7 days $3,500 5 days $5,000E 2 days $500 1 day $2,000F 5 days $2,000 4 days $3,000G 9 days $4,500 7 days $6,300

a) Calculate the per day costs for crashing each activityb) Which are the most attractive candidates for crashing?

Why?

Project Crashing Example

Activity Per Day CostA $1,000B $1,250C $450D $750E $1,500F $1,000G $900

Project Crashing Example Normal Crashed

Activity Cost Duration Extra Cost

Duration

A 5,000 4 weeks 4,000 3 weeks

B* 10,000 5 weeks 3,000 4 weeks

C 3,500 2 weeks 3,500 1 week

D* 4,500 6 weeks 4,000 4 weeks

E* 1,500 3 weeks 2,500 2 weeks

F 7,500 8 weeks 5,000 7 weeks

G* 3,000 7 weeks 2,500 6 weeks

H 2,500 6 weeks 3,000 5 weeks

When deciding on whether or not to crash project activities, a project manager was faced with the following information. Activities of the critical path are highlighted with an asterisk:

Project Crashing Example

The correct sequence for crashing activities is listed as:

1. Activity E or G (they both cost $2,500 more)

2. Activity E or G3. Activity B4. Activity D

Project Crashing Example Suppose project overhead costs accrued at a fixed rate of $500 per week. Assume that a project penalty clause kicks in after 19 weeks.The penalty charged is $5,000 per week.

Duration Direct Costs

Penalties Overhead Total

21 weeks

37,500 10,000 10,500 58,000

20 weeks

40,000 5,000 10,000 55,000

19 weeks

42,500 - 0 - 9,500 52,000

18 weeks

45,500 - 0 - 9,000 54,000

16 weeks

49,500 - 0 - 8,000 56,500

Resource Allocation ProblemA shortcoming of most scheduling procedures is that they do not address the issues of resource utilization and availability.

Scheduling procedures tend to focus on time rather than physical resources.

Resource Allocation ProblemSchedules should be evaluated not merely in terms of meeting project milestones, but also in terms of the timing and use of scarce resources.

A fundamental measure of the project manager’s success in project management is the skill with which the trade-offs among performance, time, and cost are managed.

“I can shorten this project by 1 day at a cost of $400. Should I do it?”

Resource Allocation ProblemThe extreme points of the relationship between time use and resource use are the following:

Time Limited: The project must be finished by a certain time, using as few resources as possible. But it is time, not resource usage, that is criticalResource Limited: The project must be finished as soon as possible, but without exceeding some specific level of resource usage or some general resource constraint

Resource LoadingResource loading describes the amounts of individual resources an existing schedule requires during specific time periods.

The loads (requirements) of each resource type are listed as a function of time period.

Resource loading gives a general understanding of the demands a project or set of projects will make on a firm’s resources.

Resource LoadingThe project manager must be aware of the flows of usage for each input resource throughout the life of the project.

It is the project manager’s responsibility to ensure that the required resources, in the required amounts, are available when and where they are needed.

Resource Loading Table

Resource Leveling (Smooting)Resource leveling aims to minimize the period-by-period variations in resource loading by shifting tasks within their slack allowances.The purpose is to create a smoother distribution of resource usage.Resource leveling, referred to as resource smoothing, has two objectives:

To determine the resource requirements so that they will be available at the right time,To allow each activity to be scheduled with the smoothest possible transition across usage levels.

Resource Leveling (Smooting)Resource management is a multivariate, combinatorial problem, i.e. multiple solutions with many variables, the mathematically optimal solution may be difficult or infeasible.

More common approach to analyzing resource leveling problems is to apply some resource leveling heuristics.

