Resource Allocation

9-1

Resource Allocation

Some definitions Resource allocation, loading,

leveling Expediting and crashing projects Goldratt’s “Critical Chain”

9-2

Some Definitions

Resource allocation permits efficient use of physical assets Within a project, or across multiple projects Drives both the identification of resources,

and timing of their application There are generally two conditions:

“Normal” “Crashed”

9-3

Normal and Crashing

Normal: Most likely task duration, like “m” in Chapter 8

Crash: Expedite an activity, by applying additional resources Specialized or additional equipment More people (e.g., borrowed staff,

temps) More hours (e.g., overtime, weekends)

9-4

No Free Lunch: Crashing Creates a Ripple Effect

Crashing buys time, but nothing comes free

Potential cost areas Additional equipment/material Extra labor Negative effects on other projects Reduced morale, from excessive hours/shifts Lower quality, from the pressure of time,

inexperienced and tired staff “If you want it bad, you’ll get it bad . . .”

9-5

Case: Architectural Associates, Inc.

Projects uniformly run late, thus over budget

Is that the problem, or just the symptom?

9-6

Case: Architectural Associates, Inc. (cont’d)

PROBLEM: Deterministic task schedules cause workers to plan to meet schedule – nothing more, nothing less Parkinson’s Law: “Work expands to fill the

time available.” RESULT: Issues arising early in each task

can be worked around, but late-occurring issues can’t be absorbed in schedule And most issues do arise late

9-7

Case: Architectural Associates, Inc. (concluded)

The Solution: Use probabilistic time estimates

(optimistic, pessimistic, most likely) Have staff schedule work for

effectiveness and efficiency, not just to fill x-number of days

9-8

When Trying to Crash a Project . . .

Two basic principles 1. Generally, focus on the critical path

Usually not helpful to shorten non-critical activities

Exception: When a scarce resource is needed elsewhere, e.g., in another project

2. When shortening project duration, choose least expensive way to do it

9-9

Compute Cost per Day of Crashing a Project

Compute cost/time slope for each expeditable activity

Slope = crash cost – normal cost crash time – normal time

9-10

An Example (Table 9-1)

Activity Predecessor Days(normal, crash)

Cost(normal, crash)

a - 3, 2 $40, 80

b a 2, 1 20, 80

c a 2, 2 20, 20

d* a 4, 1 30, 120

e** b 3, 1 10, 80

* Partial crashing allowed** Partial crashing not allowed

9-11

Example (cont’d): Cost per Day to Crash (Table 9-2)

Activity $ Saved/Day

a 40

b 60

c -

d 30

e 70 (2 days)

9-12

A CPM Example, Figure 9-1

9-13

CPM Cost-Duration, Figure 9-2

9-14

Another Approach to Expediting: Fast-tracking/Concurrency

Different terms for similar concept “Fast-tracking” (construction),

“Concurrent engineering” (manufacturing)

Both refer to overlapping project phases E.g., design/build, or build/test

9-15

Fast-tracking/Concurrency (cont’d)

Pros: Can shorten project duration Can reduce product development cycles Can help meet clients’ demands

Cons: Can increase cost through redesigns,

excessive changes, rework, out-of-sequence installation, and more

9-16

“Cost, Schedule, or Performance: Pick Any Two . . .”

Assuming fixed performance specifications, tradeoff areas must be in time or cost

Time-limited or resource-limited If all three dimensions are fixed,

the system is “overdetermined” Normally, no tradeoffs are possible But, something has to give . . .

9-17

Resource Loading

Resource loading: types and quantities of resources, spread by schedule across specific time periods One project, or many Identifies and reduces excess

demands on a firm’s resources

9-18

Resource Usage Calendar, Figure 9-3

9-19

AOA Network, Figure 9-4

9-20

Modified PERT/CPM AOA, Figure 9-5

9-21

Resource Leveling

Resource leveling minimizes period-by-period variations in resource loading, by shifting tasks within their slack allowances

Advantages Less day-to-day resource manipulation

needed Better morale, fewer HR problems/costs Leveling resources also levels costs,

simplifies budgeting and funding

9-22

Load Diagrams, Figure 9-6

9-23

Network Before and After Resource Loading, Figure 9-7

9-24

Load Diagrams, Figure 9-8

9-25

Resource Loading Chart, Figure 9-9

9-26

Constrained Resource Scheduling

Two basic approaches Heuristic

Rule-based, rules of thumb Priority rules, tie-breakers

Optimization Not finding an answer that works, but the

best answer

9-27

MSP Gantt with Resources, Figure 9-10

9-28

MSP Load Diagram, Showing Resource Conflict, Figure 9-11

9-29

MSP Load Diagram, Leveled, Figure 9-12

9-30

Network for Resource Load Simulation, Figure 9-13

9-31

Load Chart, Figure 9-14

9-32

Task a Decomposed, Figure9-15

9-33

Hierarchy of Gantt Charts, Figure 9-16

9-34

Sources and Uses of Resources, Figure 9-17

9-35

Project Life Cycles, Figure 9-18

9-36

Flow Diagram for SPAR-1, Figure 9-19

9-37

Goldratt’s Critical Chain

There are systemic problems that plague project schedule performance These problems are not randomly

distributed If they were random, there would be

as many projects finishing early as late

9-38

Some Systemic Causes of Late Projects

1. Thoughtless Optimism Overpromising at project start “Success-oriented” schedules Lack of management reserves

2. Setting capacity equal to demand Ignoring concepts of resource loading

and leveling

9-39

Some Systemic Causes of Late Projects (cont’d)

3. “The Student Syndrome” Delaying start of non-critical tasks Parkinson’s Law: “Work expands to

fill the time available” 4. Multitasking to reduce idle time

Switching back and forth between projects creates delays

9-40

Some Systemic Causes of Late Projects (concluded)

5. Complexity of schedule drives delay Uncertainty and complex paths join to make

trouble 6. People need reason to strive

There’s often no advantage seen to finishing early

7. Game playing E.g., lower levels pad estimates, senior

management slashes them Both can be equally arbitrary