MANAGING PROJECT

RESOURCES
 Project Crashing
The process of accelerating a project is
referred as crashing.
Crashing a project relates to resource
commitment; the more resources expended, the
faster the project will finish.
There are several reasons to crash a project:
Initial schedule was too optimistic
Market needs change and the project is in demand
earlier than anticipated
The project has slipped considerably behind
schedule
There are contractual late penalties
 Project Crashing
Principal methods for crashing are:
Improving existing resources’ productivity
Changing work methods
Increasing the quantity of resources
Increasing the quantity of resources is the
most commonly used method for project
crashing. There are 2 approaches:
Working current resources for longer hours
(overtime, weekend work, etc.)
Adding more personnel
 Project Crashing
Fully expedited (no expense is spared)
Crash
Point

Crashed

Cost

Normal
Point

Normal

Crashed Normal

Activity Duration

Time-Cost Trade-Offs for Crashing Activities

 Project Crashing
In analyzing crash options, the goal is to find
the point at which time and cost trade-offs are
optimized.

Various combinations of time-cost trade-offs

for crash options can be determined by using
the following formula:

Slope = crash cost – normal cost

normal time – crash time
 Project Crashing Example
SUPPOSE:
NORMAL ACTIVITY DURATION = 8 WEEKS
NORMAL COST = $14,000
CRASHED ACTIVITY DURATION = 5 WEEKS
CRASHED COST = $23,000
THE ACTIVITY COST SLOPE =
23,000 – 14,000 OR $9,000 = $3,000 per week
8–5 3

Cease crashing when

the target completion time is reached
the crash cost exceeds the penalty cost
 Project Crashing Example
Normal Crashed
Activity Duration Cost Duration Cost
A 4 days $1,000 3 days $2,000
B 5 days $2,500 3 days $5,000
C 3 days $750 2 days $1,200
D 7 days $3,500 5 days $5,000
E 2 days $500 1 day $2,000
F 5 days $2,000 4 days $3,000
G 9 days $4,500 7 days $6,300

a) Calculate the per day costs for crashing each activity

b) Which are the most attractive candidates for crashing?
Why?
 Project Crashing Example

Activity Per Day Cost

A $1,000
B $1,250
C $450
D $750
E $1,500
F $1,000
G $900
 Project Crashing Example
Normal Crashed
Activity Cost Duration Extra Duration
Cost
A 5,000 4 weeks 4,000 3 weeks
B* 10,000 5 weeks 3,000 4 weeks
C 3,500 2 weeks 3,500 1 week
D* 4,500 6 weeks 4,000 4 weeks
E* 1,500 3 weeks 2,500 2 weeks
F 7,500 8 weeks 5,000 7 weeks
G* 3,000 7 weeks 2,500 6 weeks
H 2,500 6 weeks 3,000 5 weeks

When deciding on whether or not to crash project activities,

a project manager was faced with the following information.
Activities of the critical path are highlighted with an asterisk:
Project Crashing Example

The correct sequence for crashing activities

is listed as:
1. Activity E or G (they both cost
$2,500 more)
2. Activity E or G
3. Activity B
4. Activity D
 Project Crashing Example
Suppose project overhead costs accrued at a fixed rate of $500 per
week.
Assume that a project penalty clause kicks in after 19 weeks.
The penalty charged is $5,000 per week.

Duration Direct Penalties Overhead Total

Costs
21 weeks 37,500 10,000 10,500 58,000

20 weeks 40,000 5,000 10,000 55,000

19 weeks 42,500 -0- 9,500 52,000

18 weeks 45,500 -0- 9,000 54,000

16 weeks 49,500 -0- 8,000 56,500

 Resource Allocation Problem
A shortcoming of most scheduling procedures
is that they do not address the issues of
resource utilization and availability.

Scheduling procedures tend to focus on time

rather than physical resources.
 Resource Allocation Problem
Schedules should be evaluated not merely in
terms of meeting project milestones, but also in
terms of the timing and use of scarce
resources.

A fundamental measure of the project

manager’s success in project management is
the skill with which the trade-offs among
performance, time, and cost are managed.

“I can shorten this project by 1 day at a cost of

$400. Should I do it?”
 Resource Allocation Problem
The extreme points of the relationship between
time use and resource use are the following:
Time Limited: The project must be
finished by a certain time, using as few
resources as possible. But it is time, not
resource usage, that is critical
Resource Limited: The project must be
finished as soon as possible, but without
exceeding some specific level of resource
usage or some general resource constraint
 Resource Loading
Resource loading describes the amounts of
individual resources an existing schedule
requires during specific time periods.

The loads (requirements) of each resource

type are listed as a function of time period.

Resource loading gives a general

understanding of the demands a project or set
of projects will make on a firm’s resources.
 Resource Loading
The project manager must be aware of the
flows of usage for each input resource
throughout the life of the project.

It is the project manager’s responsibility to

ensure that the required resources, in the
required amounts, are available when and
where they are needed.
Resource Loading Table
 Resource Leveling (Smooting)
Resource leveling aims to minimize the
period-by-period variations in resource loading
by shifting tasks within their slack allowances.
The purpose is to create a smoother
distribution of resource usage.
Resource leveling, referred to as resource
smoothing, has two objectives:
To determine the resource requirements so that
they will be available at the right time,
To allow each activity to be scheduled with the
smoothest possible transition across usage levels.
 Resource Leveling (Smooting)
Resource management is a multivariate,
combinatorial problem, i.e. multiple solutions
with many variables, the mathematically optimal
solution may be difficult or infeasible.

