Chapter 9

Resource Allocation

6-1
 Resource Allocation

Content
• Resource allocation
• Crashing/crunching
• Fast tracking
• Resource loading
• Resource leveling
• Methods

6-2
 Resource Allocation
 In Chapter 8, we discussed a special resource allocation problem: allocating time
among project tasks, better known as scheduling. Resources include but are not
limited to, human, technical, machinery, etc
 CPM/PERT ignore resource utilization and availability
 In this chapter, we look at the impact of allocating physical resources on the
schedule
 This topic is directly related to scheduling because altering schedules can alter the
timing of resources needs
 Schedules need to be evaluated in terms of both time and resources
 This chapter also highlights the difference between allocation to one project and
allocation between multiple projects (not covered)

8-3
 What is Project Crashing

 Crashing means to speed up, or expedite, a project

 Expediting projects is often needed to allow avoiding penalties, or capture certain opportunities
 To expedite a project, additional resources must be available. The PM might use overtime, work
double shifts, or use more machinery, etc.
 In CPM, two activity durations, and two costs are often introduced. The first time/cost combination
is called the normal (time, cost). Whereas, the second is called the crash time/cost
 Crashing a project changes the schedule for all activities
 Crashing a project often introduces unanticipated problems

8-4
 What is Project Crashing

 Normal time/cost is the usual or standard time and cost allocated to the activity
with the standard set of resources.
• Crash time/cost is the minimum time the job can be accomplished, beyond which no
further reduction in the job duration can be achieved. At this duration, any increase in the
resources for this job will increase the cost without reducing the duration.

 While the standard practices are often sufficient to determine the resources needed
for normal progress, careful planning is required in attempting to expedite or crash
a project.

8-5
 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

8-6
Critical Path Method—Crashing a Project

8-7
 Critical Path Method—Crashing a Project

 An implication of this calculation is  To crash a project, follow two simple

that activities can be crashed in principles:
increments of one day (or one  First, focus on the critical path(s) when
period). trying to shorten the duration of a
project. Crashing non-critical activity
 Often, this is not true, a given
will not influence the project duration.
activity may have only two or three
technically feasible durations.
 Second, when shortening a project
select the least expensive way to do it.
 To crash a project, our first task is to
develop a table or a graph of the cost
of a project as a function of the
project’s various completion dates.
8-8
 Crashing a Project - Example
 Consider the data in Table 9-1, the
project network is shown with the
project completion time. Critical
path is abe, 3 5
b,2
5 8
3 5 e,3
0 3 3 5
5 8 8 8
a,3 c,2
end
0 3 6 8
8 8

3 7
Project Cost = $120
d,4

4 8 8-9
 2 4
Round 1:- Select activity a b,2
4 7
Project new duration is 7
Project total cost =120+40=$160 2 4 e,3
0 2 2 4
4 7 7 7
a,2 c,2
end
0 2 5 7
7 7

2 6 Cost = $160
d,4

3 7
 2 3
Round 2:- Select activity b b,1
3 6
Project new duration is 6 2 3 e,3
Project total cost =160+60=$220 0 2 2 4
3 6 6 6
a,2 c,2
end
0 2 4 6
6 6

2 6 Cost = $220
d,4

2 6
 2 3
b,1
Round 3:- Select activity d and e 3 4
and crash both by 2 days 2 3 e,1
Project new duration is 4 0 2 2 4
3 4 4 4
Project total cost a,2 c,2
end
=220+30*2+35*2=$350 0 2 2 4
4 4

2 4
d,2 Cost = $350

2 4
An Example of Two-Time CPM

8-13
 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 building phases. Because design is usually

completed before construction starts, overlapping the two activities will result
in shortening the project duration.
 But this might result in an increasing number of change orders, loss of
productivity, increase cost, and the loss of time
 However, fast tracking seems to be reasonable when the early “build” or
“carry out” steps are fairly routine and well understood

