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Scheduling Resources and CostsResources and PrioritiesProject network times are not a schedule until resources have been assigned.The implicit assumption is that resources will be available in the required amounts when needed.Adding new projects requires making realistic judgments of resource availability and project durations.Cost estimates are not a budget until they have been time-phased.The Resource scheduling ProblemCopyright 2011 The McGraw-Hill Companies, Inc. 2FIGURE 8.1

Project Planning ProcessCopyright 2011 The McGraw-Hill Companies, Inc. 3Resource Smoothing (or Levelling)

Involves attempting to even out varying demands on resources by using slack (delaying noncritical activities) to manage resource utilisation when resources are adequate over the life of the project.

The Resource scheduling ProblemCopyright 2011 The McGraw-Hill Companies, Inc.

4Resource-Constrained Schedulingresources are not adequate The duration of a project may be increased by delaying the late start of some of its activities if resources are not adequate to meet peak demands.Copyright 2011 The McGraw-Hill Companies, Inc. The Resource scheduling ProblemTechnical or Logic ConstraintsConstraints related to the networked sequence in which project activities must occur.Physical ConstraintsActivities that cannot occur in parallel or are affected by contractual or environmental conditions.Resource ConstraintsThe absence, shortage, or unique interrelationship and interaction characteristics of resources that require a particular sequencing of project activitiesTypes of Project ConstraintsCopyright 2011 The McGraw-Hill Companies, Inc. 6

Constraint ExamplesCopyright 2011 The McGraw-Hill Companies, Inc. 7Types of Resource ConstraintsTypes of Resource ConstraintsPeopleSkills they bring to the project, e.g., programmer, mechanical engineer, inspector...Some skills are interchangeable, usually with a loss of productivity materialsFor example, chemicals for a scientific project, concrete for a road project, survey data for a marketing project. equipmentFor example, Earth moving tractor, a test rig

Copyright 2011 The McGraw-Hill Companies, Inc. Time-Constrained ProjectMust be completed by an imposed date.Time is fixed, resources are flexible: additional resources are required to ensure project meets schedule.Resource-Constrained ProjectIs one in which the level of resources available cannot be exceeded.Resources are fixed, time is flexible: inadequate resources will delay the project.Classification of a scheduling problemCopyright 2011 The McGraw-Hill Companies, Inc. 9Time-Constrained ProjectsMust be completed by an imposed date. Require use of levelling techniques that focus on balancing or smoothing resource demands.Use positive slack (delaying noncritical activities) to manage resource utilisation over the duration of the project.Peak resource demands are reduced.Resources over the life of the project are reduced.Fluctuation in resource demand is minimized.Resource Allocation methodsCopyright 2011 The McGraw-Hill Companies, Inc. 10

FIGURE 8.3

Botanical GardenCopyright 2011 The McGraw-Hill Companies, Inc. 11Resource Demand Levelling Techniques for Time-Constrained ProjectsAdvantagesPeak resource demands are reduced.Resources over the life of the project are reduced.Fluctuation in resource demand is minimized.DisadvantagesLoss of flexibility that occurs from reducing slack.Increases in the criticality of all activities.Resource Allocation methodsCopyright 2011 The McGraw-Hill Companies, Inc. 12Resource-Constrained ProjectsResources are limited in quantity or availability.Activities are scheduled using heuristics (rules-of-thumb) that focus on:Minimum slackSmallest (least) durationLowest activity identification numberThe parallel method is used to apply heuristicsAn iterative process starting at the first time period of the project and scheduling period-by-period the start of any activities using the three priority rules.Resource Allocation methodsCopyright 2011 The McGraw-Hill Companies, Inc. 13Example 1

Copyright 2011 The McGraw-Hill Companies, Inc. Reduces delay but reduces flexibility.Increases criticality of events.Increases scheduling complexity.May make the traditional critical path no longer meaningful.Can break sequence of events.May cause parallel activities to become sequential and critical activities with slack to become noncritical.The Impacts of Resource-Constrained SchedulingCopyright 2011 The McGraw-Hill Companies, Inc. 15Limiting AssumptionsSplitting activities is not allowedonce an activity is started, it is carried to completion.Level of resources used for an activity cannot be changed.Risk AssumptionsActivities with the most slack pose the least risk.Reduction of flexibility does not increase risk.The nature of an activity (easy, complex) doesnt increase risk.Resource Allocation methodsCopyright 2011 The McGraw-Hill Companies, Inc. 16SplittingA scheduling technique use to get a better project schedule and/or increase resource utilization.Involves interrupting work on an activity to employ the resource on another activity, then returning the resource to finish the interrupted work.Is feasible when startup and shutdown costs are low.Is considered the major reason why projects fail to meet schedule.SplittingCopyright 2011 The McGraw-Hill Companies, Inc. 17

