CHE620

Project
Management
Chapter 6
Allocating
Resources to the
Project
BY : SITI FATMA ABD KARIM

Another References:

Chapter 8:
Scheduling
Resources and
Costs
Chapter 9:
Reducing
Project Duration

This chapter addresses methods available

to project managers for dealing with
resource utilization and availability
through resource leveling and resourceconstrained scheduling. Up to now the
start and sequence of activities has been
based solely on technical or logical
considerations.

Overview of Resources Scheduling Problem

How much
flexibility do we
have in using
resources?
Will the assigned
labor and/or
equipment be
adequate and
available to deal
with my project?

Will outside
contractors have
to be used?

Question by
Project
Manager, after
staff and other
resources are
assigned

Do unforeseen
resource
dependencies
exist? Is there a
new critical path?

Is the original
deadline realistic?

Project Planning Process

The Resources Problem

Resources and Priorities
Project network times are not a
schedule until resources have been
assigned.
Cost estimates are not a budget
until they have been time-phased.
Resource-Constrained Scheduling
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.

Resource Smoothing (or Leveling)

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

Types of Project Constraints

Constraints related to the networked sequence
in which project activities must occur.

The absence, shortage, or

unique interrelationship and
interaction characteristics of
resources that require a
particular sequencing of
project activities
Physical Constraints

Activities that cannot

occur in parallel or
are affected by
contractual or
environmental
conditions.

Types of Resources Constraints

Human resources are
usually classified by the
skills they bring to the
project

People

The many differing skills

of human resources add
to the complexity of
scheduling projects.

Materials

Scheduling materials has also

become important in developing
products where time-to-market
can result in loss of market share.

Equipment

Material availability and

shortages have been blamed
for the delay of many projects

Equipment is
usually presented
by type, size, and
quantity.
Equipment is often
overlooked as a
constraint.

Example

Equipment

Product raw
material must enough
to produce the
targeted amount of
product

People / Manpower

Classification of a Scheduling Problem

Problem

Time-constrained

Resources Constrained

Definition

must be completed by an
imposed date

the level of resources

available cannot be
exceeded

Scheduling Terms

Fixed time
Flexible resources

Fixed Resources
Flexible Time

Yes

No
How to determine?
If the critical path is delayed, will
resources be added to get back on
schedule?

Resource Allocation Methods

Limiting Assumptions

Splitting activities is
not allowedonce
an activity is start,
it is carried to
completion.
Level of resources
used for an activity
cannot be changed.

Risk Assumptions
Activities 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 Methods

Time-Constrained Projects:
Smoothing Resource Demand

Must be completed by an imposed date.

Require use of leveling techniques that focus
on balancing or smoothing resource demands.

Use positive slack (delaying noncritical activities)

to manage resource utilization over the duration
of the project.

Botanical Garden Project

Top bar chart
shows the activities
on a time scale

Activity slack (for

example, irrigation
requires six days to
complete and has
six days slack).

Resource profile for

the backhoes

The smoothed
resource loading
chart shows the
results of delaying the
fence and walls
activity.

Resource Allocation Methods

Advantages

Resource Demand
Leveling Techniques
for Time-Constrained
Projects

Disadvantages

Resource Allocation Methods

Resource-Constrained Projects

Resources are limited in quantity or availability.

Activities are scheduled using heuristics
(rules-of-thumb) that focus on:
1. Minimum slack
2. Smallest (least) duration
3. Lowest activity identification number

The parallel method is used to apply heuristics

An 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-Constrained Schedule through Period 23

FIGURE 8.4

Resource-Constrained Schedule through Period 23

FIGURE 8.4 (contd)

Resource-Constrained Schedule through Period 23

FIGURE 8.4 (contd)

Resource-Constrained Schedule through Period 5-6

FIGURE 8.5

Resource-Constrained Schedule through Period 5-6

FIGURE 8.5 (contd)

Resource-Constrained Schedule through Period 5-6

FIGURE 8.5 (contd)

The impact of Resource-Constrained

Scheduling
Condition
Limited Resources Schedule

Impact
Reduces slack, reduces
flexibility by using slack to
ensure delay is minimized, and
increases the number of
critical and near-critical
activities.

Resource constraints are

added to technical constraints

Scheduling complexity

Splitting Activities

Splitting tasks is a
scheduling technique used
to get a better project
schedule and/or to
increase resource
utilization.

