fel ai maces Scheduling Resources and Costs Page 258 LEARNING OBJECTIVES After reading this chapter you should be able to @841 Understand the differences between time-constrained and resource-constrained schedules. @s-2 Identity afferent types of resource constraints. el cee eset nt a ee nana tear om mmeerstnined preiecrs @8-4 Describe how the leveling approach is used for resource-constrained projects. 8-5 Understand how project management software creates resource-constrained schedules, (Be-6 Understand when and why splitting tasks should be avoided. ier aey Manin senate euiieanes eaaesicninel eerie atenee ne rics 8-8 Identity common problems with muitiproject resource scheduling. Be-9 Explain why a time-phased budget baseline is needed. @e10 create a tme-phased project budget baseline @as-4__ Define the term critical chain. @as-2 _Identiy the reasons projects are late even when estimates are padded. @as-3 Describe the basic cical-chain methodology. @as-4 Describe the differences between critical-chain scheduling and the traditional approach to scheduling, OUTLINE (81 Overview of the Resource Scheduling Problem @e.2 Types of Resource Constraints @e.3 Classification of a Scheduling Problem @8.4 Resource Allocation Methods etal Comer lan Commas tet enter cescurea® Conatts nad] screctiing Gee spining Activities @8.7 _ Benefits of Scheduling Resources @e.8 Assigning Project Work @8.9 — Multiproject Resource Schedules 8.10 _ Using the Resource Schedule to Develop a Project Cost Baseline @ summary @appendix 81: The Critical-Chain ApproachProject network tes are not a schedule until sources hare been assigned. Cost estimates are not a budget unl they have been “Page 359 time phased. — ~Chifont F Gray We have consistently stressed that upstont planning resuks in big pays on predictable projets, For those who have diligently worked through the earlier planning processes chapters, you are nearly ready to launch your project. This chapter completes the final {wo planning tasks that become the master plan for your project—resource and cost scheduling. (See © Figure 8.1.) This process uses the resource schedule to assign mephased costs that provide the project budget baseline. Given ths timephased baseline, comparisons can be made with atual and planned schedule and costs. This chapter frst discusses the process for developing the project resource schedule. This resource schedule will be use to assign the time phased budgeted values to create a project budget baseline FIGURE 8.1 Proxet Planing Process a ‘There ar always more projet proposals than there are available resources. The priority system needs to seletproeets that Page 260 best contribute to the oreanzatioa's objectives, within the constraint ofthe resourees available. fall projects and their respective resources are computer scheduled, the feasibility and impact of adding new proeet o those in process can be quickly assessed, With his information the project priority team will add @ new projet onl if resources are available, This chapter examines methods of scheduling resourees so the team ean make realise judgments of resource availability ad projet durations. The project manager uses the same schedule for implementing the project. I changes occur during project implementation, the computer schedule is easily updated and the effects easily assessed,8.1 Overview of the Resource Scheduling Problem a4 Understand the differences between time-constrained and resource-constrained schedules. ‘After staff and other resources were assigned to her project. a project manager listed the following questions that sil needed to be adresse + Will the wssigned labor andjor equipment be adequate and available to deal with my project? + Will outside contractors have tobe used?” + Do unforeseen resource dependencies exis? Is there @ new critical path? + How much flebility do we have in using resources? + Isthe original deadline realistic? CCearly this project manager has a good understanding ofthe problems she i facing. Any project scheduling system should facilitate finding quick, easy answers to these questions “The planned network and activity project duration times found in previous chapters didnot take into account resource usage and vailaility. The time estimates for the work packages nd network times were made independently with the implicit assumption that resources would be avuilable, This may or may not be the case. I resourees ate adequate but the demand varies widely over the hie ofthe project, it may be desirable to even out resource demand by delaying noneritcal activities (using slack) to lower peak demand and, thus, increase resource ulization. This process sealed espur cesmoathins. On the other hand, iPresources are not adequate to meet peak demands, the late start of some activ uration ofthe project may be increased. This process scaled rsource-onstrained scheduling 2s must be delayed, and the The consequences of filing to schedule limited resources are costly and project delays usualy manifest themselves midway “Page 25 in the project when quick corrective action is dificult. An additional consequence of falling to schedule resources is ——— Ignoring the peaks and valleys ofresoure usage over the duration ofthe projet, Because project resources are usually overcommitted tnd beeause resources seldom lineup by availability and need, procedures are needed to deal with these problems. This chapt adresses methods available to project managers for dealing with esouteevilization and avallaility through resource leveling and resource constrtined scheduling. Up tomnow the start and sequence of aetvities have been based solely on technical or logical considerations. For example, assume you ae planning a wedding reception that ineludes four activtes~(1) pla, (2) hire band, (3) decorate hal, and (4) purchase refreshments Each activity takes one éay. Activities 2,3, and 4 could be done in parallel by diferent people. There is no technical reason or dependency of one on another (see © Figure 8.24). However, if one person must perform al activities, the resource constraint requires thatthe activites be performed in sequence or series Clearly the consequence is a delay ofthese activities and a very different set of network relationships (see © Figure 8.2B). Note thatthe resource dependeney takes priority over the technological dependency but does nat violate he technological dependenc thats, hire, decorate, and purchase may now have to take place in sequence rather than concurrently, but they mus all be completed before the reception ean take place. FIGURE 8.2 Constraint Examples(One may ask, "Why not fetor resource availabilty alongwith technical dependency when creating the original network?” First resource availabilty may not be known unt the inital schedule is completed. Second, even if esources are known, one could not assess the impact of resources unless a resource neutral schedule were created. For example, one would never know thatthe wedding could be planned in three days instead of five i three people were available instead of the assumed one, When the premise behind this simple example is applied to other, more elaborate projets, the implications can be significant. The interreationships and imeractons among time and resource constraints are complex for even small projet networks, Some effort to examine