1. MGMT 483 – Week 11

2.  The issues involved in developing a project plan and schedule in the face of constrained resources (people or facilities)  Critical Path Method – “Crashing” a project  The resource allocation problem  Resource loading  Resource leveling  Constrained resources scheduling – priority rules

3.  Last class we looked at schedules and the critical path  Changing schedules almost always has an impact on project resources  Impacts the need for resources and the timing of resources ▪ Human resources – eg specialized professional services ▪ Particular equipment or machinery ▪ Any specialized or scare resource used in the project

4.  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 Meredith & Mantel (2009) Project management: a managerial approach. 7th ed. Wiley.

5.  Crashing is the process of attempting to shorten project activities and in turn the overall project by assigning additional resources.  Of course, the resources to do this must be available  Crashing a project changes the schedule for all activities  This will have an impact on schedules for all the subcontractors  Crashing a project often introduces unanticipated problems – and the solution to one problem often creates other problems Meredith & Mantel (2009) Project management: a managerial approach. 7th ed. Wiley.

6.  Crashing might result in a change in “production function” for doing activities  In simple terms might involve increasing the resources to do something  8 people to dig a ditch instead of 4 people (or labour shovels)  Or human resources could be replaced by technology  Dig the ditch with a machine  Changes in production function might increase project risk as well as cost

7.  To determine if crashing makes sense, a cost/time slope is calculated for each activity that can be expedited (crashed). The formula looks like this: This formula allows the analyst to determine the relative cost of crashing each activity. Then the most cost effective plan for crashing can be determined. The formula implies that the activities can always be crashed in one-day increments, which may not be true. Meredith & Mantel (2009) Project management: a managerial approach. 7th ed. Wiley.

8. Table 9-1 Page 386 Table 9-2 Page 386 *Partial crashing allowed **Partial crashing NOT allowed Activity e illustrates technological discontinuity: it can either be completed in 3 days at $10 per day or 1 day at $80

9. 1. Focus on the critical path(s) when trying to shorten the duration of a project  Crashing a noncritical activity will not influence project duration 2. When shortening a project’s duration, select the least expensive way to do it

10. Figure 9-1a The critical path is a >b>e (8 days). Normal total cost =$120 Using Table 9.2 data – which task should be crashed to reduce the time by one day? $40

11. Figure 9-1b The critical path is now a >b>e (7 days). Total cost after crashing by one day =$160

12. Crashing by 2 days to a Six Day Schedule Could crash: e and d ($70 + $30) OR a and b ($40 + $60) Total project cost is now $120 + $100 = $220

13. Crashing by 3 days to a Five Day Schedule We crash: e by 2 days = $70 a by 1 day = $40 and we must also reduce d by one day = $30 Total project cost is now $120 + $140 = $260

14. Crashing by 4 days to a Four Day Schedule We crash incrementally beyond the 5 day schedule, which has two critical paths. Only b and d can still be crashed – so each are reduced by one day ($60 + $30) Total project cost is now $120 + $140 +$90 = $350

15.  There may be penalties for late delivery or bonuses for early delivery Figure 9-2

16.  Question 2 on page 424

17.  Another way to expedite a project is to overlap activities – called “fast tracking”  In a design to production project, one way to accomplish this is to overlap the design and production phases. In other words the design is not complete when construction starts.  Research has shown that this can be an effective method of expediting (despite the apparent risks)

18.  The CPM method by itself does not address the issue of resource availability.  Typically the durations are set with “normal” resources, and the schedule is calculated with no assumed resource limit.  In many cases this is clearly not so. The extremes that the PM may be confronted with are:  Time limited projects – The project must be finished on time with resources applied as necessary.  Resource limited projects – The project must stay within set resource limits and the schedule is allowed to drift as necessary.  If schedule, cost and specification (scope) are all fixed, it is unlikely that the PM can succeed.

