Topic 9 Resource Allocation

8/7/2019 Topic 9 Resource Allocation

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Learning Outcomes:

� Process of crashing a project

� Fast-tracking to shorten a project schedule

� Resource allocation, loading and leveling

�

Trade-offs among project resources� Use of resources in individual and multiple,

simultaneous projects



Introduction

y No matter how good the Project Plan and how efficientand productive the Project Team may be, ProjectManagers will always be faced with limited time andmoney, and a shortage of people, equipment and

materialsy Scheduling problems become more complex when

multiple projects share common resources and the PMmust determine the best trade-offs

y Crashing and fast-tracking are two ways of expeditingor shortening a project duration

y Resource loading and leveling ensure the right amountof resources are available during specific time periodsand allocating them at a constant rate over time



Crashing a project using the Critical Path Method

y Stakeholders often want to shorten a project scheduleestimate

y This can be achieved by compressing the duration of activities on the critical path

y Recall that the critical path is the longest path through thenetwork diagram with the least amount of slack

y You first need to develop a good WBS and activity list beforedeveloping the network diagram

y Duration of each activity on the critical path must be

estimated and all the durations added up to determine theproject schedule estimate

y Activity duration can be shortened by allocating moreresources or by changing the scope of the activities



Crashing a project

y A technique for making cost and schedule trade-offs toobtain the greatest amount of schedule compressionfor the least incremental cost

y Main advantage shortens the time to finish a project

y

Main disadvantage increases total project costsy Standard practice and rule of thumb can be used for

estimating resource needs for normal progress

y Crashing requires careful planning to ensure totalproject length is actually reduced and to avoidintroducing new problems

y Cost/time crashing method relies on the cheapestoption for reducing the durationy Other factors besides cost also need to be considered



Factors to consider when crashing

y Timing of crashing

y Crashing a critical activity early in the project may leadto waste of money if

y Some other non-critical path becomes the new critical pathy Some other critical activity is finished early

y It may be wise to crash early

y If later activities are likely to be delayed and therefore offsetany gains in time

y The PM wants to retain the option of crashing both early andlate activities



y

Impact of crashing on morale and motivation of project team

y Least-cost method used repeatedly to accelerateprogress may result in fatigue and resentment amongteam members

y If overtime pay is involved, other team members notinvolved with the crashing may resent not having thisbenefit

y Can lead to tension in the entire team

y Inherent risks in crashing need to be considered

y Some activities are more riskier than others to crash

y Risk management must be re-examined when crashing



Ways to crash a schedule

y Change the way resources are applied to the project

y Relieve employees of other responsibilities so they candevote more hours each day to the project

y Re-allocate resources from non-critical activities to

provide the extra helpy Check to see the critical path has not shifted to include the

non-critical activities

y Add resources to provide additional staff, overtime,

additional equipment, vendor incentives to completesooner, or outsource

y Schedule overtime sparingly since it is not as productive asregular work hours



y

Change the sequence of activities to allow overlap orparallel activities, rather than sequential

y This will increase the risk

y Reconsider the accuracy of the estimates for activities

on the critical pathy But dont arbitrarily reduce the estimates to fit the time

available

y Consider modifying the project objectives

y

Rethink the basic strategy to achieve the same objectivesy Reduce the project scope

y Increase the budget or increase the time



Example of crashing using the CPM

Activity Time required(weeks)

Cost (RM) Crashing costper week (RM)

Normal Crash Normal Crash

A 4 2 10,000 14,000 2000

B 6 5 30,000 42,500 12,500

C 2 1 8000 9500 1500

D 2 1 12,000 18,000 6000

E 7 5 40,000 52,000 6000

F 6 3 20,000 29,000 3000



Example

y Only critical path activities are considered for crashing

y Begin with the lowest weekly crashing costs

y Activity A at RM 2000 for a max of 2 weeks

y Activity C is lower at RM 1500 but is not on the critical path

y Next is Activity F at RM 3000 for a max of 3 weeks

y Activities A, F, E, B can be crashed in that order

y Total crashing course is RM 37,500, raising the budget fromRM 120,000 to RM 157,500

y Corresponding schedule reduced from 23 to 15 weeks

y There is a possibility that this reduction may be unrealistic if sufficient resources cannot be made available during thecrashing period

y As an activity is crashed, a new critical path may develop so

that the actual schedule is not reduced as much as expected



CPM Crashing Costs



Fast-tracking - another technique for schedule shortening

y Involves doing tasks in parallel that would normally be done in

sequence or in slight overlapsy Only possible if the project supports tasks being done in parallel

y Requires closer coordination among those responsible for theaffected tasks but can result in huge time savings

y

Main disadvantage is that it increases the risk of rework, andthus actually may lengthen the schedule

y E.g. beginning construction work on a building before the designis approved by relevant authorities

y Fast-tracking may reduce the project schedule up to 40 %

y However, overlapping design approval and construction is a risky business

y Decision must be jointly made by all major stakeholders whoneed to accept the risk that it may need to be demolished andrebuilt if the design assumptions prove mistaken