these interactions before the project begins frequently uncovers surprising problems. Project managers who do not consider resource availability in moderately complex projects usually learn of the problem when itis too late to correct. A defiet of resources can significantly ater project dependency relationships, completion dates, and project costs. Project managers must be tarefil to schedule resources to ensure availabilty in the right quantities and atthe right time. Fortunatls there ate computer software programs that can identify resource problems during the early project planning phase when corrective changes can be considered, These programs only require activity resouree needs and availablity information to schedule resoures oO SNAPSHOT FROM PRACTICE 81 Working in Tight Places In rare situations, physical factors cause activities that would normally occur in parallel to be constrained by Contractual or environmental conditions. For example, in theory the renovation of a sailboat compartment might Involve four o five tasks that can be done independently. However, since space allows only one person to work at ‘one time, all tasks have to be performed sequential. Likewise, on a mining project it may be physically possible for only two miners to wotk in a shaft ata time, Another example Is the erection of a communication tower and, nearby groundwork. For safety considerations, the contract prohibits groundwork within 2,000 feet ofthe tower construction iStockphoto(Gety mages. ‘The procedures for hancling physical factors are similar to those used for resource constraints. ‘See (I Snapsbot from Practice 8.1: Working in Tight Places fora third constraint that impinges on project schedules.8.2 Types of Resource Constraints 82 Identity diferent types of resource constraints Resources are people, equipment, and material that can be drawn on o accomplish something, In projects the availabilty or ‘unavailability of resources will often influence the vay projets are managed 1 People. This isthe most obvious and important project resource. Human resources are usually elasitied bythe skills they bring to the project~for example, programmer, mechanical engincer, welder, inspector, marketing director, supervisor. In rae cases some skills are interchangeable, but usually with loss oF produetivity, The many dering skils of human resources add 10 the complexity of scheduling projects 2. Materials Project materials cover a larg spectrumfor example, chemicals fora scientific project, concrete for a road Drojct, survey data for'a marketing project. Material availabilty and shortages have been blamed fr the delay of many projets. When it is known that a lick of availability of materials is important and probable, materials shouldbe included inthe project network plan and schedule, For example, delnery and placement ofan ol rig tower ina Siberian ol ed has a very smal time window during one summer month, Aay delivery delay means a one-year, costly delay. Another example in which material isthe ‘maior resource scheduled was the resurfacing and replacement of some strvetures on the Golden Gate Bridge in San Francisco, Work ton the project was limited tothe hours between raidnight and 5:00 arm. witha penalty of $1,000 per minute for any work taking place afer 5:00 am, Scheduling the arial of replacement structures was an extremely important part of managing the five-hour worktime window of the project. Scheduling materials has also bocome important in developing products where timetommatket can result in loss of marketshare, ie 43. Equipment, Equipment is usually presented by type. sie. and quantity. In some cases equipment can be interchanged to improve Schedules, but this is not typical. Equipment is often averlooked as a constraint. The most common oversight i to assume the resource pool is more than adequate forthe projet. For example, ifa project needs one earthmoving tractor six months from now and the organization owns four. its common to assume the resource will not delay the pending project. However, when the earthmoving tractor is due onsite in six months, al four machines in the poo! might be oecupied on other projects. In multiprejet. environments it is prudent to use common resource poo! for all projects. This approach forces a check of resource availability across all projects and reserves the equipment for speci project needs in the future. Recognition of equipment constraints before the project begins can avoid high crashing or delay costs.8.3 Classification of a Scheduling Problem Most ofthe scheduling methods avilable today require the project manager to classify the projet as citer me consntned oF resource constrained. Project managers need to consult their priority matrix (see @ Figure 4.2) to determine which case fit their project. One simple test isto ask, “If the critical path is delayed, will resources be added to get back on schedule?" Ifthe answer is 1, assume the projet i time constrained: f no, assume the proc sresoutee constrained ‘A time-constrained projet is one that must be completed by an imposed date. If required, esourees canbe added to ensure the projet is completed by a specific date. Although time isthe critical fctr, resource usage should be no more than is necessary and sufficient. {A resourceconstained projet is one that assumes the lve of resources avaiable cannot be exceeded, Ifthe resourees are inadequate, it will be acceptable to delay the project, but as litle as posible. In scheduling terms, ime constrained means lime (project duration) ised and resources are flexible, while resource constrained means resources are fixed and time is flexible. Methods for scheduling these projects are presented inthe next section,8.4 Resource Allocation Methods Assumptions Ease of demonstrating the allocation methods available requires some limiting assumptions to keep attention on the heart of the problem. The rest of the chapter depends entirely on the assumptions noted here. First splitting activities wil aot be allowed. Splitin teers fo interrupting work on one task and assigning the resources to work ona cilferent task for period of time, then reassigning them to work on the original task. No spliting means that once an activity i placed ia the schedule, assume it wll be worked oa. continuously units finished, Second, the level of resources used for an activity eannot be changed, These limiting assumptions do ot exist in practice but simplify learning. cis easy for new project managers to deal withthe reality of spliting activities and changing the level of resources when they meet them on the ob. Time-Constrained Projects: Smoothing Resource Demand 83 Describe how the smoothing approach is used on time-constrained projects. Scheduling time-constrained projects focuses on resource wiization. When demand for a specific esource type is erate. it Page TOT {s dficat to manage, and utilization may be very poor. Practitioners have attacked the utilization problem usin resource ————— leveling techniques that balance demand fora resource. Basically al leveling techniques delay noncriical activites by using posite slack io reduce peak demand and fil in the valleys forthe resources. An example will demonstrate the basic prosedure for ime- constrained project. See @ Figure 8.3. FIGURE 8.2 Rtanial Ganden =| a For the purpose of demonstration, the