More common approach to analyzing

resource leveling problems is to apply some
resource leveling heuristics.
 Resource Leveling Heuristics
Prioritizing resource allocation include
applying resources to activities:
with the smallest amount of slack
with the smallest duration
that start earliest
with the most successor tasks
requiring the most resources
 Resource Leveling Steps
Create a project activity network diagram
Create a table showing the resources required
for each activity, durations, and the total float
available
Develop a time-phased resource loading table
Identify any resource conflicts and begin to
smooth the loading table using one or more
heuristics
Resource Leveling Example

Critical path:A-C-F-H-K
Resource Leveling Example

Critical path:A-C-F-H-K
 Resource Leveling Example
Activity Duration Total Float Resource Hours Needed Total Resources
Per Week Required
A 5 0 6 30
B 4 1 2 8
C 5 0 4 20
D 6 3 3 18
E 6 1 3 18
F 6 0 2 12
G 4 3 4 16
H 7 0 3 21
I 5 3 4 20
J 3 5 2 6
K 5 0 5 25
Total 194
Resource Leveling Example
12

10
Resource Requirements

0
1 3 5 7 9 11 13 15 17 19 21 23 25 27
Project Days
 Resource Leveling Example
On day 10 the required resource hours is 10
If project is budgetted for up to 10 resource
units per day, then it is acceptable.
C, D, and E are all scheduled on this day and
have require 4, 3, and 3 hours respectively
Which activity should be adjusted?
C is on the critical path
E has 1 day slack
D has 3 days of slack (we can split the
activity)
Resource Leveling Example
 Resource Loading Chart
Another way to create a visual diagram of
resource management problem is to use
resource-loading charts.
Resource conflicts can be seen in the
resource-loading charts.
They are used to display the amount of
resources required as a function of time on a
graph.
Each activity’s resource requirements are
represented as a block (resource requirement
over time).
 Resource Loading Chart
Resource limit is set at 8 hourly units per day.
Display the amount of resources required as a function of
time.

4 B 5 5 D 9 9 E 11
Res = 2 Res = 7 Res = 3

1. Start with a
0 A 4 network diagram
Res = 6 11 F 12
Res = 6
4 C 7
Res = 2
 Resource Loading Chart
Activity Resource Duration ES Slack LF

A 6 4 0 0 4
B 2 1 4 0 5
C 2 3 4 4 11
D 7 4 5 0 9
E 3 2 9 0 11
F 6 1 11 0 12

2. Produce a table that shows the

duration, early start, late finish,
slack, and resource(s) required for
each activity.
 Resource Loading Chart
3. Draw an initial loading chart with
8 each activity scheduled at its ES.
Resources

6
Resource
4 imbalance
A D F
B
2 E
C

2 4 6 8 10 12 14
Project Days
 Resource Loading Chart
4. Rearrange activities within their slack
to create a more level profile. Splitting
8 C creates a more level project.
Resources

4 C
A D F
B
2 E
C

2 4 6 8 10 12 14
Project Days
Resource Loading Chart
 Critical Chain Project Management
Critical Chain Project Management (CCPM), which
was developed and publicized by Dr. Eliyahu M.
Goldratt (1997) in his book Critical Chain, is a novel
approach for managing projects.
Goldratt is well known in the operations management
community as the inventor of the Theory of Constraints
(TOC).
TOC is a tool for managing repetitive production
systems based on the principle that every system has a
constraint, and system performance can only be
improved by enhancing the performance of the
constraining resource.
 Critical Chain Project Management
CCPM identifies the critical chain as the set of
tasks that results in the longest path to project
completion after resource leveling.
 CCPM is the same as conventional project
management except for the terminology "critical
chain", which would otherwise be called the
"leveled critical path".
 Critical Chain Project Management
CCPM planning consists of recalculating the project
schedule based on shortened task duration estimates.
 The rationale for shortening the original duration estimates
is as follows:
all tasks in the project are subject to some degree of
uncertainty
when asked to provide an estimate of the duration, the task
owner adds a safety margin in order to be almost certain of
completing the task on time. This means that, in general, task
durations are overestimated
In most cases, the task will not require the entire amount of
safety margin and should be completed sooner than scheduled
Because the safety margin is internal to the task, if it is not
needed, it is wasted.
 Critical Chain Project Management
For project plan execution, CCPM prescribes the
following principles:

 Resources working on critical chain tasks are

expected to work continuously on a single task at a
time. They do not work on several tasks in parallel or
suspend their critical tasks to do other work
Resources are to complete the task assigned as
soon as possible, regardless of scheduled dates
 Critical Chain Project Management
If the task is completed ahead of schedule, work on
its successor is to begin immediately. If the task
successor utilizes a critical resource for which a
resource buffer has been defined, advance warning is
provided to that resource at the point in time where
the resource buffer begins
If the task is completed past its planned completion
date, as shown on the CCPM schedule, this is no
reason for immediate concern, as the buffer will
absorb the delay.

Source: http://en.wikipedia.org/wiki/Critical_chain