1. Resource Planning, Cost Estimation and Budgeting
Dr. Raghu Bista

2. Resources for project
A resource is usually understood as manpower, materials, machines and money
A project needs resources to complete its activities
Resources are assumed to be unlimited in supply, but in reality it is not. It is necessary to check whether there is enough supply or not.

3. Resource Planning
To complete project in time with minimum resource, careful planning of resource is necessary to identify the required resources
Resource planning not just means estimating resource requirements but also matching with supply, getting resource at minimum possible price and meeting quality requirement

4. Resource Estimation
Work Breakdown Structure to sub divide the project into detailed activities
Estimate resource requirements of each activity of the project (material, labor, machines, money)
Prepared project activity schedule, estimate resource requirement of each activity week wise, day wise.

5. Example
If an activity of a project is to clean bricks. From past experience, a labor can clean 1000 bricks per hour. If a labor works 10 hours per day, the estimation for labor days is
= 10 labor days
1000 bricks per hour × 10 working hours

6. The Resource/Duration Tradeoff
Labor
Duration
Days
Labor Days 10 1 5 2

7. Resource Estimation Cont….
Compile resource requirement for each activity on early start bar chart
Compile the resource availability
Draw the resource histogram
Compare resource forecast with resource availability.
Make corrections if resource requirement exceeds resource availability
Smooth resources by moving activities with in their slack
Re-schedule the planning bar chart
Prepare cash requirement plan

8. Work Breakdown Structure
Work Breakdown Structure (WBS) is a hierarchical structure to logically sub-divide all the work elements of the project into graphical presentation
A project can be logically sub-divided by project phases, location, tasks, sub-contractors etc.

9. Work Breakdown Structure and Description for House Project
Foundations
1.1.1
Wall/Roofs
1.1.2
Piping
1.2.1
H/C
Water
1.2.2
Wiring
1.3.1
Fitting
1.3.2

10. Components of Work Breakdown Structure
Description
Coding
Number of WBS Levels
The level of details
Roll-up

11. Uses of WBS It helps to visualize the scope of project clearly
It helps to develop a complete lists of activities of the project
It helps to estimate budget for the project

12. Example of Project Activities
Expected time (weeks) to complete activities
Immediate preceding activities A B C D E F G
5 weeks
2 weeks
3 weeks
4 weeks
None
C,D

13. Gantt Chart
In this type of chart, the time that an activity should take is represented by horizontal line, the length of line being proportional to the duration of the activity. The activity moves from left to right and activities being listed from top to bottom.

14. Gantt Chart A B C Activities D E F G 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Weeks
(Activities shown with dotted lines are non critical activities)

15. Compilation of resource requirement for each activity on early start barchart
Activities
Start Date
Finish Date
Resource Per week A B C D E F G 1 6 3 9 10 5 2 8 11 14 4

16. Barchart showing resource per week A B C
Activities D E F G
Weeks
(Activities shown with dotted lines are non critical activities)

17. Resources Loading
Resources loading refers to the allocation of resources to work element in a project schedule. We can load or place on a detailed schedule, resources with regard to specific tasks or the overall project.
The important first step of constructing network and Gantt Charts will be incomplete until the subsequent resource assignments are made for each project activity.

18. Resource Loading Graph
A resource loading graph is a graphical presentation of resource allocation over time
Figure: Resource Loading Graph
Resource
Loading
Time

19. Resource Overload and Underload
When resource forecast exceeds the available resource, an overload exists and an underload is when forecast is lower than available resource
An overload is an unworkable situation
An underload can also be a problem

20. Solutions to Resource Overload
Delay activities with slack and reschedule
Work overtime in case of labour constraint

21. Resource Leveling
Resource leveling refers to the proress of reducing the period to period fluctuation in resource leveling graph.
Proper resource planning will facilitate a reasonably stable level of the work force.
Other advantages of resource leveling include simplified resource tracking and control, lower cost of resource management

22. Resource Leveling Graph
Resources
Time

23. Limitation of Resource Leveling
Not all resources fluctuation can be eliminated because of resource availability constraint and critical activities of project which must be completed in schedule

24. Crashing Project
Sometimes, project needs to be completed earlier than the normal completion time because of urgency, this is called crashing project.

25. Reasons for Crashing
Because of the urgency of the project, it needs to completed as quickly as possible
The project's progress is behind the schedule. But the project must be completed in given time. So then it needs to crash the remaining activities to be in schedule.

26. Way to finish Activities Faster
Improving the productivity of the existing resources
Changing the working methods
Increasing project resources which is most common

27. Preparation of Final Schedule
Based on slack time of each activities, resource constraint and crashing opportunities, final schedule will be prepared.
With this shedule resource planning should be re-arranged

28. Preparation of procurement plan
As per the requirement of various resources, an economic procurement plan needs to be planned

29. Cash as Resource
Cash resource of each activity is estimated totaling the price of other resources required for the activity
Cash requirement planning can be made with outflow of cash with time

30. Estimation of Cash Resource (Examples)
Activities
Expected time (weeks)
to complete activities
Total Cost A B C D E F G
5 weeks
2 weeks
3 weeks
4 weeks
Total
10000
5000
4000
20000
6000
15000
55,000

31. Estimation of Weekly Cash Requirement Budget (Assuming that out flow of cash is constant with time across each activity)
Week Number
Activities involved
Weekly Outgoing
Cumulative Outgoing 1
A B
4500 2 3 … …. 4 ..
14th

32. Thank You