Botanical Garden project uses only one resource (backhoes); all backhoes are “Rage 76 interchangeable. The top bar chart shows the activities on timescale, The dependencies are shown wit the vertical connecting arrows. The horizontal arrows following atvities represent activity slack (for example irigation requires six days to complete and has six days of slack). The number of backhoes needed foreach task is shown in the shaded activity duration black (rectangle). After the land has been searified and the plan laid out, work can begin on the walkways, irigation, and fencing and retaining walls simultaneously. The middle chart shows the resource profile forthe backhoes. For periods $ through 10, four backhoes ‘are needed.Because this projec is declared time constrained, the goal will be to reduce the peak requirement forthe resource and thereby di Increase the utilization ofthe resource. A quick examination of the ES (eary start) resource load chart suggests only two activities Ihave slack that can be used to reduce the peak—fence and walls provide the best choice for smoothing the resource needs. Another choice could be irigation, butt would result in an upanddown resource profile. The choice will probably center on the activity that Is perceived as having the least risk of being late. The smoothed resource loading chart shows the results of delaying the fence and walls activity. Note te differences in the resource profiles. The important point is that the resources needed over the lif ofthe projet have been reduced from four to three (25 percent). n ation, the profile has been smoothed. which should be easier to manage ‘The Botanical Garden project schedule reached the three goals of smoothing: +The peak of demand forthe resource was reduced +The number of resources over the life ofthe project was reduced, +The fluctuations in resource demand were minimized, ‘Smoothing improves the utlization of resources. Backhoes are not easily moved from location to locaton. There ate cost associated With changing the level of resources needed, The same analogy applies to the movement of people back and forth among projects. It is wel known that people ate more efficient ithey can focus their effort on one project rater than multitasking thelr ime among, say. thee projects. ‘The downside of leveling i loss of flexibility that occurs from reducing slack. The risk of activites delaying the project also increases because slack reduction can reate more critical activities and{or neareritical activites. Pushing leveling to far fora perietly level resouree profile is risky, Every activity then becomes eitical, ‘The Botanical Garden example gives a sense of the time-constrained problem and the smoothing approach. However, in practice the ‘magnitude ofthe problem is very complex for even small projects. Manual solutions are not practical. Fortunately. the software packages available today have very good routines for leveling project resources. Typically they use aetivities that have the most slack to level project resources, The rationale is that those activities with the most slack pose the last isk. Although tis is generally true, other risk factors such at reduction of tesbilty to use reassigned resources on other activities andthe nature of the activity (29, complex) are not addressed using sueh a simple rationale, Its easy to experiment with many alternatives to find the one that best Mts Your project and minimizes the risk of delaying the project. Resource-Constrained Projects a4 Describe how the leveling approach is used for resource-constrained projects When the number of people andjor equipment is not adequate to meet peak demand requirements and it is impossible to obiain more, the project manager faces a resourceconstrained problem. Something has to give. Te trick isco prioritize and allocate resources to minimize project delay without exceeding the resource limit or altering the technical network relationships. The resource scheduling problem is lage, combinatorial one. Tis means even a modestsized projet network with only Page TA few resource types might have several thousand feasible solutions, A few researchers have demonstrated optimum a ‘mathematical solutions fo the resoutee allocation problem but only for small networks and very few resource types (Arrow & Hurowicz, 2006: Talbot & Patterson, 1979; Wooxtworth & Shanahan, 1988). The massive data requirements for larger problems make ure mathematical solutions (eg. linear programming) impractical, An alternative approach to the problem has been the use of heuri ies (rules of thumb) to solve lage, combinatorial problems. These practical decision or priority rules have been in place for many years. Heuristics do not always yield an optimal schedule, but they ate very capable of yielding a “good” schedule for very complex networks with many types of resources. The efficiency of diferent rules and combinations of rules has been well documented (Davis & Patterson, 1975; Fendly, 1968). However, ecsuse each projec ie unique, ite wiee to test several sets of heuristics on a network to ‘determine the priority allocation rales that minimize project delay. The computer software available today makes it ery easy forthe project manager to create a good resource schedule forthe project. A simple example of the heuristic approach is iustrated bere Heuristics allocate resources to activites to minimize projest dey; that i, heuistes prioritize which activities are allocated rascaroae and which activities ane delayed when caccnrsee ara not adesquate,‘The parallel method is the most widely used approach to apply heuristics, which have been found to consistently minimize project dele over lage variety of project. The parallel method i an trative proces that start fom the beginning of project time and, hen the resources needed exceed the resources available, eins aedvtes fs by the priority rules |. Minimum slack. 2, Smaliet duration. 3. Lowest setvity identification number ‘Those notable to be scheduled without delaying others are pushed out further in time. However, do not attempt to move activites that have already started. When considering activites not to delay, consider the resources each setvity uses. In any period when two or more aetivtes require the same resouree, the priority rules are applied. For example if in period S thre activities ae eligible to start. ave the same ES) and roquite the seme resource, the frst activity placed in the schedule would be the activity wit the least slack (rule 1), However, ill aetvites have the same sack, the next rule would be invoked (rule 2), and the activity withthe smallest duration would be placed inthe schedule fist. In very rare cases, when all eligible activities hae the sume slack and the same duration, the tei broken by the lowest activity identiieation number (rue 3), sine each activity has a unique 1D number. ‘When a resource limit has been reached, the erly start (ES) for sueceeding activites not yet in the schedule wil be delayed (and all, successor activites not having fee slack) and their slack reduced In subsequent periods the procedure is repeated until the project scheduled. The procedure is demonstrated next; see © Figure 8.4. The shaded areas in the resource loading chart represent the “scheduling interval” ofthe meconsrined schedule (ES through LF). You