Copyright 2009 John Wiley & Sons, Inc. Chapter 9 Resource Allocation

Critical Path Method—Crashing a Project Time and cost are interrelated The faster an activity is completed, the more it costs Change the schedule and you change the budget Thus 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

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 required May be able to use just-in-time inventory Improves morale Fewer 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 ones There are many more The heuristic can either start at the beginning and work forwards Or it can start at the end and work backwards

Optimization Methods Finds the one best solution Uses either linear programming or enumeration Not all projects can be optimized Approaches 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 manufacturing The 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 method Minimum late finish time Greatest resource demand Greatest resource utilization Most possible jobs

Goldratt’s Critical Chain 1. Optimism 2. Capacity should be equal to demand 3. The “Student Syndrome” 4. Multitasking to reduce idle time 5. Assuming network complexity makes no difference 6. Management cutting time to “motivate” workers 7. Game playing 8. Early finishes not canceling out late finishes