Resource Leveling HeuristicsPrioritizing resource allocation include applying resources to activities:

with the smallest amount of slackwith the smallest durationthat start earliestwith the most successor tasksrequiring the most resources

Resource Leveling StepsCreate a project activity network diagramCreate a table showing the resources required for each activity, durations, and the total float availableDevelop a time-phased resource loading tableIdentify any resource conflicts and begin to smooth the loading table using one or more heuristics

Resource Leveling Example

Critical path:A-C-F-H-K

Resource Leveling Example

Critical path:A-C-F-H-K

Resource Leveling ExampleActivity Duration Total Float Resource Hours

Needed Per WeekTotal Resources

Required

A 5 0 6 30

B 4 1 2 8

C 5 0 4 20

D 6 3 3 18

E 6 1 3 18

F 6 0 2 12

G 4 3 4 16

H 7 0 3 21

I 5 3 4 20

J 3 5 2 6

K 5 0 5 25

Total 194

Resource Leveling Example

Resource Leveling ExampleOn day 10 the required resource hours is 10If project is budgetted for up to 10 resource units per day, then it is acceptable.C, D, and E are all scheduled on this day and have require 4, 3, and 3 hours respectively

Which activity should be adjusted?C is on the critical path E has 1 day slack D has 3 days of slack (we can split the activity)

Resource Leveling Example

Resource Loading ChartAnother way to create a visual diagram of resource management problem is to use resource-loading charts.Resource conflicts can be seen in the resource-loading charts.They are used to display the amount of resources required as a function of time on a graph.Each activity’s resource requirements are represented as a block (resource requirement over time).

Resource Loading Chart

Resource limit is set at 8 hourly units per day.

Display the amount of resources required as a function of time.

0 A 4 Res = 6

4 B 5 Res = 2

5 D 9 Res = 7

9 E 11 Res = 3

4 C 7 Res = 2

11 F 12 Res = 6

1. Start with a network diagram

Resource Loading Chart

Activity Resource Duration ES Slack LF

A 6 4 0 0 4

B 2 1 4 0 5

C 2 3 4 4 11

D 7 4 5 0 9

E 3 2 9 0 11

F 6 1 11 0 12

2. Produce a table that shows the duration, early start, late finish, slack, and resource(s) required for each activity.

Resource Loading Chart

A

2

4

6

8

2 1210864 14

C

BD

E

F

Project Days

Res

ourc

es

3. Draw an initial loading chart with each activity scheduled at its ES.

Resource imbalance

Resource Loading Chart4. Rearrange activities within their slack

to create a more level profile. Splitting C creates a more level project.

A

2

4

6

8

2 1210864 14

C

BD

E

F

Project Days

Res

ourc

es

C

Resource Loading Chart

Critical Chain Project ManagementCritical Chain Project Management (CCPM), which was developed and publicized by Dr. Eliyahu M. Goldratt (1997) in his book Critical Chain, is a novel approach for managing projects. Goldratt is well known in the operations management community as the inventor of the Theory of Constraints (TOC). TOC is a tool for managing repetitive production systems based on the principle that every system has a constraint, and system performance can only be improved by enhancing the performance of the constraining resource.

Critical Chain Project ManagementCCPM identifies the critical chain as the set of tasks that results in the longest path to project completion after resource leveling. CCPM is the same as conventional project management except for the terminology "critical chain", which would otherwise be called the "leveled critical path".

Critical Chain Project ManagementCCPM planning consists of recalculating the project schedule based on shortened task duration estimates. The rationale for shortening the original duration estimates is as follows:all tasks in the project are subject to some degree of uncertaintywhen asked to provide an estimate of the duration, the task owner adds a safety margin in order to be almost certain of completing the task on time. This means that, in general, task durations are overestimatedIn most cases, the task will not require the entire amount of safety margin and should be completed sooner than scheduledBecause the safety margin is internal to the task, if it is not needed, it is wasted.

Critical Chain Project ManagementFor project plan execution, CCPM prescribes the following principles:

Resources working on critical chain tasks are expected to work continuously on a single task at a time. They do not work on several tasks in parallel or suspend their critical tasks to do other workResources are to complete the task assigned as soon as possible, regardless of scheduled dates

Critical Chain Project ManagementIf the task is completed ahead of schedule, work on its successor is to begin immediately. If the task successor utilizes a critical resource for which a resource buffer has been defined, advance warning is provided to that resource at the point in time where the resource buffer beginsIf the task is completed past its planned completion date, as shown on the CCPM schedule, this is no reason for immediate concern, as the buffer will absorb the delay.

Source: http://en.wikipedia.org/wiki/Critical_chain