can schedule the resource anyplace wihia the interval and not delay the project. Scheduling the activity beyond the LE will delay the project. FIGURE 8.4 ResureeConstrined Schedule through Period 2-3‘The Parallel Method: Period Acton MM 4s so 7 18 ay oto vot See @ Figure 8.4, (ny acvy 1 stg. reguires 2 poerammers Landay Lito seb [Noctis are elinble tobe chee. Activities 23, and are lib to be shed, Acty 3a the eat sack (0)-appy re L Load acy 3 ito seb Activity 2s et wth ack of 2 hones. ev 2 requires 2 poses and ely isavalable Delay activity 2. Update: ES = 3 slack ‘Tho nent lil sty sett 4 ice oa requires 1 programme Load ay 4a eb ____see Brique Acti 2s eligible but o.kds into 3 programmers i poo Dea acivy 2 Update ES = 4 sak 0 Acti 2s sible but extent 3 programmers poo Dea activity 2. Update: ES = 5, = 1. slack = Delay atv 7 Updates ES», LF» 1k Activity 2s lie but exceeds limit of 3 programmers in oat Delay activity 2. Update: ES ~ 6, LE~ 12 slack» -2 Delay activity 7. Update: ES = 12, LF = 14, sack 2 Activities 2,5, and 6 ae ibe with slack of 2.2 and, respectively Load activity 2 nto seed (ele Bocause atv 6 has O lack. tithe exh atv Load activity 6 nto seed (ele) ‘The programmer ito 3s ached Delay tv 5, Update: ES ~ 7, sack 1 Limits eached. No proprammes avaiable Delay tit 5, Update: ES 8, sack ~ 0 Limit is reached. No programmers viable Delay activity 5. Update: ES =9, LF 1, slack 1 Limit is eached. No programmers viable Delay activity 5. Update ES = 10, LE = 12, lack Activ isle Load acy it eke (Note: Actin 6 doesnot hae ack case there ae no programmer aalble3 maxim) [Noche ci. Activity Vis eligible Load activity ino schedule“Toe programmers are limited to thee. Follow the actions described in @ Figures 8.4 and 5, Note how the limit of “Page TET” thre programe sats to delay the prec. — FIGURE 8.5 Resoarce-Constraned Schedule through Peiod 5-6 i Observe how itis nevessary to update each period to reflet changes in aetvity cay start and slack times so the heuristics "Rage 76 can reflect changing pistes, When ung the paraliescheduling method the networkin Figure 85 rele the new Ee Schedule date of I time units, rather than the time-onstraned projeet duration of 12 time units, The network has also AES 76? been revised to reflect new start, finish, and slack times for each activity. Note that activity 6 i stil eitial and has a slack ofO time units because no resources are available (they are being sed on activites and S). Compare the slack foreach activity found in ‘© Figures 8.4 and (8,5; slack has been reduced significantly. Note that activity 4 has only 2 units of slack rather than what appears tobe 6 slack units. This occurs because only three programmers are available and they are needed to satisty the resource requirements of activities 2 and 5, Note thatthe number of eritca activities (1, 2, 3,5, 6,7) bas increased from four to six. “This small example demonstrates the seenario of scheduling resoures in real projects and the resulting increase inthe Fisk "Page 370" ofbeing late In practice this isnot a trivial problem! Managers who fil to schedule resourees usually encounter this ———— Scheduling risk when it sto late to werk around the problem, resulting in a project delay. Since manually using the perael method i impractical on real-world projects because of size, project managers will depend on software programs fo schedule project resources8.5 Computer Demonstration of Resource-Constrained Scheduling 85 Understand how project management software creates resource-constrained schedules. Fortunately project management software is capable of assessing and resolving complicated resource-consrained schedules using heuristics similar to those described in the previous section. We will use the EMR project to demonstrate how this is done using MS Projet. tis important to note thatthe software is not “managing” the project. The software i simply a tool the project manager uses to view the project from different perspectives and conditions, See Snapshot from Practice 8.2; Assessing Resource Allocation for more ips on assessing resource problems, © smrstor From practice 82 Assessing Resource Allocation (One of the strengths of project management software is the ably to Identify and provice options for resolving resource allocation problems. One project manager who uses MS Project shared the following checklist for dealing with resource conflicts after preliminary assignment of resources, 1. Assess whether you have overallocation problems (see Rediin the resource shect view). 2. Identify where and when conflicts occur by examining the resource usage view. 3. Resolve the problem by 2. Replacing overallocated resources with appropriate resources that are available, Then askif this solves the problem. Ifo Use the leveling tool and choose the level within slack option, 1. Does this solve the problem? (Are resources stil overallocated?) Il. Check the sensitiv of the network and askifthis Is acceptable. fot: Consider spiting tasks. 1. Make sure to readjust task durations to take into account addtional startup and shutdown tne. 4. 1f3 does not work, then either 2. Use level tool default option and ask if you can live with the new completion date. tft: '. Negotiate for additional resources to complete the project. If not possible: Consider reducing project scope to meet deadline. While this checklist makes specific references to MS Project, the same steps can be used with most project management software. EMR isthe name gven toa handed elecroic meal ference guide thai bring developed tobe used by emergency “Page TTE ‘medical tecnica and paramedics. @ Figure 8.6 contains a imednied network forthe dsian phase ofthe poet. For the purpose ofthis example. we assume thal only design enginers are required forthe tasks and tha the design engineers are imerehangebl. The number of eraineer required to perform each asks noted inthe network where S00 perent means ve design ‘mgincers are needed forthe netivity. For example activi S, feature specs, oquires four desi enelncers (400 peroeat).‘The project begins January 1 and ends February I, a duration of 45 workdays, Te calendar for the project has been setup to work seven days.a week so the reader can trace and more easily se the results and impacts of resources-similarto manual solutions present in chapter exercises. The timetimited (constrained) bar chart for the project is shown in @ Figure 8.7. This bar chart incorporates the same information used to develop the project network but presents the project inthe form ofa bar chart along a timeline. FIGURE 8.7 EMR Project before Resouces Added Finally resource usage chart is presented fora segment ofthe project—January 15 to January 23; see @lFigure 8.84. Observe that ‘the timelimited project requires 21 design engineers on January 18 and 19 (168 hrs)8 hrs per engineer = 2! engincers). This segment represents the peak requirement for design engineers for the projet, However, due tothe shortage of design engineers and commitments to other projets. ony 8 engineers can be assigned to the project. This creates overallocation problems, more clearly detailed in © Figure 8.8B, which isa resouree loading chart for design engineers, Notice that the peak is 21 engineers and the limit of ' engineers is shown by the gray shaded area.FIGURE 8.88 EMI ProjectTinteConstrained Resource Usage