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 resource-
constrained 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

Do unforeseen
labor and/or
equipment be
Question by resource
dependencies
adequate and Project exist? Is there a
available to deal
with my project? Manager, after new critical path?

staff and other

resources are
assigned
Will outside
Is the original
contractors have
deadline realistic?
to be used?
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 The many differing skills

usually classified by the of human resources add
People
skills they bring to the to the complexity of
project scheduling projects.

Materials

Scheduling materials has also

Material availability and
become important in developing
shortages have been blamed
products where time-to-market
for the delay of many projects
can result in loss of market share.

Equipment is
Equipment 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 the level of resources
imposed date available cannot be
exceeded
Scheduling Terms Fixed – time Fixed – Resources
Flexible – 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

Risk Assumptions
Limiting Assumptions
– Activities with the
– Splitting activities is
most slack pose the
1 not allowed—once
least risk.
an activity is start,
it is carried to – Reduction of
completion. flexibility does not
increase risk.
– Level of resources
used for an activity – The nature of an
cannot be changed. activity (easy,
complex) doesn’t
increase risk.
 Resource Allocation Methods

Time-Constrained Projects: 2
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 Disadvantages

Resource Demand
Leveling Techniques
for Time-Constrained
Projects
 Resource Allocation Methods

Resource-Constrained Projects
3
– 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 2–3

FIGURE 8.4
Resource-Constrained Schedule through Period 2–3

FIGURE 8.4 (cont’d)

Resource-Constrained Schedule through Period 2–3

FIGURE 8.4 (cont’d)

Resource-Constrained Schedule through Period 5-6

FIGURE 8.5
Resource-Constrained Schedule through Period 5-6

FIGURE 8.5 (cont’d)

Resource-Constrained Schedule through Period 5-6

FIGURE 8.5 (cont’d)

The impact of Resource-Constrained
Scheduling
Condition
Limited Resources Schedule
Resource constraints are
added to technical constraints
Impact
Reduces slack, reduces
flexibility by using slack to
ensure delay is minimized, and
increases the number of
critical and near-critical
activities.
Scheduling complexity
 Splitting Activities

Splitting tasks is a Not large start-up or

scheduling technique used Splitting can be a useful shutdown costs
to get a better project tool if the work involved
schedule and/or to does not include large moving equipment from
increase resource start-up or shutdown costs one activity location to
utilization. another.

Large start-up or shutdown

costs
Splitting is a major reason
having a bridge designer why projects fail to meet
take time off to work on schedule.
the design problem of
another
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 If the scheduled delay

reasonable alternatives: is unacceptable or the
risk of being delayed
– Cost-time tradeoffs too high, the
– Changes in priorities assumption of being
resource constrained
• Provides information for time- can be reassessed.
phased work package budgets to
assess:
– Impact of unforeseen events
(such as turnover, equipment
breakdown, or transfer of project
personnel) This is useful when
they receive requests
– Amount of flexibility in available from other managers
resources 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.

Individual opinion/
answer
 Assigning Project Work

There is a natural
Match – Requirements with tendency to assign the
Qualification and Experience best people the most
difficult tasks.

Project Manager

Balance up the task

performance with the need
 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 (cont’d)

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

1 2 3 Unforeseen
Time to market Adaptability
delays
• Due to global • Not only on • Reducing project
competition and innovation but also time occurs when
high speed adaptability – unforeseen delays –
technological quickly adapt with (target to complete
advances new challenges early so that when
• For example : • For example : ESSO unforeseen delays
electronics industry become PETRON happen, losses
(6 months delay – (re-branding) occur still
cause loss of market acceptable
share 35%. • For Example : Delay
that occur due to
equipment
breakdown /
adverse weather
Rationale for Reducing Project Duration

4 5
Incentive contracts “Imposed deadlines”

• . Incentive contracts • For example : a

can make reduction politician makes a
of project time public statement that
rewarding a new law building
• 4For example : will be available in
Construction early two years.
completion (give
more profit to both
owner and
contractor)
 Accelerating Project Completion

Two major condition for crashing

specific project activities

When When
Resources are Resources are
not constrained 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 Disadvantages

• Avoid the additional costs of • Double or triple payments

coordination and • Productivity declined –
communication encountered human nature
when new people are added.
• Fewer distractions when
people work outside normal
hours
 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 Twice—Fast 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 1995–1996
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 fast-
tracking. 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

Project Cost–Duration Graph

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.
 Explanation of Project Cost

Project Indirect Costs Project Direct Costs

Indirect costs generally Direct costs commonly

represent overhead costs represent labor, materials,
such as supervision, equipment, and
administration, sometimes
consultants, and interest. subcontractors.

(usually, the cost is fixed)

 Explanation of Project Cost
Project Indirect 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.
Project Direct 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, The salary of a supervisor for a
administration, and consultants month who has only
are $2,000, any reduction in supervised the construction of
project duration would represent a single building is a direct
a savings of $2,000 per day. If fixed cost incurred on the
indirect costs are a significant building.
percentage of total project costs,
reductions in project time can
represent very real savings
(assuming the indirect resources
can be utilized elsewhere).
 Constructing a Project Cost-Duration Graph

There are three major steps required to construct a project cost–

duration graph:

2. Find total
1. Find total direct
indirect costs for
costs for selected
selected project
project durations.
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 What is the How to select
What manager
constructing central the critical
do?
cost-duration concern? activities ?
graph?

• finding the • to decide • need to look • depends on

total direct which for critical identifying the
costs for activities to activities that activity’s
specific shorten and can be normal and
project how far to shortened crash times
durations over carry the with the and
a relevant shortening smallest corresponding
range. process. increase in costs.
cost per unit
of time.
 Determining the Activities to Shorten

Normal Crash
Crash cost
time time
Shortening an
Represents low- activity is called
cost, realistic, crashing. The The direct cost
efficient shortest for completing
methods for possible time an an activity in its
completing the activity can crash time is
activity under realistically be called crash
normal completed in is cost.
conditions. called its crash
time.
 Hypothetical Cost–duration 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 Cost–duration 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 Cost–duration 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 limit—the 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 Cost–duration 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.

As late as possible — With this rule, resources are

made available so that activities start on their LSTs
Minimum slack first
whenever possible without increasing the project ’
— Tasks are
s duration. This may seem irrational, but it
supplied with
preserves the firm’s resources and delays cash
resources in inverse
outflows as long as possible. This rule is also
order of their slacks.
compatible with Eliyahu Goldratt ’ s contention
This rule usually
that the “ student syndrome ” leads workers to
minimizes the
delay starting an activity until the last possible
number of late
moment (Goldratt, 1997, Ch. 13).
activities.
 Priority Rules
Most critical followers — The
Shortest task duration first — Always number of successors on the
consistent with technological critical path(s) for each activity is
precedences, shorter tasks are given counted. Activities with a higher
priority over longer tasks. This rule number of critical successors take
maximizes the number of tasks that can precedence. The rationale here is
be completed by a system in a given time that such activities would cause
period. the greatest damage to the
desired project schedule if they
Most successors — The same are late.
as the previous rule except
that all successors are
Most resources first — With this rule, the
counted. This rule has the
greater the use of a specific resource on a
same rationale as the
task, the higher the task ’s priority for the
preceding rule.
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 Time-
Constrained or Resources
Constrained” by today.

Individual opinion/ answer