8-14
 Resource Allocation
 A shortcoming of the scheduling procedures covered thus far is that they do not address resource usage and
availability.
 Besides, it is not sufficient to refer to resource usage as “costs”. Instead, we must refer to individual types of labor,
specific facilities, kinds of materials,, individual pieces of equipment, and other inputs that are limited in
availability.
 The extreme points of the relationship between time use and resource use are:
 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 activity: An activity requires a fixed amount of time and resources, some industrial processes –
heat treating for instance- are system constrained. The material must cook for a specific time to achieve the desired
effect. When dealing with system constrained tasks, no tradeoffs are possible, and resources have to be available
when needed
8-15
 Resource Loading

 Resource loading describes the amount of Fig. 9-3 Resource usage calendar for career day
resources an existing schedule requires project
during specific time periods.
 Resource loading gives an understanding of
the demands a project require over time
 Given a WBS, deriving a resource loading
is not difficult.
 Figure 9-3 shows part of the WBS of the
career day project. The part of the WBS
shown lists the personnel resources needed
for each activity.
 The resource loading is shown for each
resource for each week of the project.
8-16
 Resource Loading

 An examination of Fig. 9-3 shows that the Fig. 9-3 Resource usage calendar for career day
secretary is overloaded during late May and project
early June.
 Graduate Assistants (GAs) have a standard
load of 20 h a week. Therefore enough GAs
have to be availed.

8-17
 Resource Loading Example using AOA
 Consider Fig-9-4 that shows the AOA
diagram for Table 8-2.
 Let us consider the resource usage for two
hypothetical resources A, and B, on the
ark.
 The expected activity time is shown above
the arc, and the resource usage is shown in
brackets, below the arc, with resource A
shown first, and B second.
 Fig. 9-5 shows the “calendarized” AOA
diagram. Resource demand can be summed
by time period across all activities.

8-18
 Resource Loading Example using AOA
 The loading digram of resource A is shown in Fig.
9-61 and that for resource B in Fig.9-6b.
 The loads are erratic and vary substantially over
the duration of the project.
 Resource A- used by a,b, and c-has a high demand
that drops in the middle and then climbs again.
 Resource B has a low initial use but increases as
the project develops.
 The PM must be aware of the ups and downs of
the resource usage through out the project duration
and he should make sure that the required
resources are available when needed. Next, we will
discuss how to meet this responsibility
8-19
 Resource Leveling
 Resource leveling is a technique in
project management that overlooks
resource allocation and resolves
possible conflict arising from over-
allocation.
 Resource leveling aims to minimize
the period-by-period variations in
resource loading by shifting tasks
within their slack allowances.
 The purpose is to create a smoother
distribution of resource usage.
 There are several advantages to
smoother resource usage:
 Less hands-on management is required
 Fewer personnel problems, lower and
lower inventory requirements
 Lesser cost associated with hiring and
training, and lower pressure on the
payroll systems
8-20
 Resource Leveling (Slide 1 of 2)
 The procedure for resource leveling is straightforward. Consider the
simple AOA network (Fig. 9.7a).
 The activity time is shown over the arc, and the resource usage (one
resource, worker) is in brackets below the arc.
 Activities a, b, and c follow event 1, and all must precede event 4.
Activity a requires two workers and takes 2 days, b requires two
workers and takes 3 days, and c needs four workers and 5 days.
 If all these tasks are begun on their early start dates, the resource
loading diagram appears as shown in Figure 9.7b, steps of
decreasing labor demand varying from eight workers to four
workers.
 If, however, task b is delayed for 2 days, the full length of its slack
in this particular case, the resource loading diagram is smoothed, as
shown in Figure 9.7c. The same result would have occurred if b
were started as early as possible and task a were delayed until day 3.

