1. Chapter 9 Resource Allocation

2. Chapter 9 Resource Allocation
Introduction
This chapter addresses:
Trade-offs involved to crash cost
Relationship between resource loading and leveling
Some approaches used to solve allocation problem
Chapter 9 Resource Allocation

3. Critical Path Method – Crashing a Project
One important difference between CPM & PERT:
CPM included a way of relating the project schedule to the level of physical resources
trade time for cost, or vice versa
Can specify 2 activity times and 2 costs
1st time/cost combination- called normal
2nd combination called crash
Normal – usual ‘average’ time, resources
Crash – expedite by applying additional resources
Chapter 9 Resource Allocation

4. Critical Path Method – Crashing a Project
Allocation problem requires more careful consideration-additional resources?
Many things make crashing a way of life on some projects (i.e last minutes changes in client specification, without permission to extend the project deadline by an appropriate increment)
Careful planning is critical when crashing project – need to consider feasibility of expediting work (e.g equipment availability)
Chapter 9 Resource Allocation

5. Critical Path Method – Crashing a Project
Slope = crash cost – normal cost
crash time – normal time
Where: slope = cost per day of crashing a project
When slope is negative : indicate the time required for a project is decreased, the cost is increased
Chapter 9 Resource Allocation

6. Chapter 9 Resource Allocation
The dollars per day slope of activities is relevant only if the whole crash increment is useful
Crashing may involve a relatively simple decision to increase groups of resources (labor-shovel, Ditch-Witch Technology)
If do changes in technology tend to produce discontinuities in outcomes and also in cost.
Chapter 9 Resource Allocation

7. Principles to crash a project
Focus on the critical path when trying to shorten the duration [resource ready]
Select the least expensive way to do it
Chapter 9 Resource Allocation

8. Crashing a Project (E.g Two-Time CPM)
Activity
Precedence
Duration, Days (normal,crash)
Cost, $ (normal,crash)
Slope ($/day) a -
3,2
40, 80
40/-1 = -40 b
2,1
20, 80
60/-1 = -60 c
2,2
20, 20
Cannot be expedited d*
4,1
30, 120
90/-3 = -30
e**
3,1
10, 80
-70 (2 days)
*Partial crashing allowed
**Partial crashing not allowed
Chapter 9 Resource Allocation

9. Chapter 9 Resource Allocation
A CPM Example 1 2 3 4 5 6 7 8 a c b d e
Normal Schedule, 8 days, $120
Chapter 9 Resource Allocation

10. Chapter 9 Resource Allocation1 2 3 4 5 6 7 8 a c b d e 1 2 3 4 5 6 7 8 a c b d e
7-day schedule, $160
6-day schedule. $220 1 2 3 4 5 6 7 8 a c b d e 1 2 3 4 5 6 7 8 a c b d e
5-day schedule, $260
4-day schedule, $350
Chapter 9 Resource Allocation

11. Chapter 9 Resource Allocation
Network critical path is a-b-e, project duration is 8 days, normal total cost is $120
The decision about which activities to crash depends on how much to reduce the duration
On the benefit side, some projects have penalty clauses that make the parent organization liable for late delivery- sometimes bonuses for early delivery
Chapter 9 Resource Allocation

12. Chapter 9 Resource Allocation
On the cost side, figure below shows the time/cost relationship of crashing the project
All crash
a + b + 2d + 2e
a + d + 2e - b
a + b a
All normal
Chapter 9 Resource Allocation

13. Chapter 9 Resource Allocation
Fast Tracking
Another way to expedite a project
Term used for construction projects
Refers to overlapping design and build phases
Design completed before construction starts,so overlapping will result shortening the project duration
Build before design completed-more design changes
Loss productivity, increased cost, loss time
Chapter 9 Resource Allocation

14. Chapter 9 Resource Allocation
Fast Tracking (cont.)
Studies revealed that:
more design changes in fast tracking – the number of project change orders not significantly different than not fast-tracked project
Dependent on effective feed-back and feed-forward communication
Chapter 9 Resource Allocation

15. Chapter 9 Resource Allocation
SOLVED PROBLEM
Activity
Crash Time,
Cost
Normal Time,
Partial crashing a
3,$60 No b
6,80
7,30
Yes c
2,90
5,50 d
6,30 e
2,100
4,40 1 2 3 4 a b e c d
Find the lowest cost to complete the project in 10 days
Chapter 9 Resource Allocation

16. Chapter 9 Resource Allocation
Answer
Current time and cost: 12 days and $210
Since the critical path is a-c-e, we only
initially need consider these 3 activities:
a: cannot be crashed
c: can cut 3 days at an extra cost of $40
but only results in project completion by
day 11, due to b. To reach 10 days, cut
b by 1 day, total extra cost $90
e: can cut e by 2 days for an extra cost of
$60 and results in project completion by
day 10.
Thus, cut e 2 days at a cost of $60. 3 1 2 4 a b e c d 7 5 6 8 12
Chapter 9 Resource Allocation

17. RESOURCE ALLOCATION PROBLEM
A fundamental measure of the PM’s success in project mgmt is the skill with which the trade-offs among performance, time and cost are managed
The extreme points of the relationship between time use and resource are:
Time limited
Resource limited
Chapter 9 Resource Allocation

18. Chapter 9 Resource Allocation
RESOURCE LOADING
The amount of individuals resources an existing schedule requires during specific time periods
Resource loading can be illustrated by:
Resource usage calendar
Modified PERT/CPM AOA diagram (similar with Gantt Chart)
PM responsibility:
Demand for resources does not exceed resource capacities
Ensure that the required resources, in the required amounts
Chapter 9 Resource Allocation

19. Resource Usage Calendar
Chapter 9 Resource Allocation

20. Modified PERT/CPM AOA Diagram (Refer Ch 08 Slide 26)5 10 15 20 25 30 35 40 45 4 1 2 3 6 7 a
(4,0) b
(2,1) c
(3,1)
dummy h
(0,2) d j
(0,6) e f
(1,1) i
(6,3) g
(1,0)
Chapter 9 Resource Allocation

21. Chapter 9 Resource Allocation
RESOURCE LEVELING
Aims to minimize the period-by-period variations in resource loading by shifting tasks within their slack allowances
Purpose to create a smoother distribution of resource usage
Advantages;
Much less hands on management
Be able to use ‘just in time’ inventory policy with right quantity delivered
If the resource being leveled is people, it improves morale and results in fewer problems in the personnel and payroll offices
Chapter 9 Resource Allocation

22. Chapter 9 Resource Allocation
E.g: Network 2
a, 2
[2] 1
c, 5 4
[4]
b, 3
[2] 3
The activity time is shown above the arc, and resource usage
(one resource, workers) is in brackets below the arc.
Chapter 9 Resource Allocation

23. Before Resource Leveling1 2 3 4 5 10 8 6 b c a 1 2 3 4 5 c b a
Days
Activity
Workers
Days
Chapter 9 Resource Allocation

24. After Resource Leveling10 1 2 3 4 5 c b a
Days
Activity 8
Workers 6 a b 4 c 2 1 2 3 4 5
Days
Chapter 9 Resource Allocation

25. RESOURCE LOADING/LEVELING AND UNCERTAINTY
If happens excess capacity,the alternative that we can consider:
Try to level the demand, moving some of it forward and some backward
Try to alter the supply of working hours-trade off time between periods of over capacity and periods of under capacity
Might expend additional resources-contract worker for overload period, subcontract the workload
Which cheaper?Delay or subcontract?
Chapter 9 Resource Allocation