View, January 18-23, Wok eats Tonal Vecerenyesi | 0h a a ae a fae Digtenees Tea Bamana [aaa aa aa ere 200 FIGURE 8.88 Resource Loading Chart for EMR Project, January 1-23 DelonErgents Ovealected —] Alaa: “To resolve this problem we use the “leveling tol within the sofware and fist try to solve the problem by leveling only within sack, This solution would preserve the original nish date. However, as expected, this does not solve all ofthe allocation problems. The next option isto allow the software to apply scheduling heuristics and level outside of sack. The new schedule is contained in the revised, esource-limited network chart presented in © Figure 8,9, The resoureeimited project network indicates the project duration has now been extended 102/26, or 57 workdays (versus 45 days time limited). The eiical path is now 2.3 9,13.FIGURE 8.9 EMR Project Network View Sebedule after Resources Leveled LJ Figure 8.10 presents the project bar chart and the results of leveling the project schedule to reflect the availability of only eight design engineers. The application of the heuristics can be seen in the scheduling ofthe internal, external, and feature speification activities. All three activities were originally schedule to start immediately after activity I, architectural decisions FIGURE 8.10 EMR Project Resources Leveled This is impossible, since the theee activites collectively require 14 engineers. The sofeware chooses to schedule activity 5 frst because this activity iso the orignal critical path and has zero slack (heuristic rule #1). Neat, and concurrently activity 4 is chosen over activity 3 Because activity 4 hes a shorter duration (heuristic rule #2); internal specs, activity 3 s delayed du to the limitation of § ‘design engineers. Notice that the original ritical path no longer applies because ofthe resource dependencies created by having only eight design engineers, See (@ Figure 8.9 for the original planned critical path. Compare the bar chart in @Figure 8.10 with the timesimited bar chart in @ Figure 8.7. For example, note the diferent “Page 7 start dates for activity 8 (Seren). Inthe timesimited plan (@ Figure 8.7), the start date for activity 8 is 1/18, while the = start det in the resourcesimited schedule (Figure 8.10) is 2/16, almost a month later! Pact‘While resource bar graphs are commonly used to illustrate overallocation problems, we prefer to view resource usage tables “Page 274 like the one presented in © Figure 8.84. This table tells you when you have an cverallocation problem and identifies | activites that are causing the overallocation. The Impacts of Resource-Constrained Scheduling Like leveling schedules, the limited resource schedule usually reduces slack, reduces lexiilty by using slack to ensure delay is minimized, and inveases the numberof critical and nearcritial activities. Scheduling complexity is increased because resource constraints are added o technical constraints; star times may now have ewo constraints. The traditional critical path concept of sequential activites fom the start to the end ofthe projet is no longer meaningful. The resource constraints can break the sequence and leave the network with a set of disjointed ertical activities" Conversely, parallel activities can become sequential. Activities with slack on a imeconstrained network ean change om eitcal to noneritiah. rss Fee8.6 Splitting Activities 86 Understand when and why spliting tasks should be avoided. Splitting tasks is a scheduling technique used to get a beter project schedule and/or to Increase resource wilzation. A “Page TAT planner splits the continuous work included in an activity by interrupting the work and sending the resource toanother | ———— activity for a period of time and then having the resouree resume work on the orginal aetvity, Spitting ean be a wsefu tool ithe work involved doesnot include large startup or shutdown costs—for example, moting equipment from one activity location to nother. Tae most common error isto interrupt “people work," where there are high conceptual startup and shutdown costs. For example, having a bridge designer take time off to work on the design problem of another project may case this individual lose ‘our days shifting conceptual gears in and out of to activites. The cost may be hidden, but it is real. Figure 8.11 depicts the nature of the spliting problem. The original activity has been split into three separate activites: A B, and C. The shutdown and start up times lengthen the time forthe orignal activity. One study reported that task switching can cos from 20 percent to 40 percent loss inefficiency (Rubinstein, Meyer, & Evans, 2001), FIGURE 8.11 Spiting Aces ‘Activity duration without spitting Activity A Activity B Activity © ‘Activity duration spit into three segments—A, B, C Activity A Activity B Activity © Shutdown Start-up ‘Activity duration split with shutdown and start-up Some have argued thatthe propensity to deal with resource shortages by spliting isa major reason projets fil to meet schedule (ef, Goldrat, 1997; Newbold, 1997). We agree. Planners should avoid the use of spliting as much as possible, except in situations where splitting costs are Known to be smal or when there is no alternative for resolving the resource problem. Computer software offers the splitting option for each activity use it spainely,8.7 Benefits of Scheduling Resources Wis important to remember that i esources are truly limited and activity ime estimates are accurate, the resource: constrained schedule wil materialize as the projects implemented nor the timecoastrained schedule! Therefore, lure 10 Schedule limited resources can lead to serious problems fr a project manager. The benefit of creating this schedule before the project, begins leaves time for considering resonable alternatives, Ifthe scheduled delay’ is unacceptable or the risk of being delayed 100 high, the assumption of being resource constrained can be reassessed. Costtime tradeoffs can be considered, In some eases priorities may ‘be changed. See ©! Snapshot from Practice 8.3: U.S. Forest Service Resource Shortage, a Resource schedules provide the information needed to prepare time-phased work package budets with dates, Once established, they provide a quick means fora project manager to gauge the impact of unforeseen events such as turnover, equipment breakdowns, oF transfer of projeet personnel, Resouree schedules also allow pojeet managers to assess how much flexibility they have over eetain resources This useful whea they eceive requests from other managers to borrow or share resources, Honoring such requests creates goodwill and an “IU that can be cashed in drng time of nee © smsrstor From practice 8.3 U.S. Forest Service Resource Shortage ‘A major segment of work in managing US. Forest Service (USFS) forests is seling mature timber to logging ‘companies that harvest the timber under contract conditions monitored by the service, The proceeds are returned to the federal government. The budget allocated to each forest depends on the two-year plan submitted to the US. Department of Agriculture. Olympic Forest headquarters in Olympia, Washington, was developing e two-year plan as a basis for funding. All of the districts inthe forest submitted their timber sale projects (numbering more than 50) to headquarters, where thoy were compiled and aggregated