Splitting can be a useful

tool if the work involved
does not include large
start-up or shutdown costs

Large start-up or shutdown

costs
having a bridge designer
take time off to work on
the design problem of
another

Not large start-up or

shutdown costs
moving equipment from
one activity location to
another.

Splitting is a major reason

why projects fail to meet
schedule.

Splitting Activities

Figure 8.11 depicts

the nature of the
splitting problem.
The original activity
has been split into
three separate
activities: A, B, and
C. The shutdown
and start-up times
lengthen the time
for the original
activity.

Benefits of Scheduling Resources

Leaves time for consideration of
reasonable alternatives:

Cost-time tradeoffs
Changes in priorities
Provides information for timephased work package budgets to
assess:
Impact of unforeseen events
(such as turnover, equipment
breakdown, or transfer of project
personnel)
Amount of flexibility in available
resources

If the scheduled delay

is unacceptable or the
risk of being delayed
too high, the
assumption of being
resource constrained
can be reassessed.

This is useful when

they receive requests
from other managers
to borrow or share
resources.

Why resources
scheduling tie to project
priority?
Submit your answer in
the forum title
Resources scheduling
Project Priority by
today.
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answer

Assigning Project Work

Match Requirements with

Qualification and Experience

Project Manager

Balance up the task

performance with the need

There is a natural
tendency to assign the
best people the most
difficult tasks.

Multi-project Resource Schedules

Multiproject Scheduling Problems

1.

Overall project slippage

Delay on one project create delays for other projects

2.

Inefficient resource application

The peaks and valleys of resource demands create scheduling

problems and delays for projects.
3.

Resource bottlenecks
Shortages of critical resources required for multiple projects
cause delays and schedule extensions.

Multiproject Resource Schedules (contd)

Managing Multiproject 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.

Centralize project management: treat all projects as a part of a

megaproject.
Outsource projects to reduce the number of projects handled
internally.

Imagine that you are a

project manager, what is the
reason a project manager
need to schedule the
resources?

Submit your answer in the

forum title Reason for
scheduling Resources
From project manager
perspective by today.
Individual opinion/ answer

Rationale for Reducing Project Duration

Time to market

Due to global
competition and
high speed
technological
advances
For example :
electronics industry
(6 months delay
cause loss of market
share 35%.

Adaptability

Not only on
innovation but also
adaptability
quickly adapt with
new challenges
For example : ESSO
become PETRON
(re-branding)

Unforeseen
delays

Reducing project
time occurs when
unforeseen delays
(target to complete
early so that when
unforeseen delays
happen, losses
occur still
acceptable
For Example : Delay
that occur due to
equipment
breakdown /
adverse weather

Rationale for Reducing Project Duration

Incentive contracts

. Incentive contracts
can make reduction
of project time
rewarding
4For example :
Construction early
completion (give
more profit to both
owner and
contractor)

Imposed deadlines

For example : a
politician makes a
public statement that
a new law building
will be available in
two years.

Accelerating Project Completion

Two major condition for crashing
specific project activities
When
Resources are
not constrained

When
Resources are
constrained
A project manager has fewer options for
accelerating project completion when additional
resources are either not available or the budget is
severely constrained. This is especially true once
the schedule has been established.

When Resources are not constrained

1. Adding Resources

The most common method for shortening

project time is to assign additional staff and
equipment to activities. There are limits,
however, as to how much speed can be gained
by adding staff. Doubling the size of the
workforce will not necessarily reduce
completion time by half.

When Resources are not constrained

2. Outsourcing Project Work
A common method for shortening the project
time is to subcontract an activity. The
subcontractor may have access to superior
technology or expertise that will accelerate
the completion of the activity. For example,
contracting for a backhoe can accomplish in
two hours what it can take a team of
labourers two days to do.

When Resources are not constrained

3. Scheduling Overtime
The easiest way to add more labour to a project is not to add
more people, but to schedule overtime. If a team works 50 hours
a week instead of 40, it might accomplish 20 percent more.
Advantages
Avoid the additional costs of
coordination and
communication encountered
when new people are added.
Fewer distractions when
people work outside normal
hours

Disadvantages
Double or triple payments
Productivity declined
human nature

When Resources are not constrained

4.0 Establish a Core Project Team
Assigning professionals full time to a
project avoids the hidden cost of
multitasking in which people are forced
to juggle the demands of multiple
projects.