8-21
 Resource Leveling (Slide 1 of 2)
 Reconsider the load diagrams of Figure 9.6a and b.
 Assume it is desired to smooth the loading of resource B, which is
particularly jagged. Both activities e and f can be delayed (e has 5
days of slack and f has 9). If we delay both for 1 day, we remove
the peak on day 20 without increasing any of the other peaks (see
Figure 9.8b).
 The change would lower usage by one unit beginning on day 21
(remember that we have already delayed f by 1 day), and increase
usage by one unit beginning on day 35, continuing to the end of
the project. This action increases peak use of B from 9 to 10 units.
 It is important to emphasize that if the network under
consideration is more complex and the number of resources to be
leveled is realistically large, a manual leveling process is out of
the question

8-22
 Methods for Resource Leveling
 Heuristic Approach :-An approach,
such as a rule of thumb, that yields a
good solution that may or may not be
optimal
 Optimization Approach :-An approach,
such as linear programming or
simulation
 Heuristic Approach while not optimal,
the schedules are very good. They take the
CPM/PERT schedule as a baseline
 They sequentially step through the
schedule trying to move resource
requirements around to level them
 Resources are moved around based
on one or more priority rules
 As soon as possible
 As late as possible
 Shortest tasks first
 Most resources first
 Minimum slack first
 Most critical followers
 Most successors
 Arbitrary
8-23
 Methods for Resource Leveling

Optimization Methods
 Finds one or more solutions
 Uses either linear programming for single solution and in combination with
simulation for multiple solutions

8-24
-
2
5

Class practice

Activity Predecesor Time(N) Time(C) Cost(N) Cost(C) C/T Left

a - 6 5 60 90 30 1
21 Days Network b
c
-
a
7
6
4
4
50
100
150
160
33.3
30
3
2
d a 7 7 30 30 - -
e b 5 4 70 85 15 1
f c 9 7 40 120 40 2
g d,e 7 4 50 230 60 3

c f

a d g

b e

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
11/16/23 -25
-
2
6

Class practice
Crashing to 20 Days
 Activities a,c, and f are on Critical Path
 a and c are the least-cost choice. We crash a because it affects
two paths
 Lower a’s normal time by one day
 It now equals the crash time and cannot be shortened further
 The critical path is unchanged
 The critical time has been lowered to 20 days
 The cost of the project is $400+30(a)= $430

11/16/23 26
-
2
7

Class practice
Activity Predecesor Time(N) Time(C) Cost(N) Cost(C) C/T Left
a - 6 5 60 90 30 1 1
20 Days b
c
-
a
7
6
4
4
50
100
150
160
33.3
30
3
2
Network d
e
a
b
7
5
7
4
30
70
30
85
-
15
-
1
f c 9 7 40 120 40 2
g d,e 7 4 50 230 60 3

c f
a d g

b e

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
11/16/23 -27
 Crashing to 19 Days

 Activities a,c, & f are still on the critical path

 a cannot be crashed any more
 c is the least-cost choice.
 Lower c’s normal time by one day.
 The critical path is unchanged
 The critical time has been lowered to 19 days
 The cost of the project is $400+ 30(a) + 30(c) = $460

11/16/23 6-28
28
 19 Days Network
Activity Predecesor Time(N) Time(C) Cost(N) Cost(C) C/T Left
a - 6 5 60 90 30 1 1
b - 7 4 50 150 33.3 3
c a 6 4 100 160 30.0 2 1
d a 7 7 30 30 - -
e b 5 4 70 85 15 1
f c 9 7 40 120 40 2
g d,e 7 4 50 230 60 3

c f
a d g

b e

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
11/16/23 6-29
 Crashing to 18 Days

 All activities are now critical. 3 paths; acf, adg, and beg
 a cannot be crashed any more. The only way to crash acf is to
crash c or f. c is cheaper.
 Regarding path adg, a and d cannot be crashed. The only way
to crash adg is to crash g
 Crashing g automatically crashes path beg.
 Crash c and g by 1 at cost of 30+60 = 90
 The critical time has been lowered to 18 days
 The cost of the project is $400+ 30(a) + 30(c2) + 60(g) = $550

11/16/23 6-30
30
-
3
1

18 Days Network
Activity Predecesor Time(N) Time(C) Cost(N) Cost(C) C/T Left
a - 6 5 60 90 30 1 1
b - 7 4 50 150 33.3 3
c a 6 4 100 160 30.0 2 2
d a 7 7 30 30 - -
e b 5 4 70 85 15 1
f c 9 7 40 120 40 2
g d,e 7 4 50 230 60 3 1

c
f
a
d g

b e

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
11/16/23 -31
-
3
2

Crashing to 17 Days

 All activities are critical

 There are three paces acf, adg, and beg
 Crash f and g by 1 at cost of 60 +40 = 100
 The critical time has been lowered to 17 days
 The cost of the project is $400+ 30(a) + 30(c2) + 60(g2)+40(f)
= $650