into a project plan for the whole forest. The frst computer run was reviowed by a small group of senior managers to determine ifthe plan was reasonable and “doable.” Management was pleased and relieved to note all projects appeared to be doable in the two-year time frame until a question was raised concerning the computer printout. “‘Whhy areal the columns in these projects labeled 'RESOURCE® blank?” ‘The response from an engineer was “We don't use that part of the program” eh) ma DarinburtiGetty mages ‘The discussion that ensued recognized the Importance of resources in completing the two-year plan and ended with a request to “try the program with resources included." The new output was starting, The two-year program turned into a three-anc-a-half-year plan because of the shortage of specific labor skills such as road engineer and environmental impact specialist. Analysis showed that adding only three skilled people would allow the two-year plan to be completed an time. In addition, further analysis showed hiring only a few more skied people, Beyond tho three, would alow an extra year of projects to also be compressed into the two-year plan, This would result in additional revenue of more than $3 millon. The Department of Agriculture quickly approved the requested extra ‘Collars for additional cts to genormio the extra revenue.8.8 Assigning Project Work 87 Identify general guidelines for assigning people to spectic tasks. When making individual assignments, project managers should match, as best they can, the demands and requirements of “Page T5 specific work with the qualifications and experience of avalable participants. In doing so, there is a natural tendency to ——— assign the best people the most dificult tasks Projeet managers need tobe careful not to overdo tis, Overtime these people may _row (o resent the fat that they are always given the toughest assgrments, AL the same time, lees experienced particpaats may resent the fact that they ae never given the opportunity to expand their sklenowiedge base. Project managers need to balance task performance with the need to develop the talents of people assigned tothe project. Project managers need to decide not only who does wat ut also who works With whom. A number of fctors need tobe considered in deciding who should work together. Fist, to minimize unnecessary tension, managers should pick people with compatible work habits and personalities but who complement each other (Le. one persons weakness isthe other person's strength). For example one person may be rian at solving complex problems but sloppy at documenting his progres. It would be wise to par this person with an individual who is good at paying attention to details. Experience is another factor. Veterans shouldbe teamed up with new hiesnot only so they can share their experience but aso to help socialize the newcomers fo the customs and norms of the organization. Finally, future needs shouldbe considered. If managers have some people who have never worked together before but who have to Tater on inthe projec, they may be wise to fake advantage of opportunities to have these people work together early on so that they can become familiar with each other. Finally, see © Snapshot fom Practice 8.4: Managing Geeks fr some intresting ‘thoughts fom the former CEO of Google on how to put together teams. © smsuor From practice 84 Managing Geeks* Eric Schmiat, after a successful career at Sun Microsystems, took over struggling Novell, nc. and helped turn it ‘around within two years, Four years later he became the CEO of Google. One of the keys to his success is his, abilty to manage the technical wizards who develop the sophisticated systems, hardware, and software that are the backbone of electronically driven companies. He uses the term “geek” (and he can, since he is one, with a Ph. in computer science) to describe this group of technologists who rule the cyberword. ‘Schmidt has some interesting ideas about assigning geeks to projects. He believes that putting geeks together in project teams with other geeks creates productive peer pressure. Geeks care e great deal about how other geeks perceive them. They are good! at judging the quality of technical work and are quick to praise as well as criticize teach other's work. Some geeks can be unbesrably arrogant, but Schmidt ciaims that having them work together (on projects isthe best way to control them-—by letting them control each other, {At the same time, Schmidt argues that too many geeks spoil the soup. By this he means that when there are too ‘many geeks on a development team, there is a tendency for intense technical navel gazing. Members lose sight of deadlines, and delays are inevitable. Te combat this tendency, he recommends using geeks only in small groups. He urges breaking up large projects into smaller, more manageable projects so that small teams of geeks can be assigned to them. This keeps the project on time and makes the teams responsible to each other.8.9 Multiproject Resource Schedules 88 Identify common prablems with multiproject resource scheduling, For clarity we have discussed key resource allocation issues within the context ofa single project. In realty resouree allocation generally occurs ina multiprojet envionment where the demands of one project have to be reconciled with the needs of other projects. Organizations must develop and manage systems for effcinty allocating and scheduling resources across several projects with diferent priorities, resource requirements, sets of activites, and risks, The system must be dynamic and capable of secommodating new projects as wel as reallocating resources once projeet work is completed, While the same resource issues and principles that apply toa single project also apply o this muliproject environment, application and solutions are more complex. ven the interdependency among project ‘The following are three ofthe more common problems encountered in managing multinrojct resource schedules, Note that these are aero manifestations ofsingle-project problems that are now magnified ina multiprojet environment. |. Overall schedule slippage. Because projects often share resources, delays in one projeet can havea ripple effect and delay other projects. For example, work on one software development projet can grind toa halt because the coders scheduled for the next ‘rtical task are late in completing their work on another development project Inccicat resource utiliza resource demands. For example, firm may havea staff of 10 electricians to meet pesk demands when, under normal cantons, ‘only Seletrcians ace required. 