When Resources are constrained

1. Do It TwiceFast and Correctly
If you are in a hurry, try building a quick and dirty short-term
solution, then go back and do it the right way. For example, the
Rose Garden stadium in Portland, Oregon, was supposed to be
completely finished in time for the start of the 19951996
National Basketball Association (NBA) season. Delays made this
impossible, so the construction crew set up temporary bleachers
to accommodate the opening-night crowd. The additional costs of
doing it twice are often more than compensated for by the
benefits of satisfying the deadline.

When Resources are constrained

2. Fast-Tracking
Sometimes it is possible to rearrange the logic of the project network so that
critical activities are done in parallel (concurrently) rather than sequentially. This
alternative is a good one if the project situation is right. When this alternative is
given serious attention, it is amazing to observe how creative project team members
can be in finding ways to restructure sequential activities in parallel.
For example,
Instead of waiting for the final design to be approved, manufacturing engineers
can begin building the production line as soon as key specifications have been
established.
Changing activities from sequential to parallel usually requires closer coordination
among those responsible for the activities affected but can produce tremendous
time savings.

When Resources are constrained

3. Critical-Chain
Critical-chain project management (CCPM) is designed to accelerate
project completion.

Issue : the jury is still out in terms of its applicability.

At the same time, it would be difficult to apply CCPM midstream in a
project. CCPM requires considerable training and a shift in habits
and perspectives that take time to adopt. Although there have been
reports of immediate gains, especially in terms of completion times,
a long-term management commitment is probably necessary to reap
full benefits.

When Resources are constrained

4. Reducing Project Scope
Probably the most common response for meeting unattainable
deadlines is to reduce or scale back the scope of the project. This
invariably leads to a reduction in the functionality of the project.
For example, the new car will average only 25 mpg instead of 30, or
the software product will have fewer features than originally
planned. While scaling back the scope of the project can lead to big
savings in both time and money, it may come at a cost of reducing
the value of the project.
If the car gets lower gas mileage, will it stand up to competitive
models? Will customers still want the software minus the features?
Focus should be on changes in activities on the critical path.

When Resources are constrained

5. Compromise Quality
Reducing quality is always an option, but it is rarely acceptable or
used. If quality is sacrificed, it may be possible to reduce the time
of an activity on the critical path.
In practice the methods most commonly used to crash projects are
scheduling overtime, outsourcing, and adding resources. Each of
these maintains the essence of the original plan. Options that
depart from the original project plan include do it twice and fasttracking. Rethinking of project scope, customer needs, and timing
become major considerations for these techniques.

Project Cost-Duration Graph

Nothing on the horizon suggests that the need to
shorten project time will change. In fact, if anything
the pressure to get projects done quicker and sooner
is likely to increase in importance.

The challenge for the project manager is to use a

quick, logical method to compare the benefits of
reducing project time with the cost.
When sound, logical methods are absent, it is difficult
to isolate those activities that will have the greatest
impact on reducing project time at least cost.

Explanation of Project Cost

Total cost for each duration
=
Indirect cost + direct costs.
Indirect costs continue for the life of
the project. Hence, any reduction in
project duration means a reduction in
indirect costs.
Direct costs on the graph grow at an
increasing rate as the project duration
is reduced from its original planned
duration.
With the information from a graph
such as this for a project, managers can
quickly judge any alternative such as
meeting a time-to-market deadline.

Project CostDuration Graph

Explanation of Project Cost

Project Indirect Costs

Project Direct Costs

Indirect costs generally

represent overhead costs
such as supervision,
administration,
consultants, and interest.

Direct costs commonly

represent labor, materials,
equipment, and
sometimes
subcontractors.
(usually, the cost is fixed)

Explanation of Project Cost

Project Indirect Costs

Project Direct Costs

Cannot be associated with

any particular work
package or activity, hence
the term. Indirect costs
vary directly with time.
That is, any reduction in
time should result in a
reduction of indirect costs.

Direct costs are assigned

directly to a work package
and activity, hence
the term. Direct costs are
those costs that are
directly attributable to the
production of a product or
service.

Explanation of Project Cost

Project Indirect Costs

Project Direct Costs

If the daily costs of supervision,

administration, and consultants
are $2,000, any reduction in
project duration would represent
a savings of $2,000 per day. If
indirect costs are a significant
percentage of total project costs,
reductions in project time can
represent very real savings
(assuming the indirect resources
can be utilized elsewhere).

The salary of a supervisor for a

month who has only
supervised the construction of
a single building is a direct
fixed cost incurred on the
building.

Constructing a Project Cost-Duration Graph

There are three major steps required to construct a project cost
duration graph:
1. Find total direct
costs for selected
project durations.