11/16/23 -32
-
3
3

17 Days Network
Activity Predecesor Time(N) Time(C) Cost(N) Cost(C) C/T Left
a - 6 5 60 90 30 1 1
b - 7 4 50 150 33.3 3
c a 6 4 100 160 30.0 2 2
d a 7 7 30 30 - -
e b 5 4 70 85 15 1
f c 9 7 40 120 40 2 1
g d,e 7 4 50 230 60 3 2

c
f
a
d g

b e

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
11/16/23 -33
-
3
4

Crashing to 16 Days
 We can shorten the project to 16 days by crashing f and g by another day.
 The cost of the project is $400+ 30(a) + 30(c2) + 60(g3)+40(f2) = $750
 Activities a,c,f, and g have been crashed to their limits.
 No further crashing will help so b,d, and e remain at their normal times and costs.

11/16/23 34
-
3
5

16 Days Network
Activity Predecesor Time(N) Time(C) Cost(N) Cost(C) C/T Left
a - 6 5 60 90 30 1 1
b - 7 4 50 150 33.3 3
c a 6 4 100 160 30.0 2 2
d a 7 7 30 30 - -
e b 5 4 70 85 15 1
f c 9 7 40 120 40 2 2
g d,e 7 4 50 230 60 3 3

c
f
a
d
g
b
e
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
11/16/23 -35
-
3
6

Trade-off: Cost-Time

Project Crashing

750
700
650
Project Cost

600
Example 1
550
500
450
400
15 16 17 18 19 20 21
Project Duration

11/16/23 -36
 problem 11 page 352
 Reconsider Exercise 2, assuming a Crash Crash Normal
Normal Slope
fixed overhead cost of $30 per day Time
(days)
Cost
(total)
Time
(days)
Cost (C/T)
Activity
but no project deadline. What is the A 3 500 4 300 200

least-cost crash program? What if B

C
1
4
325
550
3
7
250
400
37.5
50

the overhead cost was $40? What if D 3 250 5 150 50

it was $60?
 Solution
Iteration # Project Critical Path Activity Project Cost
Duration Crashed
1 15 B-C-D ------ =1100+15*30=1,550
2 14 B-C-D 1B =1550-30+37.5=1557.5

With overheads of $30 per day

So for an overhead of $30, it is better not to crash and keep the schedule as it
is, i.e. 15 days duration
 problem 11 page 352
 With overheads of $40 per day  With overheads of $60 per day
 Reduce the project by two days by  The optimal duration is 8 days at a cost of
crashing B. optimal project duration is 13 1,905 and the project is no longer crushable
days, costing $1,695. any attempt to crash since activities (B, C, and D) have been pushed
to their minimum durations
C, or D afterward will result in an
addition of $50 per day which
Iterat Proje Critical Activity Project Cost
outbalances the savings by reducing the ion # ct Path Crashed
Durat
overheads by $40 per day ion
1 15 B-C-D ------ =1100+15*60=2,000
2 14 B-C-D 1B =2000-60+37.5=$1,977.5
Itera Proje Critical Activity Project Cost 3 13 B-C-D 2B 1977.5+37.5-60=$1,955
tion ct Path Crashed 4 12 B-C-D 2B+D 1,955+50-60=$1,945
# Dura 5 11 B-C-D 2B+2D 1,945+50-60=$1,935
tion 6 10 B-C-D 2B+2D+C 1935+50-60=1925
1 15 B-C-D ------ =1100+15*40=1,700 7 9 B-C-D 2B+2D+2C 1925+50-60=1915
2 14 B-C-D 1B =1700-40+37.5=$1,697.5 8 8 B-C-D 2B+2D+3C 1915+50-60=$1,905
3 13 B-C-D 2B 1697.5+37.5-40=$1,695