Project Management The Managerial

Process 6th Edition Larson Solutions

Manual
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 Chapter 8
SCHEDULING RESOURCES AND COSTS

Chapter Outline

1. Overview of the Resource Scheduling Problem

2. Types of Resource Constraints
3. Classification of a Scheduling Problem
4. Resource Allocation Methods
A. Assumptions
B. Time-Constrained Projects: Smoothing Resource Demand
C. Resource-Constrained Projects
5. Computer Demonstration of Resource-Constrained Scheduling
A. The Impacts of Resource-Constrained Scheduling
6. Splitting Activities
7. Benefits of Scheduling Resources
8. Assigning Project Work
9. Multiproject Resource Schedules
10. Using the Resource Schedule to Develop a Project Cost Baseline
A. Why a Time-Phased Budget Baseline Is Needed
B. Creating a Time-Phased Budget
11. Summary
12. Key Terms
13. Review Questions
14. Exercises
15. Case: Power Train, Ltd.
16. Appendix 8.1: The Critical-Chain Approach
A. Time Estimates
B. Critical-Chain in Action
C. Critical-Chain versus Traditional Scheduling Approach
D. CCPM and Splitting Tasks
E. Monitoring Project Performance
F. The CCPM Method Today
17. Appendix Summary
18. Appendix Review Questions
19. Appendix Exercises
20. Appendix Case: The CCPM Dilemma
 Chapter Objectives

• To contrast the differences between time and resource constrained projects

• To explain the implications for managing time and resource constrained projects
• To demonstrate an understanding of one heuristic method for scheduling resource
constrained projects
• To explain the potential for hidden critical paths
• To introduce multiproject resource scheduling
• To demonstrate the ability to create a project cost baseline
• To explain how costs are translated from an estimate to a time-phase baseline.

Review Questions

1. How does resource scheduling tie to project priority?

Resource scheduling ties to project priority because resources are limited.

Remember, the priority system ranks projects which then determines which project
each resource should work on first.

2. How does resource scheduling reduce flexibility in managing projects?

Resource scheduling systems usually reduce flexibility because when resources are
considered, computer routines use slack to get an “efficient” schedule. When slack is
used up, flexibility is lost and the risk of delaying the project increases. If the
resource conflict occurs on the critical path, the project is delayed.

3. Present six reasons scheduling resources is an important task.

Several reasons for scheduling resources are to:

• Check if existing resources are adequate and available

• Decide which resources have priority
• Assess the impact if another project is added to the pool
• Determine where the real critical path is. Are there unforeseen dependencies?
• See what happens to the risk of being late if slack is used up developing a
schedule
• Decide if outside contractors have to be used
• Decide if an imposed project duration is realistic.

Students should not be limited to these reasons; there are many more reasons for
scheduling resources.

4. How can outsourcing project work alleviate the three most common problems
associated with multiproject resource scheduling?

2 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

 Outsourcing can be used to reduce project slippage, improve utilization of critical
resources, and avoid resource bottlenecks. For example, project delays can be
avoided by contracting key activities when resources are not available internally.
Likewise, hiring consultants to help with Y2K problems allows critical IT people to
work on specific problems, while the outsiders work on standard programs. Not only
does the project get done on time, but the company avoids hiring IT personnel to meet
a short term need.

5. Explain the risks associated with leveling resources, compressing or crashing

projects, and imposed durations or “catch-up” as the project is being
implemented.

The risks associated with leveling, crashing, and “catch-up” are similar to those noted
in question 2. Flexibility is decreased and risk of delay is increased. For example,
slack is used up and may cause other bottlenecks later in a sequence of activities.
Having time buffers at merge points before the project begins could help avoid some
of the need to crash activities. Decoupling critical activities can help to cut time if
decoupling is possible and resources can be shifted; however, the risk is typically
reduced only slightly.

6. Why is it critical to develop a time-phased baseline?

Other systems do not measure how much work is accomplished for the money spent!
Hence, without time-phasing cost to match your project schedule, it is impossible to
have reliable information for control purposes.

