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Chapter 9

Resource Allocation

Copyright 2009 John Wiley & Sons, Inc.

Critical Path Method—Crashing a

 Time and cost are interrelated
 The faster an activity is completed, the
more it costs
 Change the schedule and you change
the budget
 Thus many activities can be speeded
up by spending more money

What is Crashing / Crunching?

 To speed up, or expedite, a project
 Of course, the resources to do this must be
 Crunching a project changes the schedule for
all activities
 This will have an impact on schedules for all
the subcontractors
 Crunching a project often introduces
unanticipated problems

Activity Slope Crash Cost .Normal Time .Normal Cost Slope  Crash Time .

An Example of Two-Time CPM Table 9-1 .

Activity Slopes—Cost per Period for Crashing Table 9-2 .

Crashing the Project Figure 9-1a .

Seven Day Schedule Figure 9-1b .

Six Day Schedule Figure 9-1c .

Five Day Schedule Figure 9-1d .

Four Day Schedule Figure 9-1e .

Cost-Crash Curve Figure 9-2 .

however. a concern with internal resources  Schedules need to be evaluated in terms of both time and resources . this may not be a problem  It is. CPM/PERT ignore resource utilization and availability  With external resources.The Resource Allocation Problem  As discussed.

Resource Allocation  Itis common to see the resource allocation problem in terms of manpower. but it can apply to equipment and capital as well  Resource allocation in project management is very similar to capacity planning in production management  Both the approaches to the problem and potential solutions to the problem are very similar .

Resource Loading  Resource loading describes the amount of resources an existing schedule requires  Gives an understanding of the demands a project will make of a firm’s resources .

Resource A Figure 9-6a .

Resource B Figure 9-6b .

Resource Leveling  Less hands-on management is required  May be able to use just-in-time inventory  Improves morale  Fewer personnel problems .

Resource Leveling Continued  When an activity has slack. we can move that activity to shift its resource usage  May also be possible to alter the sequence of activities to levelize resources  Small projects can be levelized by hand  Software can levelize resources for larger projects  Large projects with multiple resources are very complex to levelize .

. Optimization An approach. that yields the one best solution. such as a Approach rule of thumb. that yields a good solution that may or may not be optimal. such as Approach linear programming.Constrained Resource Scheduling Heuristic An approach.

the schedules are very good  Take the CPM/PERT schedule as a baseline  They sequentially step through the schedule trying to move resource requirements around to levelize them  Resources are moved around based on one or more priority rules .Heuristic Methods  The only feasible way on large projects  While not optimal.

Common Priority Rules  As soon as possible  As late as possible  Shortest task first  Most resources first  Minimum slack first  Most critical followers  Most successors  Arbitrary .

Heuristic Methods Continued  These are just the common ones  There are many more  The heuristic can either start at the beginning and work forwards  Or it can start at the end and work backwards .

Optimization Methods  Finds the one best solution  Uses either linear programming or enumeration  Not all projects can be optimized  Approaches only work with small to medium projects .

Multi-Project Scheduling and Resource Allocation  Scheduling and resource allocation problems increase with more than one project  The greater the number of projects. the greater the problems  One way is to consider each project as part of a much larger project  However. different projects have different goals so combining may not make sense  Must also tell us if there are resources to tackle new projects we are considering .

Schedule slippage 2. In-process inventory .Standards to Measure Schedule Effectiveness 1. Resource utilization 3.

Schedule Slippage  The time past a project’s due date when the project is completed  Slippage may cause penalties  Different projects will have different penalties  Expediting one project can cause others to slip  Taking on a new project can cause existing projects to slip .

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

In-Process Inventory  This is the amount of work waiting to be processed because there is a shortage of some resource  Similar to WIP in manufacturing  The cost here is holding cost .

Heuristic Techniques  Multi-projectsare too complex for optimization approaches  Many of the heuristics are extensions of the ones used for one project .

Additional Priority Rules  Resource scheduling method  Minimum late finish time  Greatest resource demand  Greatest resource utilization  Most possible jobs .

Multitasking to reduce idle time 5. Game playing 8. Management cutting time to “motivate” workers 7. Capacity should be equal to demand 3.Goldratt’s Critical Chain 1. Assuming network complexity makes no difference 6. The “Student Syndrome” 4. Early finishes not canceling out late finishes . Optimism 2.