1. Chapter 9
Resource Allocation

2. Ch #-2
Allocating Resources to the Project
 Allocation of physical resources to one or multiple
projects.
 At any given time, the firm may have fixed level of
various resources like
- labor-hours of various types of professionals
- machine hours of various types of machinery
- hours of computing time
- specialized locations
 The project schedule should be adjusted to
smooth the use of the resources

3. Critical Path Method—Crashing a
Project
 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

4. 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

5. Direct Cost vs. Indirect Cost
 Direct cost increases if the activity
duration is to be reduced.
 The Indirect cost decreases if the activity
duration is to be reduced.

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

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

8. Activity Slopes—Cost per Period for
Crashing
Table 9-2
Negative slope: as the time required for a project or task is decreased,
the cost is increased.

9. Ch #-9
Crashing the Project
When crashing a project, first task is to
develop a table or graph of the cost of a
project as a function of the project’s various
possible completion dates.
Crash selected activities, one at a time, to
decrease the project duration.

10. Ch #-10
Crashing the Project
Two principles:
•Focus on the critical path(s) when trying to
shorten the duration of a project. (Crashing
a noncritical activity will not influence project
duration.)
•When shortening a project’s duration, select
the least expensive way to do it.

11. Crashing example
1
3
2
4 6
5
D [10,8]
10
•Direct Cost – Rs. 25,500
Indirect Cost – Rs. 200/day

12. Crashing Table

13. 2
5
3
6 7
1 4
A [9,6]
210
G [5,3]
180
H [2,1]
300
Question
•Direct Cost – Rs. 37,500
Indirect Cost – Rs. 250/day

14. Solution

15. The Resource Allocation
Problem
 As discussed, 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

16. Resource Allocation
 It is 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

17. 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

18. Resource A
Figure 9-6a

19. Resource B
Figure 9-6b

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

21. 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

22. 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.

23. Heuristic Methods
 The only feasible way on large projects
 While not optimal, 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

24. 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

25. 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

26. 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

27. 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

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

29. 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

30. 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

31. 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

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

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

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