Exercises

1. Given the network plan that follows, compute the early, late, and slack times.
What is the project duration? Using any approach you wish (e.g., trial and
error), develop a loading chart for resources Electrical Engineers (EE), and
resource, Mechanical Engineers (ME). Assume only one of each resource exists.
Given your resource schedule, compute the early, late, and slack times for your
project. Which activities are now critical? What is the project duration now?
Could something like this happen in real projects?

Instead of taking 9 days the duration has been extended to 11 days and all activities
are critical. Resource shortages are common in real projects and this problem
demonstrates the impact resource constraints can have on project schedules.

Chapter 8 Scheduling Resources and Costs 3

4 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS
2. Given the network plan that follows, compute the early, late, and slack times.
What is the project duration? Using any approach you wish (e.g., trial and
error) develop a loading chart for resource resources Carpenters (C) and
Electricians (E). Assume only one Carpenter is available and two Electricians
are available. Given your resource schedule, compute the early, late, and slack
times for your project. Which activities are now critical? What is the project
duration now?

Resource constraints extend the project duration from 12 days to 14 days and Activity
2 which was part of the original critical path is no longer critical path. All other
activities are critical which illustrates the key point that resource constraints tend to
increase the sensitivity of project networks.

Chapter 8 Scheduling Resources and Costs 5

3. Compute the early, late, and slack times for the activities in the network that
follows, assuming a time-constrained network. Which activities are critical?
What is the time-constrained project duration?
Note: Recall in the schedule resource load chart the “time constrained”
schedule interval (ES through LF) has been shaded. Any resource schedule
beyond the shaded area will delay the project.

Without consideration of resources the project is estimated to take 13 time units and
the critical path is 2 → 4 → 6 (see Network Diagram).

Assume you have only three resources and you are using a computer using a
computer that uses software that schedules projects by the parallel method and
following heuristics. Schedule only one period at a time!
Minimum slack
Smallest duration
Lowest identification number
Keep a log of each activity change and update you make each period—e.g.,
period 0-1, 1-2, 2-3, etc. (Use a format similar to the one on page 241.) The log
should include any changes or updates in ES and slack times each period,
activities scheduled, and activities delayed. (Hint: Remember to maintain the
technical dependencies of the network.) Use the resource load chart to assist you
in scheduling (see pages 260-261).
List the order in which you scheduled the activities of the project. Which
activities of your schedule are now critical?
Recompute your slack for each activity given your new schedule. What is the
slack for activity 1? 4? 5?

Log of Parallel Method of Scheduling 8-3

PERIOD ACTIVITY CHANGES

0-1 2 Schedule Activity 2 (first by minimum slack rule)
1 Schedule Activity 1
3 Delay Activity 3 ES to period 1. Reduce slack to 0
5 Delay Activity 5 ES to period 6. Reduce slack to 0
1-2 3 Delay Activity 3 ES to period 2. Reduce slack to -1
5 Delay Activity 5 ES to period 7. Reduce slack to -1
6 Delay Activity 6 ES to period 11. Reduce slack to -1
2-3 3 Delay Activity 3 ES to period 3. Reduce slack to -2
5 Delay Activity 5 ES to period 8. Reduce slack to -2
6 Delay Activity 6 ES to period 12. Reduce slack to -2
3-4 3 Schedule Activity 3
4-5 4 Schedule Activity 4
5-6 - No changes
6-7 - No changes
7-8 - No changes
8-9 5 Schedule Activity 5

6 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

 Log of Parallel Method of Scheduling 8-3 (continued)

PERIOD ACTIVITY CHANGES

9-10 - No changes
10-11 - No changes
11-12 - No changes
12-13 6 Schedule Activity 6

Chapter 8 Scheduling Resources and Costs 7

4. You have prepared the following schedule for a project in which the key
resources is a tractor. There are 3 tractors available to the project. Activities A
and D require one tractor to complete while Activities B, C, E and F require 2
tractors.
Develop a resource-constrained schedule in the loading chart that follows.
Use the parallel method and heuristics given. Be sure to update each period as
the computer would do. Record the early start (ES), late finish (FL) and slack
(SL) for the new schedule.