FIGURE 8.11Splitting ActivitiesCopyright 2011 The McGraw-Hill Companies, Inc. 18Leaves time for consideration of reasonable alternatives:Cost-time tradeoffsChanges in prioritiesProvides information for time-phased work package budgets to assess:Impact of unforeseen eventsAmount of flexibility in available resourcesBenefits of Scheduling ResourcesCopyright 2011 The McGraw-Hill Companies, Inc. 19Multi-project Scheduling ProblemsOverall project slippageDelay on one project create delays for other projectsInefficient resource applicationThe peaks and valleys of resource demands create scheduling problems and delays for projects.Resource bottlenecksShortages of critical resources required for multiple projects cause delays and schedule extensions.Multi-project Resource SchedulesCopyright 2011 The McGraw-Hill Companies, Inc. 20Managing Multi-project Scheduling:Create project offices or departments to oversee the scheduling of resources across projects.Use a project priority queuing system: first come, first served for resources.Centralise project management: treat all projects as a part of a megaproject.Outsource projects to reduce the number of projects handled internally.Multi-project Resource SchedulesCopyright 2011 The McGraw-Hill Companies, Inc. 21Time Phased budget Copyright 2011 The McGraw-Hill Companies, Inc. Types of costsDirect CostsCosts that are clearly chargeable to a specific work package.Labor, materials, equipment, and otherDirect (Project) Overhead CostsCosts incurred that are directly tied to an identifiable project deliverable or work package.Salary, rents, supplies, specialised machineryGeneral and Administrative Overhead CostsOrganisation costs indirectly linked to a specific package that are apportioned to the project

Copyright 2011 The McGraw-Hill Companies, Inc. FIGURE 9.1

Project CostDuration GraphCopyright 2011 The McGraw-Hill Companies, Inc. Constructing a Project CostDuration Graph Find total direct costs for selected project durations.Find total indirect costs for selected project durations.Sum direct and indirect costs for these selected project durations.Compare additional cost alternatives for benefits.Copyright 2011 The McGraw-Hill Companies, Inc. Time-Phased Budgets

A cost estimate is not a budget unless it is time-phased.Time phasing begins with the time estimate for a project.Time-phased budgets mirror how the projects cash needs (costs) will occur or when cash flows from the project can be expected.Budget variances occur when actual and forecast events do not coincide.

Copyright 2011 The McGraw-Hill Companies, Inc. Time phased work package Copyright 2011 The McGraw-Hill Companies, Inc.

Creating a time phased budgetCopyright 2011 The McGraw-Hill Companies, Inc.

Reducing Project DurationCopyright 2011 The McGraw-Hill Companies, Inc. Rationale for Reducing Project DurationTime Is Money: Cost-Time TradeoffsReasons for imposed project duration dates:Customer requirements and contract commitmentsTime-to-market pressuresIncentive contracts (bonuses for early completion)Unforeseen delaysOverhead and goodwill costsPressure to move resources to other projectsCopyright 2011 The McGraw-Hill Companies, Inc. Accelerating Project CompletionWhen resources are not constrained Adding ResourcesOutsourcing Project WorkScheduling OvertimeEstablishing a Core Project TeamDo It TwiceFast and CorrectlyCopyright 2011 The McGraw-Hill Companies, Inc. Accelerating Project CompletionCopyright 2011 The McGraw-Hill Companies, Inc. When resources are constrained Fast-Tracking/ concurrent activitiesCritical-Chain- longest technical dependency pathReducing project scopeCompromise quality

Accelerating Project CompletionCost-time solutions focus on reducing (crashing) activities on the critical path to shorten overall duration of the project.

Reducing the time of a critical activity usually incurs additional direct costs.

Copyright 2011 The McGraw-Hill Companies, Inc. Explanation of Project CostsDirect costsNormal costs that can be assigned directly to a specific work package or project activity.Labor, materials, equipment, and subcontractorsCrashing activities increases direct costs.

Project Indirect costsCosts that cannot be associated with any particular work package or project activity.Supervision, administration, consultants, and interestReducing project time directly reduces indirect costs.Copyright 2011 The McGraw-Hill Companies, Inc.

FIGURE 9.2Activity GraphCopyright 2011 The McGraw-Hill Companies, Inc. Constructing a Project CostDuration Graph Determining activities to shortenShorten the activities with the smallest increase in cost per unit of time.Assumptions:The time- cost relationship is linear.Normal time assumes low-cost, efficient methods to complete the activity.Crash time represents a limitthe greatest time reduction possible under realistic conditions.Slope represents a constant cost per unit of time.All accelerations must occur within the normal and crash times.Copyright 2011 The McGraw-Hill Companies, Inc. Reducing Project Duration to Reduce Project CostCompute total costs for specific durations and compare to benefits of reducing project time.Search critical activities for lowest direct-cost activities to shorten project duration.Identifying direct costs to reduce project timeGather information about direct and indirect costs of specific project durations. Copyright 2011 The McGraw-Hill Companies, Inc. Reducing project duration: Example1Copyright 2011 The McGraw-Hill Companies, Inc. Practical ConsiderationsUsing the project costDuration GraphCrash timesLinearity assumptionChoice of activities to crash revisitedTime reduction decisions and sensitivityCopyright 2011 The McGraw-Hill Companies, Inc. What if Cost, Not Time is the Issue?Commonly used options for cutting costsReduce project scopeHave owner take on more responsibilityOutsourcing project activities or even the entire projectBrainstorming cost savings optionsCopyright 2011 The McGraw-Hill Companies, Inc.