Copyright 2012 John Wiley & Sons, Inc.

Chapter 9

Resource Allocation

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Critical Path Method—Crashing a Project

Time and costs are interrelatedFaster an activity is completed, more is

the costChange the schedule and you change the

budgetThus many activities can be speeded up

by spending more money

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What is Crashing / Crunching?

To speed up, or expedite, a project Of course, the resources to do this must be

available 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

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Activity Slope

Crash Cost Normal Cost

Crash Time Normal TimeSlope

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An Example of Two-Time CPM

Table 9-1

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Activity Slopes—Cost per Period for Crashing

Table 9-2

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Crashing the Project

Figure 9-1a

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Seven Day Schedule

Figure 9-1b

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Six Day Schedule

Figure 9-1c

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Five Day Schedule

Figure 9-1d

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Four Day Schedule

Figure 9-1e

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Cost-Crash Curve

Figure 9-2

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Fast-Tracking

Fast-tracking is another way to expedite a project– Mostly used for construction projects– Can be used in other projects

Refers to overlapping design and build phases

Increases number of change orders Increase is not that large

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The Resource Allocation Problem

CPM/PERT ignore resource utilization and availability

With external resources, this may not be a problem

It is, however, a concern with internal resources

Schedules need to be evaluated in terms of both time and resources

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Time Use and Resource Use

Time limited: A project must be finished by a certain time

Resource limited: A project must be finished without exceeding some specific level of resource usage

System-constrained: A project has fixed amount of time and resources

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Resource Loading

Resource loading describes the amount of resources an existing schedule requires

Gives an understanding of the demands a project will make of a firm’s resources

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Resource A

Figure 9-6a

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Resource B

Figure 9-6b

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Resource Leveling

Less hands-on management is requiredMay be able to use just-in-time inventory Improves moraleFewer personnel problemsWhen an activity has slack, we can move

that activity to shift its resource usage

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Resource Leveling Continued

May also be possible to alter the sequence of activities to levelize resources

Small projects can be levelized by handSoftware can levelize resources for larger

projectsLarge projects with multiple resources are

complex to levelize

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Constrained Resource Scheduling

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, that yields the one best solution.

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Heuristic Methods

They are the only feasible methods used to attack large projects

While not optimal, the schedules are very good

Take the CPM/PERT schedule as a baseline

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Optimization Methods

Finds the one best solutionUses either linear programming or

enumerationNot all projects can be optimized

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Multi-Project Scheduling and Resource Allocation

Scheduling and resource allocation problems increase with more than one project

The greater the number of projects, the greater the problems

One way is to consider each project as the part of a much larger project

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Multi-Project Scheduling and Resource Allocation Continued

However, different projects have different goals so combining may not make sense

Must also tell us if there are resources to tackle the new projects we are considering

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Standards to Measure Schedule Effectiveness

Schedule slippage Resource utilization In-process inventory

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Schedule Slippage

The time past a project’s due dateSlippage may cause penaltiesDifferent projects will have different

penaltiesExpediting one project can cause others

to slipTaking on a new project can cause

existing projects to slip

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Resource Utilization

The percentage of a resource that is actually used

We want a schedule that smoothes out the dips and peaks of resource utilization

This is especially true of labor, where hiring and firing is expensive

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In-Process Inventory

This is the amount of work waiting to be processed because there is a shortage of some resource

Similar to WIP (work in progress) in manufacturing

Holding cost is incurred

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Heuristic Techniques

Multi-projects are too complex for optimization approaches

Many of the heuristics are extensions of the ones used for one project