Resource Allocation

Critical Path Method - Crashing a Project:

 CPM includes a way of relating the project schedule to the level of physical resources allocated
to the project
 This allows the project manager to trade time for cost, or vice versa
 In CPM, two activity times and two costs are specified, if appropriate for each activity
 The first time/cost combination is called normal, and the second set is referred to as crash
 Normal times are “normal” in the same sense as the most likely time estimate used in PERT, and
the only one in CPM
 Crash times result from an attempt to expedite the activity by the application of additional
resources
 Careful planning is critical when attempting to expedite (crash) a project
 Expediting tends to create problems; and the solution to one problem often creates several
more problems that require solutions
Crashing – Considerations:
 Pick activities on the Critical Path
 Determine Crash/Day costs
 Start with lowest cost crash/day
 Determine other effects of shortening critical path activities
 Continue to crash/analyze until optimum solution reached.
 Analyze Project Cost/Duration Graph
Fast-Tracking:
 Another way to expedite a project is known as “fast-tracking”
 It refers to overlapping the design and build phases of a project
 Because design is usually completed before construction starts, overlapping the two activities
will result in shortening the project duration
The Resource Allocation Problem:
 A 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
 Time itself is always a critical resource in project management, one that is unique because it can
neither be inventoried nor renewed
 Schedules 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
 The extreme points of the relationship between time use and resource use are these:
 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 critical
  Resource Limited:The project must be finished as soon as possible, but without
exceeding some specific level of resource usage or some general resource constraint
 If all three variables - time, cost, specifications - are fixed, the system is “overdetermined”
 In this case, the project manager has lost all flexibility to perform the trade-offs that are so
necessary to the successful completion of projects
 A system-constrained task requires a fixed amount of time and known quantities of resources
 Resource 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 Loading:
 An excellent guide for early, rough project planning
 Because the project action plan is the source of information on activity precedences, durations,
and resources requirements, it is the primary input for both the project schedule and its budget
 The action plan links the schedule directly to specific demands for resources
 The CPM network technique can be modified to generate time-phased resource requirements
 The project manager must be aware of the ebbs and 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 Leveling:
 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
 Several advantages include:
 Less hands-on management is required
 May be able to use a “just-in-time” inventory policy
 When resources are leveled, the associated costs also tend to be leveled
 The project manager must be aware of the cash flows associated with the project and of the
means of shifting them in ways that are useful to the parent firm
 Resource leveling is a procedure that can be used for almost all projects, whether or not
resources are constrained
Constrained Resource Scheduling:
 There are two fundamental approaches to constrained allocation problems:
 Heuristic Methods
 Optimization Models
 Heuristic approaches employ rules of thumb that have been found to work reasonably well in
similar situations
 Optimization approaches seek the best solutions but are far more limited in their ability to
handle complex situations and large problems
Heuristic Methods
  Heuristic approaches to constrained resource scheduling problems are in wide, general use for a
number of reasons:
1. They are the only feasible methods of attacking the large, nonlinear, complex problems that tend to
occur in the real world of project management
2. While the schedules that heuristics generate may not be optimal, they are usually quite good-
certainly good enough for most purposes
 Most heuristic solution methods start with the CPM schedule and analyze resource usage period
by period, resource by resource
 In a period when the available supply of a resource is exceeded, the heuristic examines the tasks
in that period and allocates the scarce resource to them sequentially, according to some priority
rule
 Technological necessities always take precedence
 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
 Most priority rules are simple adaptations of the heuristics used for the traditional “job shop
scheduling” problem of production/operations management
 Most heuristics use a combination of rules: a primary rule, and a secondary rule to break ties
 As the scheduling heuristic operates, one of two events will result:
 The routine runs out of activities before it runs out of resources
 The routine runs out of resources before all activities have been scheduled
Multiproject Scheduling and Resource Allocation:
 The most common approach to scheduling and allocating resources to multiple projects is to
treat the several projects as if they were each elements of a single large project
 Another way of attacking the problem is to consider all projects as completely independent
 To describe such a system properly, standards are needed by which to measure scheduling
effectiveness
 Three important parameters affected by project scheduling are:
 Schedule slippage
 Resource utilization
 In-process inventory
 The organization (or the project manager) must select the criterion most appropriate for its
situation
 Schedule slippage, often considered the most important of the criteria, is the time past a
project’s due date or delivery date when the project is completed
  Resource utilization is of particular concern to industrial firms because of the high cost of making
resources available
 The amount of in-process inventory concerns the amount of work waiting to be processed
because there is a shortage of some resource
 All criteria cannot be optimized at the same time
 As usual, the project manager will have to make trade-offs among the criteria
 A firm must decide which criterion to evaluate its various scheduling and resource allocation
options

Mathematical Programming:
 Mathematical programming can be used to obtain solutions to certain types of multiproject
scheduling problems
 These procedures determine when an activity should be scheduled, given resource constraints
 Mathematical programming, however, is rarely used in project management to handle the
multiproject problem (mostly, heuristics are used)
Summary
 The critical path method (CPM) is a network constructed in the same manner as PERT but
considers the possibility of adding resources to tasks to shorten their duration
 The resource allocation problem is concerned with determining the best trade-offs between
available resources, including time, throughout the duration of the project
 Resource loading is the process of calculating the total load from project tasks on each resource
for each time period of the project’s duration
 Resource leveling is concerned with evening out the demand for various resources required in a
project by shifting tasks within their slack allowances
 There are two basic approaches to addressing the constrained resources allocation problem:
 Heuristic methods
 Optimizing methods
 For multiproject scheduling, three important measures of effectiveness are schedule slippage,
resource utilization, and level of in-process inventory