Copyright 2012 John Wiley & Sons, Inc. Chapter 9 Resource Allocation

8-2 Critical Path Method—Crashing a Project Time and costs are interrelated Faster an activity is completed, more is the cost Change the schedule and you change the budget Thus many activities can be speeded up by spending more money

8-3 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

8-4 Activity Slope

8-5 An Example of Two-Time CPM Table 9-1

8-6 Activity Slopes—Cost per Period for Crashing Table 9-2

8-7 Crashing the Project Figure 9-1a

8-8 Seven Day Schedule Figure 9-1b

8-9 Six Day Schedule Figure 9-1c

8-10 Five Day Schedule Figure 9-1d

8-11 Four Day Schedule Figure 9-1e

8-12 Cost-Crash Curve Figure 9-2

8-13 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

8-14 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

8-15 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

8-16 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

8-17 Resource A Figure 9-6a

8-18 Resource B Figure 9-6b

8-19 Resource Leveling Less hands-on management is required May be able to use just-in-time inventory Improves morale Fewer personnel problems When an activity has slack, we can move that activity to shift its resource usage

8-20 Resource Leveling Continued 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 complex to levelize

8-21 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.

8-22 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

8-23 Optimization Methods Finds the one best solution Uses either linear programming or enumeration Not all projects can be optimized

8-24 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

8-25 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

8-26 Standards to Measure Schedule Effectiveness Schedule slippage Resource utilization In-process inventory

8-27 Schedule Slippage The time past a project’s due date 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

8-28 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

8-29 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

8-30 Heuristic Techniques Multi-projects are too complex for optimization approaches Many of the heuristics are extensions of the ones used for one project