The resource allocation problem

y

Fundamental resources required for any project:1. People

2. Money

3. Equipment

4. Facilities

5. Materials and Supplies

6. Information

7. Technology

y Basic questions for the PM to answer:

1. What resources are needed to complete each task on the project?2. Who and what from the list is already available?

y Every project faces the reality of limited resources

y The strategy is to avoid both over and under allocation



y Over allocation

y Allocating a rare resource with the assumption that it will be

easily availabley E.g. the unlimited time of the only subject matter expert in the

company

y Under allocation

y Reassigning the team to other projects when they are not busy so

that they are unavailable when they are neededy In the worst case, during project lulls, some team members may

get laid off, becoming permanently unavailable and takingvaluable project knowledge with them

y For realistic and efficient allocation

y Avoid resource peaks and valleys

y Use a consistent set of people at a consistent rate on the project

y Every upswing in resource use has an additional cost, e.g.procuring new equipment or transporting new team members to

the project site



y Goal of resource allocation

y Optimize the people and equipment assigned to theproject

y To plan for consistent and continuous use of the fewestresources

y System-constrained project tasksy Task requiring a fixed amount of time and known

quantities of resources

y E.g. heating a material for a production process

y No trade-offs are possibley Just need to ensure required resources are available

when needed



Resource loading

y

The amount of work each team member or other resourceis assigned

y Important team members may be overwhelmed with animpossible workload

y Others may be under-loaded

y Histograms are often used to depict period by periodvariations in resource loading

y Histograms can be very useful in identifying staffingproblems

y Over-allocation means more resources than are available havebeen assigned to perform work at a given time

y Project Management software can automatically prepare aresource-loading diagram



Sample histogram showing an over-allocated individual



Resource levelling

y Many project schedules neglect to deal with

y Conflicting availability among resources

y Potential overuse of key resources

y Needs of other projects and priorities

y Resource levelling

y A technique for resolving resource conflicts by delaying tasksy A form of network analysis where resource management drives

scheduling decisions, i.e. start and finish dates of tasks

y Main purpose is to create a smoother distribution of tasks

y

Assumes that it is most productive to have consistent, continuoususe of the fewest resources possible

y Avoids repeatedly adding and removing resources throughout theproject

y Adjusts the schedule to compensate for limitations on equipment

and people



y Over-allocation and under-allocation can be remedied by changing the schedule

y Period by period variations in resource loading is minimized by shifting tasks within their slack allowances

y Project management software is useful for resource levelling

y Used to make changes to the schedule

y PM needs to be aware of all substantial changes to the scheduley Benefits of resource levelling

y Resources need less management when they are used on a moreconstant basis

y

Helps PMs use a JIT inventory type of policy for employingsubcontractors or other expensive resources

y Fewer problems for Project personnel and Accounting departments

y Improves morale of project team members by providing stability intheir jobs



Constrained resource scheduling

yHeuristic methodsy Rule of thumb estimates that have been found to work

reasonably well in similar situations

y Used widely since

y

They are the only feasible methods of solving the large, non-linear complex problems of real world project management

y Schedules may not be optimal but are good enough for mostpurposes

y Modern simulation techniques allow PMs to develop many

different schedules quickly and make a comparisony Optimizing methods

y Linear programming and enumeration methods to findan optimal solution to the constrained resource problem



Multi-project scheduling and resource allocation

y Scheduling and allocating resources to multiple projectsis much more complicated than a single project

y Most common approach is to treat several projects aselements of a single large project

y Another way is to consider all the projects as completely independent

y An efficient multi-project scheduling system is definitely needed when there are many projects, each with its own

tasks, due dates and resource requirements



y Parameters affected by project scheduling

y Schedule slippagey Most important of the criteria

y Amount of time after a projects due date when the project isactually delivered

y

Resource utilizationy Measure of effectiveness

y Particularly important to industrial organizations because of the high cost of making resources available

y Amount of in-process inventory

y The amount of work waiting to be processed because of theshortage of some resource

Topic 9 Resource Allocation

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