Chapter 9 Resource Allocation 1

Chapter 9Resource Allocation

Chapter 9 Resource Allocation 2

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

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)

Critical Path Method – Crashing a Project

Chapter 9 Resource Allocation 5

Slope = crash cost – normal cost crash time – normal time

Critical Path Method – Crashing a Project

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

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

1. Focus on the critical path when trying to shorten the duration [resource ready]

1. 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,cras

h)

Slope ($/day)

a - 3,2 40, 80 40/-1 = -40

b a 2,1 20, 80 60/-1 = -60

c a 2,2 20, 20 Cannot be expedited

d* a 4,1 30, 120 90/-3 = -30

e** b 3,1 10, 80 -70 (2 days)

*Partial crashing allowed**Partial crashing not allowed

Chapter 9 Resource Allocation 9

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

1 2 3 4 5 6 7 8

ac

b

d

e

1 2 3 4 5 6 7 8

a c

b

d

e

1 2 3 4 5 6 7 8

a cb

d

e

7-day schedule, $160 6-day schedule. $220

5-day schedule, $2601 2 3 4 5 6 7 8

a cb

d

e

4-day schedule, $350

Chapter 9 Resource Allocation 11

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

On the cost side, figure below shows the time/cost relationship of crashing the project

0

50

100

150

200

250

300

350

400

0 1 2 3 4 5 6 7 8 9

Total duration (days)

Co

st (

$)

All crasha + b + 2d + 2e

a + d + 2e - ba + b

a

All normal

Chapter 9 Resource Allocation 13

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

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

Fast Tracking (cont.)

Chapter 9 Resource Allocation 15

SOLVED PROBLEM

Activity

Crash Time,Cost

Normal Time,Cost

Partial crashing

a 3,$60 3,$60

No

b 6,80 7,30 Yes

c 2,90 5,50 No

d 5,50 6,30 No

e 2,100 4,40 Yes

1

2

3

4

a

be

c

d

Find the lowest cost to complete the project in 10 days

Chapter 9 Resource Allocation 16

AnswerCurrent time and cost: 12 days and $210

3

1

2

3

4

a

be

cd0

3

74

5

6

8

12

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.

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

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)

0 5 10 15 20 25 30 35 40 45

4

1

1 2

3

3

3

5

6 7

1 4

a

(4,0)

b

(2,1)c

(3,1)

dummy

h

(0,2)

d

(0,2)

j

(0,6)

e

(2,1)f

(1,1)

i

(6,3)

g

(1,0)

Chapter 9 Resource Allocation 21

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

E.g: Network

1

2

3

4

a, 2[2]

c, 5

[4]b, 3

[2]

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 Leveling

1 2 3 4 5

10

8

6

4

2

b b

c c

a

c

Days1 2 3 4 5

c

b

a

Days

Work

ers

Act

ivit

y

Chapter 9 Resource Allocation 24

After Resource Leveling

1 2 3 4 5

10

8

6

4

2

a

c

b

Days1 2 3 4 5

c

b

a

Days

Act

ivit

y Work

ers

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?