1. Chapter 8
Resource Allocation

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

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

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. Crashing the Project
Two principles:
•Focus on the critical path(s) when trying to
shorten the duration of a project. (Crashing
a non-critical 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. Step 1
Path Normal Crashing A
by 2 day
ADG 21 19
AEH 37 35
BH 35 35
CFH 25 25

13. Step 2
Path Normal Crashing A
by 2 day
Crashing E, B
by 3 days
ADG 21 19 19
AEH 37 35 32
BH 35 35 32
CFH 25 25 25

14. Step 3
Path Normal Crashing
A by 2 day
Crashing
E, B by 3
days
Crashing H
by 2 days
ADG 21 19 19 19
AEH 37 35 32 30
BH 35 35 32 30
CFH 25 25 25 23

15. Crashing Table

16. 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

17. Solution

18. Question 1:
Events Normal Crash
Activity Time
(days)
Cost
(Rs)
Time
(days)
Cost
(Rs)
1-2 3 360 2 400
2-3 6 1440 4 1620
2-4 9 2160 5 2380
2-5 7 1120 5 1600
3-4 8 400 4 800
4-5 5 1600 3 1770
5-6 3 480 2 760
Indirect cost: Rs100/day

19. Question 2:
Normal Crash
Activity Time
(days)
Cost
(Rs)
Time
(days)
Cost
(Rs)
Slope
1-2 8 100 6 200 50
1-3 4 150 2 350 100
2-4 2 50 1 90 40
2-5 10 100 5 400 60
3-4 5 100 1 200 25
4-5 3 80 1 100 10
Indirect cost: Rs. 70/day

20. Risks in Project Crashing
Various external and internal factors may lead project
manager to go for crashing, but it usually affects the
quality of work as the time taken (besides cost) is the
major issue on his mind:
 New resources aren't going to be familiar with the tasks
at hand, so they will probably be less productive than
current team members.
 Who will guide the new members up the learning curve?
Usually it will be the most productive members of the
team, who could themselves be working to get the task
finished more quickly.
 Being available does not equal being qualified. For
example, while outsourcing, one can't be sure that
workers are trained enough to deliver as per expected
standards.

21. Project Fast Tracking
 Fast tracking means that the activities that are
normally done in sequence are instead performed
partially in parallel. In other words, Fast tracking is
applied by re-scheduling various activities within the
project to be worked on simultaneously instead of
waiting for each piece to be completed separately.
 Fast-tracking always involves risk that could lead to
increased cost and some rework later.
 A good rule of thumb is that sequential activities can
sometimes be fast-tracked by up to 33%. In other
words, if you're fast-tracking, you can start the
second of two sequential activities when the first
activity is 66% complete.

22. The Resource Allocation
Problem
 As discussed, CPM/PERT ignore resource
utilization and availability
 Critical resources can’t be renewed or
inventoried.
 Schedules need to be evaluated in terms of
both time and resources (scarce ones)
 Time Limited vs. Resource Limited

23. 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

24. Resource A

25. Resource B

26. Resource Leveling
 Approach to even out the peaks and
valleys of resource requirements so that
a fixed amount of resources can be
employed over time.
 Less hands-on management is required
 May be able to use just-in-time inventory
 Improves morale
 Fewer personnel problems

27. 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

28. Resource Leveling Steps
Create a project activity network diagram and
mention the duration of the activities
Calculate EOT( earliest occurrence time) for
all the events. This helps in calculation of float/
slack of activities
Develop a time-phased resource loading
diagram
Identify any resource conflicts and begin to
smooth the loading table using slacks

29. Resource Leveling Techniques
1. Shift the start date of an activity within its
slack time
2. Split the activity within its slack time

30. Resource Leveling Example:
Activity Duration Manpower Req.
1-2 6 8
1-3 10 4
1-4 6 9
2-3 10 7
2-4 4 6
3-5 6 17
4-5 6 6
Q: Reduce the peak manpower requirement and smoothen the period
to period resource requirement.

31. Solution

32. Question:
 A job requires the following resources:
Six crane operators have been recruited for the
job. How would you manage the job so as to
complete it at the earliest?

33. 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.

34. 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

35. 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

36. 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

37. 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

38. 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

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

40. 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

41. 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

42. 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

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

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