Chapter 9

Resource
Allocation

© 2012 John Wiley & Sons Inc.

Critical Path Method—Crashing a
Project

 Time and costs are interrelated

 Faster an activity is completed, more is
the cost
 Change the schedule and you change the
budget
 Thus many activities can be speeded up
by spending more money

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What is Crashing?

 Crashing is the process of attempting to

shorten project activities and in turn the overall
project by assigning additional resources.
 To speed up, or expedite, a project the
resources to do must be available.
 To determine if crashing makes sense, a
cost/time slope is calculated for each activity
that can be expedited (crashed). See formula
next slide

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 Activity Slope

Crash Cost  Normal Cost

Slope 
Crash Time  Normal Time

8-4
 An Example of Two-Time CPM

Table 9-1 8-5

 Activity Slopes—Cost per Period for
Crashing

Table 9-2 8-6

 Crashing the Project

Figure 9-1a 8-7

 Seven Day Schedule

Figure 9-1b 8-8

 Six Day Schedule

Figure 9-1c 8-9

 Five Day Schedule

Figure 9-1d 8-10

 Four Day Schedule

Figure 9-1e 8-11

Fast-Tracking

 Fast-tracking is another way to expedite a

project
– Mostly used for construction projects
– Can be used in other projects
 Refers to overlapping design and build
phases
 Increases number of change orders
 Increase is not that large

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The Resource Allocation Problem

 CPM/PERT ignore resource utilization

and availability
 With external resources, this may not be
a problem
 It is, however, a concern with internal
resources
 Schedules need to be evaluated in terms
of both time and resources
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Time Use and Resource Use

 Time limited: A project must be finished

by a certain time
 Resource limited: A project must be
finished without exceeding some specific
level of resource usage
 System-constrained: A project has fixed
amount of time and resources

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Resource Loading

 Resource loading describes the amount

of resources an existing schedule
requires
 Gives an understanding of the demands a
project will make of a firm’s resources

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Activity slack and resource usage

8-16
 Resource A

Figure 9-6a 8-17

 Resource B

Figure 9-6b 8-18

 Resource Leveling
 Approaches to even out the peaks & valleys
of resource requirements so that a fixed
amount of resources can be employed over
time.
 Resource leveling aims to minimize the
period-by-period variations in resource
loading by shifting tasks within their slack.
 The purpose is to create a smoother
distribution of resource usage.
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Resource Leveling Continued

 May also be possible to alter the

sequence of activities to levelize
resources
 Small projects can be levelized by hand
 Software can levelize resources for larger
projects
 Large projects with multiple resources are
complex to levelize
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Constrained Resource Scheduling

Heuristic An approach, such as a

Approach rule of thumb, that yields
a good solution that may
or may not be optimal

Optimization An approach, such as

Approach linear programming, that
yields the one best
solution.
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Heuristic Methods

 The heuristic method typically starts with

a schedule calculated using the CPM
method.
 Then it steps through the schedule period
by period. For each period it determines if
sufficient resources are available.
 If they are it proceeds to the next period
and repeats the process.

8-22
Heuristic Methods Continued

 If insufficient resources are available, it

uses a priority rule to determine activities
receiving resources in that time period.
 Activities that do not receive resources
are delayed to the next time period and
the process is repeated.

8-23
Common Priority Rules

 As soon as possible
 As late as possible
 Shortest task first: This rule sorts the competing tasks
by duration and assigns resources starting at the short end of the
list. This rule maximizes the number of activities to be completed in
any given time period.
 Most resources first: This rule sorts the competing
tasks by the amount of resource required and assigns resources
starting at the highest end of the list. This favors tasks with high
resource consumption under the assumption that they are more
important.

8-24
 Minimum slack first: This rule sorts the competing tasks
by the amount of slack they currently have and assigns resources
starting at the low end of the list. This rule favors activities on or close
to being on the critical path. Tasks that are delayed lose slack and so
have a relatively higher priority in the next time period.
 Most critical followers: This rule sorts the competing
tasks by the number (count) of critical path activities that follow each
one. Resources are assigned starting at the high end of the list.
 Most successors: This rule sorts the competing tasks by
the number (count) of successors that follows each one. Resources
are assigned starting at the high end of the list.
 Arbitrary: Resources are assigned in some other way. This may
involve a value judgment like which customer is perceived as most
important.
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Optimization Methods

 Finds the one best solution

 Uses either linear programming or
enumeration
 Not all projects can be optimized

8-26
Multi-Project Scheduling and Resource
Allocation

 Scheduling and resource allocation

problems increase with more than one
project
 The greater the number of projects, the
greater the problems
 One way is to consider each project as
the part of a much larger project

8-27
Multi-Project Scheduling and Resource
Allocation Continued

 However, different projects have different

goals so combining may not make sense
 Must also tell us if there are resources to
tackle the new projects we are
considering

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Standards to Measure Schedule
Effectiveness

 Schedule slippage
 Resource utilization
 In-process inventory

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Schedule Slippage

 The time past a project’s due date

 Slippage may cause penalties
 Different projects will have different
penalties
 Expediting one project can cause others
to slip
 Taking on a new project can cause
existing projects to slip
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Resource Utilization

 The percentage of a resource that is

actually used
 We want a schedule that smoothes out
the dips and peaks of resource utilization
 This is especially true of labor, where
hiring and firing is expensive

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In-Process Inventory

 This is the amount of work waiting to be

processed because there is a shortage of
some resource
 Holding cost is incurred

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Heuristic Techniques

 Multi-projects are too complex for

optimization approaches
 Many of the heuristics are extensions of
the ones used for one project

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Additional Priority Rules

 Resource scheduling method

 Minimum late finish time
 Greatest resource demand
 Greatest resource utilization
 Most possible jobs

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Goldratt’s Critical Chain

 Eli Goldratt in the Critical Chain addresses

the constrained resource problem based
on his Theory of Constraints
 See text for further reading

8-35
Group 8 presentation

 Case: D.U. Singer Hospital Product Corp

8-36