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Project Management: A

Managerial Approach
Chapter 9 Resource Allocation

Overview

Critical Path Crashing


Resource Leveling
Resource Constrained Schedules
Multiproject Resource Management
Critical Chain

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Resource Allocation
Some definitions
Resource allocation, loading, leveling
Expediting and crashing projects

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Some Definitions
Resource allocation permits efficient use of
physical assets
Within a project, or across multiple projects
Drives both the identification of resources, and
timing of their application

There are generally two conditions:


Normal
Crashed
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Normal and Crashing


Normal: Most likely task duration, like m
in Chapter 8
Crash: Expedite an activity, by applying
additional resources
Specialized or additional equipment
More people (e.g., borrowed staff, temps)
More hours (e.g., overtime, weekends)
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No Free Lunch: Crashing


Creates a Ripple Effect
Crashing buys time, but nothing comes free
Potential cost areas

Additional equipment/material
Extra labor
Negative effects on other projects
Reduced morale, from excessive hours/shifts
Lower quality, from the pressure of time, inexperienced and
tired staff
If you want it bad, youll get it bad . . .

Recent Example: Miamis New Art Center.


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When Trying to Crash a Project


Two basic principles
1. Generally, focus on the critical path
Usually not helpful to shorten non-critical activities
Exception: When a scarce resource is needed
elsewhere, e.g., in another project

2. When shortening project duration, choose


least expensive way to do it
(use slope formula to calculate ratio)
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Compute Cost per Day of


Crashing a Project
Compute cost/time slope for each
expeditable activity
Slope = crash cost normal cost
crash time normal time

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Another Approach to Expediting:


Fast-tracking/Concurrency
Different terms for similar concept
Fast-tracking (construction), Concurrent
engineering (manufacturing)
Both refer to overlapping project phases
E.g., design/build, or build/test

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Fast-tracking/Concurrency
Pros:
Can shorten project duration
Can reduce product development cycles
Can help meet clients demands

Cons:
Can increase cost through redesigns,
excessive changes, rework, out-ofsequence installation, and more
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The Resource Allocation Problem


Most scheduling procedures 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
It is unique because it can neither be inventoried nor
renewed
Chapter 9-5

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The Resource Allocation Problem


Schedules should be evaluated:
in terms of meeting project milestones
in terms of the timing and use of scarce resources

Measure of the project managers success: skill


with which the trade-offs among:
Performance
Time
Cost
Chapter 9-6

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The Resource Allocation Problem


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
Chapter 9-7

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The Resource Allocation Problem


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 necessary to
successful completion of projects
A system-constrained task requires a fixed
amount of time and known quantities of
resources
Chapter 9-8

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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
Gives a general understanding of the
demands a project or set of projects will
make on a firms resources
Chapter 9-9

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Resource Usage Calendar, Figure 9-3

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AOA Network, Figure 9-4

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Modified PERT/CPM AOA, Figure 9-5

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Resource Leveling
Resource leveling aims to minimize the period-byperiod 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 day-to-day resource manipulation needed
Better morale, fewer HR problems/costs
Leveling resources also levels costs, simplifies budgeting
and funding

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Chapter 9-12

Resource Leveling
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
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Chapter 9-13

Resource Leveling Fig 9-6

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Network Before and After Resource Loading,


Figure 9-7
Duration
Qty Reqd.

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Resource Loading Chart, Figure


9-9

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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
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Chapter 9-14

Examples of Simple Heuristics


1.
2.
3.
4.
5.
6.
7.
8.
9.

ASAP
As late as possible (do not engage in anything unless you have to)
SPT (shortest processing time good to reduce congestion)
Most resources first (most requested resources first)
Minimum slack first (critical jobs go first to avoid lead time
delays)
Most critical followers (most critical jobs that go after you, many
jobs depend on that resource)
Most successors
Arbitrary
Combination of the above (compound rules).

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Chapter 9-14

Examples of Complex Heuristics

Simulated annealing
Tabu search
Genetic algorithms
Greedy search with branch and bound
In the graduate course Advanced Production Planning
& Scheduling, focuses on scheduling heuristics.
It is good to know that they exist.
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Chapter 9-14

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

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Chapter 9-21

Multiproject Scheduling and Resource Allocation


Much more difficult.
May rely on an index called
TRPT: (Total Remaining Processing Time)
Based on the critical ratio.