5, Resource bottlenecks. Delays and schedules are extended a a result of shortages of eritical resources tha are required by multiple projects. For example, at one Lattice Semiconductor facility, project schedules were delayed because of competition over access to test the equipment necessary to debug programs. Likewise, several projets a US. forest area were extended because there was ‘only one siviultrist on the staf Because projects have diferent schedules and requirements, there are peaks and valleys in overall ‘Todesl with these problems, more and more companies ate creating project offices or departments co oversee the scheduling of resources across multiple projects. One approach to mulipl project resource scheduling is to use fist come-fist served rule. A project queue system is created in which projects currently under way take precedence over new projects, New project schedules are based on the projected availability of resources. This queuing tends to lead to more reliable completion estimates and is preferred on contracted projects that have st penalties for being late. The disadvantages of this deceptively simple approach ate that it does not ‘optimally utilize resources or take into account the priority ofthe project, See @ Snapshot from Practice 8.5: Multiple Project Resource Scheduli ai© SNAPSHOT FROM PRACTICE 8.5 Multiple Project Resource Scheduling “Tho case for 9 contral source to oversee project resource scheduling Is well known by practioner. Here is 3 synopsis of a conversation with one midale manager Interviewer: Congratulations on acceptance of your multiproject scheduling proposal. Everyone tells me you were very convincing ‘Middle Manager: Thanks. Gaining acceptance was easy this time, The board quickly recognized we have no ‘choice ifwe are to keep choad of competition by placing our resources on the right projects. Interviewer: Have you presented this to the board before? ‘Middle Manager: Yes, but not this company. | presented the same spiel to the fim | worked for two years ago. For their annual review meeting | was charged to present a proposal suggesting the need and benefits of central ‘capacity resource planning for managing the projects of the fim. Ivied to build a case for bringing projects under one umbrella to standardize practices and to forecast and assign key people to mission critical project. | explained how benefits such as resource demands would be aligned with mmission critical projects, proactive resource planning, and a tool for catching resource bottlenecks and resolving conflicts ‘Almost everyone agreed the idea was a good one. | felt good about the presentation and felt confident something ‘was going to happen. But the idea never really got off the ground; it just faded into the sunset \With hindsight, managers really did not ust colleagues in other departments, so they only gave half-hearted ‘support to central resource planning, Managers wanted to protect their turf and ensure that they would not have to ‘ve up power. The culture there was simply too lnflexle for the world we live in today. They are still struggling with constant conflicts among projects, I'm glad | made the switch to this fm, The culture here is much more team-oriented. Management Is committed to Improving performance.Many companies utilize more elaborete processes for Scheduling resources to increase the capacity ofthe orzanizaton to “Faye 7R™ initiate projets, Most ofthese methods approach the problem by treating individual projets a part oF one bg project and ‘adapting the scheduling heuristics previously introduced to this “mega projec.” Projet schedulers monitor revoure usage and provide updated schedules based on progress and resource avalabiltyaeros all projeets, One major improvement in project ‘management software in recent year eth ability to prioritize resource allocation to specific projects Projects canbe prioritized in ascending order (eg. 1,2, 34... and these priorities will override scheduling heuristics so that resources go co the project highest ‘on the priority ist (Note: This improvement fits perfectly with organizations that use projet priority models similar to those described in @Chapter 2.) Centralized project scheduling also makes it easier to identify resource bottlenecks that stifle progress on projects. Once botlenecks have been identified, their impact can be documented and used to justify acquiring additional equipment, recruiting critical personnel, or delaying the praiec. Finally. many companies are using outsourcing as @ means of dealing with thet resource allocation problems, In some cases. a ‘company will reduce the numberof projets they have to manage internally to only core projets and outsource noncriial projects to contractors and consulting lrms. In other cases, speciic segments of projets are outsourced to overcome resource deficiencies and scheduling problems. Companies may hire temporary workers to expedite certain atvities that ae falling behind schedule or contract project work during peak periods when there ae insufficient internal resoures to meet the demands ofall projets. The ability to more efficiently manage the ebbs and lows of project work is one of the major driving frees behind outsourcing today8.10 Using the Resource Schedule to Develop a Project Cost Baseline ‘Once resource assignments have been finalized. you ae abe to develop a baseline budget schedule forthe projet. Using your project schedule, you can shmerphase work packages and assign them to ther tespectve scheduled activites to develop a budget schedule over the life of your project. Understanding the reason for ime;phasing your budget is very important. Without a ime-phased budget, a 00d project schedule and cost contol are impossible, Why a Time-Phased Budget Baseline Is Needed 89 Explain why a ime-phased budget baseline is needed. ‘The need fora timephased budget baseline is demonstrated in the following scenario. The development of @ new product is "Page 25 tobe completed in 10 weeks at an estimated cost of $400,000 per week, fora total cost of $4 million. Management wants a——— satus report at the end of S weeks. The following information has been collected: + Planned costs for the frst $ wecks are $2,000,000. + Actual costs fr the rst S weeks are $2,400,000. Hw are we doing? It would be easy to draw the conclusion there is 2 $400,000 cost overrun. But we really have no way of knowing The $400,000 may represent money spent to move the project ahead of schedule. Assume another set of data atthe end of S weeks: + Planned costs for the fst 5 weeks are $2,000,00, + Actual costs fr the frst S weeks are $1,700,000. Is the project costing $300,000 less than we expected? Perhaps. But the $200,000 may represent the fact thatthe projet is behind schedule and work has not started. Could it be the project is behind schedule and ever cost? We cannot el from these data. The ‘many systems found inthe real world that use only planned funds (a constant burn rate) and actual cots can provide false and misleading information. There is no way tobe certain how much ofthe physical work has been accomplished. Tes systems do ot ‘measure tow much work was accomplished for dhe money pent! Hence, without tinephasing est match your project schedule itis imposible to have reliable information for contr purposes. Creating a Time-Phased Budget O Greate a time-phased project budget baseline. By using information from your WBS and resource schedule, ou can create a timephased cost baseline. Remember from the WBS for the PC Project in @ Chapters 4 and ©@5 that we integrated the WBS and OBS organization breakdown structure so the work ‘packages could be tracked by deliverable and organization responsible, See @ Figure 8.12 for an example of the PC Prototype Project, sed by deliverable and organization unit responsible. For each intersection point ofthe WBS/OBS matrix, you see work package budgets andthe total cost. The toal costa each intersection is called a cost or control account, For example tthe intersection of the Read)write head deliverable andthe Production