2. Find total
indirect costs for
selected project
durations.

3. Sum direct and

indirect costs for
these selected
durations.

Purpose: The graph is then used to compare additional cost alternatives for benefits.

Determining the Activities to Shorten

What is the
difficult task in
constructing
cost-duration
graph?

What is the
central
concern?

finding the
total direct
costs for
specific
project
durations over
a relevant
range.

to decide
which
activities to
shorten and
how far to
carry the
shortening
process.

What manager
do?

need to look
for critical
activities that
can be
shortened
with the
smallest
increase in
cost per unit
of time.

How to select
the critical
activities ?
depends on
identifying the
activitys
normal and
crash times
and
corresponding
costs.

Determining the Activities to Shorten

Normal
time

Crash
time

Crash cost

Represents lowcost, realistic,

efficient
methods for
completing the
activity under
normal
conditions.

Shortening an
activity is called
crashing. The
shortest
possible time an
activity can
realistically be
completed in is
called its crash
time.

The direct cost

for completing
an activity in its
crash time is
called crash
cost.

Hypothetical Costduration Graph For An

Activity
The crash time
for the activity
is five time
units and $800.

The
corresponding
cost is $400.

The normal
time for the
activity is 10
time units

Hypothetical Costduration Graph For An

Activity
The crash point
represents the
maximum time
an activity can
be compressed.

The heavy line connecting

the normal and crash
points represents the
slope, which assumes the
cost of reducing the time
of the activity is constant
per unit of time.

Hypothetical Costduration Graph For An

Activity

The assumptions underlying the use of this graph are as follows:

1. The cost-time relationship is linear.
2. Normal time assumes low-cost, efficient methods to complete
the activity.
3. Crash time represents a limitthe greatest time reduction
possible under realistic conditions.
4. Slope represents cost per unit of time.
5. All accelerations must occur within the normal and crash
times.

Hypothetical Costduration Graph For An

Activity

The rise is the y axis (cost) and the

run is the x axis (duration).
The slope of the cost line is $80
for each time unit the activity is
reduced; the limit reduction of the
activity time is five time units.
Comparison of the slopes of all
critical activities allows us to
determine which activity(ies) to
shorten to minimize total direct
cost.

Priority Rules
There are many possible rules for assigning preference to
some activities over others when allocating scarce
resources.
Most popular project management software packages have
a limited number of rules that can be automatically applied
to level overallocated resources so many of the priority rules
for assigning scarce resources to activities may have to be
applied manually.

Priority Rules
As soon as possible This is the standard
rule in scheduling. Activities are scheduled
to start on their ESTs, and resources are
made available with that in mind.

Minimum slack first

Tasks
are
supplied
with
resources in inverse
order of their slacks.
This rule usually
minimizes
the
number of late
activities.

As late as possible With this rule, resources are

made available so that activities start on their LSTs
whenever possible without increasing the project
s duration. This may seem irrational, but it
preserves the firms resources and delays cash
outflows as long as possible. This rule is also
compatible with Eliyahu Goldratt s contention
that the student syndrome leads workers to
delay starting an activity until the last possible
moment (Goldratt, 1997, Ch. 13).

Priority Rules
Shortest task duration first Always
consistent
with
technological
precedences, shorter tasks are given
priority over longer tasks. This rule
maximizes the number of tasks that can
be completed by a system in a given time
period.
Most successors The same
as the previous rule except
that all successors are
counted. This rule has the
same rationale as the
preceding rule.

Most critical followers The

number of successors on the
critical path(s) for each activity is
counted. Activities with a higher
number of critical successors take
precedence. The rationale here is
that such activities would cause
the greatest damage to the
desired project schedule if they
are late.

Most resources first With this rule, the

greater the use of a specific resource on a
task, the higher the task s priority for the
resource. This rule is based on the assumption
that more important activities have a greater
demand for scarce resources.

Priority Rules
In addition to these rules, there are many others.
1. For example, it may be company policy to put favoured customers
projects at the head of the resource line or to reserve special
resources for such clients by withholding them from the available
supply.
2. The same type of favouritism is sometimes shown to specific projects of
high value to the parent firm. (Some firms show favouritism to specific
high - value activities , but this rule makes little sense because all
activities of an individual project must be completed to finish the
project.)
3. Application of a value measure for allocating scarce resources across
several projects is both rational and common.

What is the conclusion of

this chapter?
Submit your answer in the
forum title Conclusion for
Resources Scheduling
because of TimeConstrained or Resources
Constrained by today.

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