Among all the projects under your control, look


at all the jobs of all the projects.
Find out which are most critical.
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Chapter 9-21

Multiproject Scheduling and Resource Allocation


Most critical... How do you know?
Based on the amount of time before due date and the total
amount of processing time remaining to be completed.

This ratio is simple but helpful.


Critical Ratio = TRPT (Total Remaining Processing Time)
TRT (Total Remaining Time)

The smaller the ratio, the more critical it is, more


entitled to earlier allocation of resources.
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Chapter 9-21

Multiproject Scheduling and Resource Allocation


Based on this, you can do multiple project scheduling.
Most critical tasks should be the first to be assigned resources.

This doesnt mean that job will be assigned the resource first.
Why? The resource in need may not be available.
You can get first priority to claim it, but you may not get the first
assignment.
You may get preference due to the type of resource that you need.

In case you have multiple projects, you have some way to do it.

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Chapter 9-21

Multiproject Scheduling and Resource Allocation

Three important parameters affected by project


scheduling are:
1.

Schedule slippage

2.

Resource utilization

3.

In-process inventory

The organization (or the project manager) must select


the criterion most appropriate for its situation.

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Chapter 9-22

Multiproject Scheduling and Resource Allocation


Schedule slippage (how much delay it has caused or it
will cause) - often considered the most important of the
criteria, is the time past a projects 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 more utilization the better, the
resource requirements become lower)
WIP (to see how smooth your workflow is) concerns
the amount of work waiting to be processed because
there is a shortage of some resource
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Chapter 9-23

Multiproject Scheduling and Resource Allocation


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
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Chapter 9-24

Cost, Schedule, or Performance:


Pick Any Two . . .
Assuming fixed performance specifications,
tradeoff areas must be in time or cost
Time-limited or resource-limited
If all three dimensions are fixed, the system
is overdetermined
Normally, no tradeoffs are possible
But, something has to give . . .
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Example: Project Crashing


Compute cost/time slope for each
expeditable activity
Slope = crash cost normal cost
crash time normal time
Slope is the cost of crashing the project for
the potential (or estimated) crashing time.
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An Example (Table 9-1)


Activity

Predecessor

Days
(normal, crash)

Cost
(normal, crash)

3, 2

$40, 80

2, 1

20, 80

2, 2

20, 20

d*

4, 1

30, 120

e**

3, 1

10, 80

* Partial crashing allowed


** Partial crashing not allowed

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Example (contd):
Cost per Day to Crash (Table 9-2)
Activity

$ Saved/
Day (Slope)

40

60

30

70 (2 days)
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Example (contd): Crashing


What to crash depends on how much we need
to reduce the duration of the project.
Normal Time
Normal Cost

2 $60

3 $70

$20

$40

$20

d
- CP: a b e (ET=8)
- Ratios
- Total Cost: $120
- Total Lead Time: 8 days

$30

$ Saved/
Day (Slope)

40

60

30

70 (2 days)

3 $40

Activity

$0

4 $30

$10

Activity

Pred.

Days
(normal,
crash)

Cost
(normal,
crash)

3, 2

$40, 80

2, 1

20, 80

2, 2

20, 20

d*

4, 1

30, 120

e**

3, 1

10, 80

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Example (contd): Crashing


Normal Cost

2 $60

Ratios

b
2
3 $40

$20*

$40
$80*

- Crash a: (lowest) for 1 day (max )


1

- New Lead Time: 7 days (still on


CP)
v. a c (4) vs a d (6)

$ Saved/
Day (Slope)

40

60

30

70 (2 days)

e
2

$0

$10*

$20*

- New Cost: $120 + $40 = $160

3 $70

Activity

$30*

4 $30

Activity

Pred.

Days
(normal,
crash)

Cost
(normal,
crash)

3, 21

$40, 80

2, 1

20, 80

2, 2

20, 20

d*

4, 1

30, 120

e**

3, 1

10, 80

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Example (contd): Crashing


1
2 $60

Normal Cost
Ratios

b
2
3 $40

a
$40
$80*

$20$80*

$ Saved/
Day (Slope)

40

60

30

70 (2 days)

e
$0

$10*

$20*

d
- Crash b: (lowest) for 1 day (max)

3 $70

Activity

$30*

- New Cost*: $160 + $60 = $220


- New Lead Time: 6 days
-(2 paths with same LT: a b e (6) vs a d (6)

4 $30

Activity

Pred.