Log of Parallel Method of Scheduling: Exercise 8-4

PERIOD ACTIVITY CHANGES

0-1 B Schedule Activity B (first by minimum slack rule)
A Schedule Activity A
1-2 - No changes
2-3 - No changes
3-4 - No changes
4-5 C Delay ES of Activity C to 5. Reduce slack to 1
5-6 D Schedule Activity D (minimum slack rule)
C Schedule Activity C
E Delay ES of Activity E to 6. Reduce slack to 1
6-7 E Delay ES of Activity E to 7. Reduce slack to 0
7-8 E Delay ES of Activity E to 8. Reduce slack to -1
F Delay ES of Activity F to 11. Reduce slack to -1
8-9 E Delay ES of Activity E to 9. Reduce slack to -2
F Delay ES of Activity F to 12. Reduce slack to -2
9-10 E Schedule Activity E
10-11 - No changes
11-12 - No changes
12-13 F Schedule Activity F

8 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

5. Develop a resource schedule in the loading chart that follows. Use the parallel
method and heuristics given. Be sure to update each period as the computer
would do. Note: Activities 2, 3, 5, and 6 use two of the resource skills. Three of
the resource skills are available. How has slack changed for each activity? Has
the risk of being late changed? Why?

Chapter 8 Scheduling Resources and Costs 9

 Log of Parallel Method of Scheduling: Exercise 8-5

PERIOD ACTIVITY CHANGES

0-1 2 Schedule Activity 2 (minimum slack rule)
1 Schedule Activity 1
1-2 3 Delay ES of Activity 3 to 2. Reduce slack to 2
2-3 3 Delay ES of Activity 3 to 3. Reduce slack to 1
3-4 4, 3 Activities 3, 4, 5 are eligible to be scheduled.
Schedule Activity 4 (minimum slack rule)
Schedule Activity 3 (minimum slack rule)
Delay ES of activity 5 to 4. Reduce slack to 1
4-5 5 Delay ES of Activity 5 to5. Reduce slack to 0
5-6 5 Delay ES of Activity 5 to 6 .Reduce slack to -1
6-7 5 Delay ES of Activity 5 to 7. Reduce slack to -2
6 Delay ES of Activity 6 to 9. Reduce slack to -1
7-8 5 Schedule Activity 5
6 Delay ES of Activity 6 to 10. Reduce slack to -2
8-9 No changes
9-10 6 No changes
10-11 6 Schedule Activity 6

10 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

6. You have prepared the following schedule for a project in which the key
resource is a backhoe. This schedule is contingent on having 3 backhoes. You
receive a call from your partner, Brooker, who desperately needs 1 of your
backhoes. You tell Brooker you would be willing to let him have the backhoe if
you are still able to complete your project in 11 months.
Develop a resource schedule in the loading chart that follows to see if it is
possible to complete the project in 11 months with only 2 backhoes. Be sure to
record the order in which you schedule the activities using scheduling heuristics.
Activities 5 and 6 require 2 backhoes, while activities 1, 2, 3, and 4 require 1
backhoe. No splitting of activities is possible. Can you say yes to Brooker’s
request?

Chapter 8 Scheduling Resources and Costs 11

7. You are one of three carpenters assigned to complete a short construction
project. Right before the start of the project, one of your fellow carpenters was
hospitalized and will not be available to work on the project.
Develop a resource-constrained schedule in the loading chart that follows to
see how long the project will take with only 2 carpenters. Be sure to record the
order in which you schedule the activities using the scheduling heuristics.
Activities A, B, C, D, E, G, and H require 2 carpenters to complete. Activity F
requires only 1 carpenter. No splitting of activities is possible.
You will receive a bonus if the project is completed within 15 days. Should
you start planning how you will spend your bonus?