19.  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  It is the PM’s job to ensure that the required resources, in the required amounts, are available when and where they are needed  Resource leveling is one technique for doing this

20. Figure 9-6 Load diagram for Resource A – high initial demand that drops then climbs again Load diagram for Resource B – low demand at the start, but increases as the project develops

21.  Typical manning graphs show periods when the demand is both above and below the availability.  Often management assumes that if the aggregate demand exceeds the aggregate supply then everything is okay.  Two problems, however, can occur from this situation. 1. during the under capacity times, the staff still needs something to do. If they are not adding value during those times, than that “production” is lost forever. 1. if the aggregate demand exceeds 85-90 percent of the supply. Research has shown that if a manufacturing process is run at more than 85% capacity, it has no resources available to deal with the inevitable disruptions in flow. Once behind, the process can never catch up.

22.  Typically the first resource-loading pattern coming from a CPM schedule has problems.  Either the peak load exceeds the availability or the variation in load is too extreme from time period to time period.  In many cases, both problems will occur simultaneously.  Resource leveling attempts to solve these problems by shifting activities within their slack.  Advantages of a level resource plan  improved morale  reduced administrative costs.  Project that have more than a few tasks are very difficult to level manually and benefit from the use of tools like Microsoft® Project.

23. Heuristics  Heuristics apply rules of thumb to determine which activities receive constrained resources first. Optimization models  Optimization attempts to calculate the best solution using mathematical models. Two approaches to constrained resource scheduling heuristics and optimization models:

24.  The heuristic method typically starts with a schedule calculated using the CPM method.  Then it steps through the schedule period by period. For each period it determines if sufficient resources are available.  If they are it proceeds to the next period and repeats the process.  If insufficient resources are available, it uses a priority rule to determine which activities in that time period receive the resources.  Activities that do not receive resources are delayed to the next time period and the process is repeated.

25.  As Soon As Possible – This is the general rule for scheduling tasks using CPM.  As Late As Possible – This rule attempts to delay activities as much as possible to defer their use of resources.  Shortest Task First – This rule sorts the competing tasks by duration and assigns resources starting at the short end of the list. This rule causes the most activities to be completed in any given time period.  Most Resources First – This rule sorts the competing tasks by the amount of resource required and assigns resources starting at the highest end of the list. This favors tasks with high resource consumption under the assumption that they are more important.

26.  Minimum Slack First – This rule sorts the competing tasks by the amount of slack they currently have and assigns resources starting at the low end of the list. This rule favors activities on or close to being on the critical path. Task that are delayed lose slack and so have a relatively higher priority in the next time period. (This tends to be the best method)  Most Critical Followers – This rule sorts the competing tasks by the number (count) of critical path activities that follow each one. Resources are assigned starting at the high end of the list.  Most Successors – This rule sorts the competing tasks by the number (count) of successors that follows each one. Resources are assigned starting at the high end of the list.  Arbitrary – Resources are assigned in some other way. This may involve a value judgment like which customer is perceived as most important.

27. Some of the problems addressed in his Theory of Constraints:  Thoughtless optimism  Management’s desire to set capacity equal to demand in spite of evidence to the contrary coming from the shop floor.  The “Student Syndrome” which describes the tendency of people to put tasks off until the last minute.  Multitasking used as a justification by management to reduce idle time.  Complexity of networks makes no difference  People need a reason to work hard used as a justification by management to cut back on durations  Game playing wherein workers inflate estimates under the (correct) assumption that management will arbitrarily cut them

28.  Goldratt recommends  That projects be scheduled based on the availability of the key resources.  That individual activities have such short durations that workers can’t apply the Student Syndrome.  That to manage uncertainty discrete buffer time be added to the overall project duration.  ordering activities into paths based on their resource dependencies as well as their predecessor/successor relationships.  The longest path is the “critical chain.”  Activities on the critical chain are given the priority for resources.  Buffers are also introduced into paths that feed the critical chain to ensure that delays off the critical chain never slow it down.