Days
(normal,
crash)

Cost
(normal,
crash)

3, 2

$40, 80

2, 1

20, 80

2, 2

20, 20

d*

4, 1

30, 120

e**

3, 1

10, 80

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Example (contd): Crashing


1
2 $60

Normal Cost
Ratios

b
2
3 $40

$20 $80*

a
$40
$80*

$30

Crash d for 1 day (partial crashing allowed)


New Cost*: $220 + $30 = $250
LT for path a d = 5 (Not critical)
CP is again a b e (6 days)

$ Saved/
Day (Slope)

40

60

30

70 (2 days)

e
$0

$10*

$20*

d
-

3 $70

Activity

4 $30
3 $60*

Activity

Pred.

Days
(normal,
crash)

Cost
(normal,
crash)

3, 2

$40, 80

2, 1

20, 80

2, 2

20, 20

d*

4, 1

30, 120

e**

3, 1

10, 80

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Example (contd): Crashing


1
2 $60

Normal Cost
Ratios

1
3 $70

b
2
3 $40

a
$40
$80*

$20 $80*

Activity

$ Saved/
Day (Slope)

40

60

30

70 (2 days)

e
$0

$10 $80*

$20*

d
$30

- Crash e for 2 days (no partial crashing allowed)


- New Cost*: $250 + $70 = $320
- LT for path a b e = 4

4 $30
3 $60*

Activity

Pred.

Days
(normal,
crash)

Cost
(normal,
crash)

3, 2

$40, 80

2, 1

20, 80

2, 2

20, 20

d*

4, 1

30, 120

e**

3, 1

10, 80

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Example (contd): Crashing


2
1
2 $60

Normal Cost
Ratios

1
3 $70

b
2
3 $40

a
$40
$80*

$20 $80 $20*

$0

Activity

$ Saved/
Day (Slope)

40

60

30

70 (2 days)

e
$10 $80*

$20*

4 $30

-Say that lead time of 5 days is acceptable.


$30 3 $60*
-Can backtrack and undo the earlier crashing at b.
-Add 1 day and subtract $60.
-Now (a b e ) and (a d ) have LT =5.
-New Cost*: $320 - $60 = $260

Activity

Pred.

Days
(normal,
crash)

Cost
(normal,
crash)

3, 2

$40, 80

2, 1

20, 80

2, 2

20, 20

d*

4, 1

30, 120

e**

3, 1

10, 80

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Example (contd): Crashing


2
1
2 $60

Normal Cost
Ratios

1
3 $70

b
2
3 $40

a
$40
$80*

$20 $80 $20*

$0

Activity

$ Saved/
Day (Slope)

40

60

30

70 (2 days)

e
$10 $80*

$20*

4 $30

-LT (a b e ) = 4
$30 3 $60*
-Say that lead time of 5 days is acceptable.
-Can backtrack and undo the earlier crashing at b.
-Add 1 day and $60 back.
-Now (a b e ) and (a d ) have LT =5.
-New Cost*: $320 - $60 = $260
-If 5 days is acceptable, then stop.

Activity

Pred.

Days
(normal,
crash)

Cost
(normal,
crash)

3, 2

$40, 80

2, 1

20, 80

2, 2

20, 20

d*

4, 1

30, 120

e**

3, 1

10, 80

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Example (contd): Crashing


1
2
1
2 $60

Normal Cost
Ratios

1
3 $70

b
2
3 $40

a
$40
$80*

$20 $80 $20


$80*
2
c $0

Activity

$ Saved/
Day (Slope)

40

60

30

70 (2 days)

e
$10 $80*

$20*
$30

-LT (a b e ) = 5
d
4
-Assume that acceptable lead time is now 4 days.
$30 3 $60
-Crash d for 1 more day.
2 $90*
-Cost*: $260 + $30 = $290
-Crash b again for 1 more day.
-New Cost*: $290 + $60 = $350
-Now (a b e, a c and a d ) have LT =4.
-Addtn. Cost of reducing project from 8 to 4 days: $230
-You could still crash d 1 more day, but it would be a waste of $.

Activity

Pred.

Days
(normal,
crash)

Cost
(normal,
crash)

3, 2

$40, 80

2, 1

20, 80

2, 2

20, 20

d*

4, 1

30, 120

e**

3, 1

10, 80

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Example (contd): Crashing

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CPM Cost-Duration

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Copyright 2006 John Wiley & Sons, Inc.


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