You should not spend time planning how you are going to spend your bonus. The
schedule will take 16 days.

The order activities scheduled: A,C,B,D,E,F,G,H

Note: Activity F needs to be scheduled ahead of G because the delay in its start has
caused its slack to be negative.

12 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

8. Given the time-phased work packages, complete the baseline budget for the
project.

Chapter 8 Scheduling Resources and Costs 13

9. Given the time-phased work packages and network, complete the baseline
budget form for the project.

14 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

10. Given the time phased work packages and network, complete the baseline
budget form for the project.

Chapter 8 Scheduling Resources and Costs 15

11. Given the time-phased work packages and network, complete the baseline
budget form for the project.

16 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

12. The National Oceanic Research Institute is planning a research study on global
warming in Antarctica. The 16-month network schedule is presented below. It
is followed by budgets for each activity. Create a time-phased budget for the
research project in the form provided.

Chapter 8 Scheduling Resources and Costs 17

 Case
Power Train, Ltd.

This case points to a very typical problem in practice. Students will come up with a wide
variety of approaches depending on their experience and business acumen. After some
discussion, the authors break the class into small teams and ask each team to come up
with a simple system of rules which can be used with current project management
software and which attacks the issues found in the Power Train case. Some of the issues
mentioned below need to be considered when developing any resource scheduling
system.

The heuristics suggested in the text are indeed very efficient in minimizing project
delays. A major key to their use is the breakdown of people skills and/or equipment
type—for example, mechanical, civil, electrical engineers. Unfortunately, there is a
tradeoff. The larger the classification, the less discriminate the heuristic is in selecting
the “right” people for projects. If the classification is more detailed, the heuristics will do
a better job of selecting, but project delays (because of required resources) will likely be
increased.

The better software companies have built in flexibility for assigning people to projects.
As project priority systems and project offices become more popular in project driven
organizations, scheduling systems which link projects to priority and people assignments
are showing up in multiproject environments. A common student format and sequence
for their approach and scheduling rules are shown below:

Rule 1. SELECT KEY PEOPLE MANUALLY: This selection cannot be

overridden by the computer or by priority; it is fixed. This rule is usually
used for assigning only very key individuals to a project. The rule skirts
the priority system and its overuse may increase delays in other projects
which have a high priority.

Rule 2. PRIORITY: The priority of the project in the portfolio is used as

the first cutting criterion. In other words, the project with the highest
priority gets first pick on people needed.

A VARIATION: Most software systems allow specific activities within a

project to have priority. This is simply a priority system within a project.
Here, however, priorities are set manually ranking activities—1, 2, 3,.....n.
If a resource conflict exists, the software assigns the resource to the
activity with the highest rank. Otherwise, the standard rules of minimum
slack, shortest duration, and lowest identification number are used.

Clearly, this general system above has a strong link to strategy by using the priority
portfolio as a cutting criterion. Again, care should be taken to see that manual selection

18 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

is not overused. Manual overuse can result in significant delays on other projects which
have a high priority. Conversely, manual intervention can be used to reduce the risk of a
specific project being delayed. Again, the breakdown of people by skills is not perfect.
Some manual intervention will be necessary. The degree of breakdown tradeoff will
always exist.

Notice that a system such as the one suggested above allows management to estimate
types of resources that may be needed in the future. The system also keeps track of
resource availability by skill type.

Below is an undergraduate response to the case setting. MBA’s and executives are more
creative and detailed. Their systems usually cover more exceptions and include more
detail, but they also frequently miss the point that all their “special cases” contribute to
delays in other projects and reduce the effectiveness of resource utilization.

Student Response

Inputs:

Project priority system which ranks projects

Rank of project complexity by low, medium, or high
Resources divided into 2 or 3 groups depending on skill within a skill
(e.g., Programmer 1, 2, 3 with 1 being highly skilled)

Rule 1. Prioritize all projects

Rule 2. Categorize project by low, medium or high complexity
(1 = high, 10 = very low)
Rule 3. Apply resources by group level

The student form suggested is below:

Complexity Skill by Type Needed & Group level

Project
(e.g., engineer, group 1)
Priority
Low Medium High Group 1 Group 2 Group 3
1 x x
2 x x
3 x x
4 x x
5 x x

In place of complexity, factors such as technology, size, product class, risk, and speed
could be used.

