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

2. 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

3. 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

4. 8-4 Activity Slope

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

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

7. 8-7 Crashing the Project Figure 9-1a

8. 8-8 Seven Day Schedule Figure 9-1b

9. 8-9 Six Day Schedule Figure 9-1c

10. 8-10 Five Day Schedule Figure 9-1d

11. 8-11 Four Day Schedule Figure 9-1e

12. 8-12 Cost-Crash Curve Figure 9-2

13. 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

14. 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

15. 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

16. 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

17. 8-17 Resource A Figure 9-6a

18. 8-18 Resource B Figure 9-6b

19. 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

20. 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

21. 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.

22. 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

23. 8-23 Heuristic Methods Continued 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. 8-24 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. 8-25 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. 8-26 Optimization Methods Finds the one best solution Uses either linear programming or enumeration Not all projects can be optimized

27. 8-27 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 the part of a much larger project

28. 8-28 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

29. 8-29 Standards to Measure Schedule Effectiveness Schedule slippage Resource utilization In-process inventory

30. 8-30 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

31. 8-31 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

32. 8-32 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 Holding cost is incurred

33. 8-33 Heuristic Techniques Multi-projects are too complex for optimization approaches Many of the heuristics are extensions of the ones used for one project

34. 8-34 Additional Priority Rules Resource scheduling method Minimum late finish time Greatest resource demand Greatest resource utilization Most possible jobs

35. 8-35 Goldratt’s Critical Chain 1. Thoughtless optimism 2. Capacity should be equal to demand 3. The “Student Syndrome” 4. Multitasking to reduce idle time

36. 8-36 Goldratt’s Critical Chain Continued 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