Department we see there are three work packages with a total budget of $200,000, The sum of ll cost accounts ina column should represent the total costs forthe deliverable. Conversely the sum of the cost accounts in a row should represent the cost of budget forthe organization wait responsible for accomplishing the work. You can continue to “roll up” costs on the WBSYOBS to total project costs. This WBS proviées the information you ean use to time;phase ‘work packages and assign them to theie respective scheduled activities over the life ofthe project.FIGURE 8.12 Direct Labor Budget Rollup (S000) "Were package badge ‘Surmnarze by rgninon unis Recall from the development of your work breakdown structure for each work package, the following information needed to be Seveloped: Define work (what). Mentty time 19 complete a work package (how long) entity timephased budget to complete a work package (cost. Wentify resources needed to complete a work package (how much). dentty a single person responsible for units of work (who), ‘dentfy monitoring points for measuring progres (how well). [Number three, time phasing the work package, is erties foe the final step of creating your budget baseline, The process of “Page TET™ time phasing work packages, which i ilstrated nex, is demonstrated in © Figure 8.13. The work package has duration of three weeks. Assuming labor, materials and equipment are tracked separately the work package costs for labor are distributed over the three weeks as they are expected to occut~$40,000, $30,000. and $50,000 for each week, respectively. When the three-week work package i placed in the network schedule, the costs are distributed to the imesphased budget forthe same three scheduled weeks, Fortunately, mast single WPs become an activity and the process of distributing costs is relatively simple. Tat is, the relationship is ‘one-forone. Such budget timing is directly from the work package to the activity.FIGURE 8.13 TinePhased Work Package Budget (labor cst oly) ‘Work Package Duration _3_woeks ‘Total labor cost __$120,000 =o 1333| reser | vox | | $90 | 50 {Ina few instances an activity will inelude more than one work package, where the packages are assigned to one responuble “Page ‘person or deparimen and delierable. In this case the work packages are consolidated into one activity. As seen in — (igure 8.14, this activity inludes two WPs, The fist, WP-11,3.24.1 (Code), is distributed ove the is three weeks. The second, \WP:1113.242 (Integration, is sequenced over weeks 3 and 4. The activity duration is four weeks. When the activity i placed inthe schedule, the costs are dstributed starting with the schedule start-$20.000, $15,000, $75,000, and $70,000, respectively FIGURE 8.14 ‘Two Time Phased Work Packages (labor cont nk) Time Phased Work Package Budget Labor cost onl Wirk Package Description — Software Page _1___ of Wiork Package IO 143244 and 113.242 Project___PC Prototyoe Deliverable _Chreut boord Date 32a Responsible organization unt Sofware, Estimator _166 Work Package Duration 4 weeks, Total aber cost —$180.000 ‘Time Phased Labor Budget (6000) Taber Wierk Periods Weeks rate_ [7 on rons 26057 os | as Resource ‘Sytem [2.5007 program's} week = Tota ‘These time-phased budgets for work packages are ited from your WBS and are placed in your projet schedule as they are expected to occur over the life ofthe project. The outcome of these budget allocations i the project cost baseline (also called planned yalue—P {), which is used to determine cost and schedule variances a the project i implemented,@ igure 8.15 shows the Patent Entry project network schedule, whch is used to place che timephased work packages’ budgets in|“ ‘the baseline. Figure 8.16 presents the proet time phased budget forthe Paint Entry project and the curative graph of the oj budget asln. In this Hare ou can ee haw the time phased work package costs wee placed into he network and hw the ‘cumulative project budget graph fora project is developed. Notice that costs do not have to be distributed linearly, but the costs should be placed as you expect them to occur FIGURE 8.15 Patient Eatry Project Newark tl Pate Ene system Prec wens a FIGURE 8.16 Patient Entry Time Phased Work Packages Assigned o_o‘You have now developed complet time and cost plans for your projet. These project baselines will be used to compare “Page 75S planned schedule and cost using an integrative sytem called canned valve. The application and use of project baselines to measure performance are discussed in detail in @ Chapter 13. With your project budget baseline established, you are also able to _Eenerate cash flow statements for your project ike the one presented in © Figure 8.17, Such statements prepare the firm to cover costs over the lifespan o the project, Finally, with resource stsiznments finalized, you are able to generate resource usage schedules {for your project (sce © Figure 8.18), These schedules map out the full deployment of personnel and equipment and can be used to generate individual work schedules. Tere FIGURE 8.17 Pretet Monthly Cash Flow Statement q ana hsFIGURE 8.18 Project Weekly Resource Usage Schedule vcard Stang ten dct 7 Nanas sect Heraare design Prownpes Ferme specttons tierdnredocamerenion kee specie Speretig tem docuretat| Projet Socuanten Pose Stem stent ine otonaceptance etSummary A project schedule is nota schedule until resources have been assigned. Ifesources are inadequate then task sequences are likly to be impacted andthe schedule extended. I'resources are adequate it may be advantageous to “smooth” resources to improve their wilzation. The results alter resource scheduling are frequently significantly diferent from the results ofthe standard CPM method ‘With the rapid changes in technology and emphasis on timecomarket, catching resource usage and availability problems before the project starts can save the costs of erasing projet activites later. Any resource deviations from plan and schedule that occur when the project is being implemented can be quickly recorded and the effect noted. Without this immediate update capability, the rest negative effet of a change may not be known until ic happens. Tying resource svalaility to.@ multiproect, multresource system supports 2 project priority process that selects projets by their contribution to the organization’ objectives and strategic plan. Assignment of individuals to projects may’ not ft well with those assigned by computer software routines. In these cases overriding the computer solution to accommodate individual diferences and sills almost always the best choice. The project resource schedule is important because it serves as your time baseline, which is used for measuring time diferences ‘between plan and actual. The resource schedule serves asthe basis for developing your time-phased project cost budget baseline. The baseline (planned value, PV) isthe sum ofthe cost accounts, and each cost account isthe sum of the work packages inthe cost account, Remember, ifyour budgeted costs are not time-phased, you have no reliable way to measure performance. Although there ate several types of project cost, the cost baseline is usually limited to direct costs (such as labor, materials, equipment) that are under the contol of the project manager: other. indirect costs can be added to project costs separately.