The moral of the case is “Don’t let priority drive selection of key people,” or “Don’t
waste super stars on low priority projects.”

Chapter 8 Scheduling Resources and Costs 19

 Appendix Review Questions

1. Explain how time is wasted in management of projects.

Time is wasted by people finishing an activity early and not warning the resource of
the next activity to prepare to start early. Or, time is wasted by simply using safety
time to work on other tasks.

2. Distinguish between project and feeder buffers.

Feeder buffers exist to avoid delays in the critical chain. They are placed at the end
of a chain of non-critical activities that merge into the critical chain. Project buffers
exist to cover uncertainty or interruptions and to ensure the project duration is met.

3. Buffers are not the same as slack. Explain.

Buffers are not expected to be used. They are used when delays force their use.
Slack can be used for almost any reason. Buffers can be only used to protect the
critical chain or project from being delayed.

Appendix Exercises

1. Check out the Goldratt Institute’s homepage at http://www.goldratt.com for

current information on the application of critical-chain techniques to project
management.

At press time the Goldratt Institute’s homepage features several cases the successful
application of CCPM.

2. Apply critical-chain scheduling principles to the Print Software, Inc., project

presented in Chapter 6 on page 175. Revise the estimated time durations by 50
percent except round up the odd time durations (i.e., 3 becomes 4). Draw a
CCPM network diagram similar to the one contained in Figure A8.3 for the
Print Software project as well as a Gantt chart similar to Figure A8.4. How
would these diagrams differ from the ones generated using the traditional
scheduling technique?

Below is the CCPM network drawn for the Printer Software project.

20 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

 Next is the CCPM Gantt chart created for the Printer Software project.

Students’ work will vary depending upon the software they use to draw the Gantt
chart.

Key differences between Critical Chain (CC) and CCPM schedules include:

• The project duration for CC is 115 while for CCPM it is 58 with a 22 project
buffer. So even if all of the buffer is used, the project will be 35 days earlier than
CC.
• The CC schedule is driven by ES while the CCPM is driven by LF.
• Buffers are strategically located on CCPM schedule while slack is shared across
non-critical activities.

Chapter 8 Scheduling Resources and Costs 21

 Appendix Case
The CCPM Dilemma

Ideas found in most plans of action:

Problems:
1. Buy in is not apparent.
2. There is clear evidence of little or ineffective training.
3. Senior management is altering the CC methodology.
4. Multitasking is prevalent and inefficient.

Action Plan: (assume use of CC scheduling)

1. Start CC training immediately.
2. Get buy in before trying CC scheduling again. Try on one project as an experiment.
3. Use 75 percent confidence in place of 50 percent.
4. Cut multitasking of critical resources to two or three projects to avoid contentions.
5. Don’t alter time estimates—just reduce them by 50 or 25 percent.

22 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

 TRANSPARENCIES (for exercises)

Chapter 8 Scheduling Resources and Costs 23

Exercise 8-1

24 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

Exercise 8-2

Chapter 8 Scheduling Resources and Costs 25

Exercise 8-3

26 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

Exercise 8-4

Chapter 8 Scheduling Resources and Costs 27

Exercise 8-5

28 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

Exercise 8-6

Chapter 8 Scheduling Resources and Costs 29

Exercise 8-7

30 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

Exercise 8-8

Chapter 8 Scheduling Resources and Costs 31

Exercise 8-9

32 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

Exercise 8-10

Chapter 8 Scheduling Resources and Costs 33

Exercise 8-11a

34 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS

Exercise 8-11b

Chapter 8 Scheduling Resources and Costs 35

Exercise 8-12

36 PROJECT MANAGEMENT: THE MANAGERIAL PROCESS