Resource Planning, Cost Estimation and Budgeting Dr. Raghu Bista

Resources for project A resource is usually understood as manpower, materials, machines and money A project needs resources to complete its activities Resources are assumed to be unlimited in supply, but in reality it is not. It is necessary to check whether there is enough supply or not.

Resource Planning To complete project in time with minimum resource, careful planning of resource is necessary to identify the required resources Resource planning not just means estimating resource requirements but also matching with supply, getting resource at minimum possible price and meeting quality requirement

Resource Estimation Work Breakdown Structure to sub divide the project into detailed activities Estimate resource requirements of each activity of the project (material, labor, machines, money) Prepared project activity schedule, estimate resource requirement of each activity week wise, day wise.

Example If an activity of a project is to clean 100000 bricks. From past experience, a labor can clean 1000 bricks per hour. If a labor works 10 hours per day, the estimation for labor days is 100000 = 10 labor days 1000 bricks per hour × 10 working hours

The Resource/Duration Tradeoff Labor Duration Days Labor Days 10 1 5 2

Resource Estimation Cont…. Compile resource requirement for each activity on early start bar chart Compile the resource availability Draw the resource histogram Compare resource forecast with resource availability. Make corrections if resource requirement exceeds resource availability Smooth resources by moving activities with in their slack Re-schedule the planning bar chart Prepare cash requirement plan

Work Breakdown Structure Work Breakdown Structure (WBS) is a hierarchical structure to logically sub-divide all the work elements of the project into graphical presentation A project can be logically sub-divided by project phases, location, tasks, sub-contractors etc.

Work Breakdown Structure and Description for House Project Foundations 1.1.1 Wall/Roofs 1.1.2 Piping 1.2.1 H/C Water 1.2.2 Wiring 1.3.1 Fitting 1.3.2

Components of Work Breakdown Structure Description Coding Number of WBS Levels The level of details Roll-up

Uses of WBS It helps to visualize the scope of project clearly It helps to develop a complete lists of activities of the project It helps to estimate budget for the project

Example of Project Activities Expected time (weeks) to complete activities Immediate preceding activities A B C D E F G 5 weeks 2 weeks 3 weeks 4 weeks None C,D

Gantt Chart In this type of chart, the time that an activity should take is represented by horizontal line, the length of line being proportional to the duration of the activity. The activity moves from left to right and activities being listed from top to bottom.

Gantt Chart A B C Activities D E F G 1 2 3 4 5 6 7 8 9 10 11 12 13 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Weeks (Activities shown with dotted lines are non critical activities)

Compilation of resource requirement for each activity on early start barchart Activities Start Date Finish Date Resource Per week A B C D E F G 1 6 3 9 10 5 2 8 11 14 4

Barchart showing resource per week 2 2 2 2 2 A 2 2 B 4 4 4 C Activities 5 5 5 5 D 6 6 6 6 E F 2 2 2 1 1 1 1 1 G 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Weeks (Activities shown with dotted lines are non critical activities)

Resources Loading Resources loading refers to the allocation of resources to work element in a project schedule. We can load or place on a detailed schedule, resources with regard to specific tasks or the overall project. The important first step of constructing network and Gantt Charts will be incomplete until the subsequent resource assignments are made for each project activity.

Resource Loading Graph A resource loading graph is a graphical presentation of resource allocation over time Figure: Resource Loading Graph Resource Loading Time

Resource Overload and Underload When resource forecast exceeds the available resource, an overload exists and an underload is when forecast is lower than available resource An overload is an unworkable situation An underload can also be a problem

Solutions to Resource Overload Delay activities with slack and reschedule Work overtime in case of labour constraint

Resource Leveling Resource leveling refers to the proress of reducing the period to period fluctuation in resource leveling graph. Proper resource planning will facilitate a reasonably stable level of the work force. Other advantages of resource leveling include simplified resource tracking and control, lower cost of resource management

Resource Leveling Graph Resources Time

Limitation of Resource Leveling Not all resources fluctuation can be eliminated because of resource availability constraint and critical activities of project which must be completed in schedule

Crashing Project Sometimes, project needs to be completed earlier than the normal completion time because of urgency, this is called crashing project.

Reasons for Crashing Because of the urgency of the project, it needs to completed as quickly as possible The project's progress is behind the schedule. But the project must be completed in given time. So then it needs to crash the remaining activities to be in schedule.

Way to finish Activities Faster Improving the productivity of the existing resources Changing the working methods Increasing project resources which is most common

Preparation of Final Schedule Based on slack time of each activities, resource constraint and crashing opportunities, final schedule will be prepared. With this shedule resource planning should be re-arranged

Preparation of procurement plan As per the requirement of various resources, an economic procurement plan needs to be planned

Cash as Resource Cash resource of each activity is estimated totaling the price of other resources required for the activity Cash requirement planning can be made with outflow of cash with time

Estimation of Cash Resource (Examples) Activities Expected time (weeks) to complete activities Total Cost A B C D E F G 5 weeks 2 weeks 3 weeks 4 weeks Total 10000 5000 4000 20000 6000 15000 55,000

Estimation of Weekly Cash Requirement Budget (Assuming that out flow of cash is constant with time across each activity) Week Number Activities involved Weekly Outgoing Cumulative Outgoing 1 A B 2000 + 2500 4500 2 3 … …. 4 .. 14th

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