Chapter 9

Resource
Allocation

Copyright 2012 John Wiley & Sons, Inc.

Critical Path MethodCrashing 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
8-2

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
8-3

Activity Slope

Crash Cost Normal Cost

Slope
Crash Time Normal Time

8-4

An Example of Two-Time CPM

Table 9-1

8-5

Activity SlopesCost per Period for

Crashing

Table 9-2

8-6

Crashing the Project

Figure 9-1a

8-7

Seven Day Schedule

Figure 9-1b

8-8

Six Day Schedule

Figure 9-1c

8-9

Five Day Schedule

Figure 9-1d

8-10

Four Day Schedule

Figure 9-1e

8-11

Cost-Crash Curve

Figure 9-2

8-12

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
8-13

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
8-14

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
8-15

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 firms resources

8-16

Resource A

Figure 9-6a

8-17

Resource B

Figure 9-6b

8-18

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

8-19

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
8-20

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 An approach, such as

Approach
linear programming, that
yields the one best
solution.
8-21

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

8-22

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

8-23

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
8-24

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

8-25

Optimization Methods
Finds

the one best solution

Uses either linear programming or
enumeration
Not all projects can be optimized

8-26

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

8-27

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

8-28

Standards to Measure Schedule

Effectiveness

Schedule slippage
Resource utilization
In-process inventory

8-29

Schedule Slippage
The

time past a projects 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
8-30

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

8-31

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
Holding cost is incurred

8-32

Heuristic Techniques
Multi-projects

are too complex for

optimization approaches
Many of the heuristics are extensions of
the ones used for one project

8-33

Additional Priority Rules

Resource

scheduling method
Minimum late finish time
Greatest resource demand
Greatest resource utilization
Most possible jobs

8-34

Goldratts Critical Chain

1.
2.
3.
4.

Thoughtless optimism
Capacity should be equal to demand
The Student Syndrome
Multitasking to reduce idle time

8-35

Goldratts Critical Chain Continued

5.
6.
7.
8.

Assuming network complexity makes no

difference
Management cutting time to motivate
workers
Game playing
Early finishes not canceling out late
finishes
8-36