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Resource Allocation and Project Crashing for Efficient Project Management

Learn about resource allocation and project crashing techniques to optimize the use of physical resources and expedite project completion while minimizing costs.

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Resource Allocation and Project Crashing for Efficient Project Management

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  1. Chapter 8 Resource Allocation

  2. Allocating Resources to the Project Allocation of physical resources to one or multiple projects. At any given time, the firm may have fixed level of various resources like - labor-hours of various types of professionals - machine hours of various types of machinery - hours of computing time - specialized locations The project schedule should be adjusted to smooth the use of the resources

  3. Crashing a Project Time and cost are interrelated The faster an activity is completed, the more it costs Change the schedule and you change the budget Thus many activities can be speeded up by spending more money

  4. 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

  5. Crashing an activity refers to the speeding up or shortening of the duration of an activity by using additional resources. These include overtime, hiring temporary staff, renting more efficient equipment, and other measures. Project crashing refers to the process of shortening the duration of the project by crashing the duration of a number of activities. Since it generally results in an increase of the overall project costs, the challenge faced by the project manager is to identify the activities to crash and the duration reduction for each activity such that as the project crashing is done in the least expensive manner possible.

  6. Direct Cost vs. Indirect Cost • Direct cost increases if the activity duration is to be reduced. • The Indirect cost decreases if the activity duration is to be reduced.

  7. Activity Cost Slope

  8. An Example of Two-Time CPM

  9. Activity Slopes—Cost per Period for Crashing Negative slope: as the time required for a project or task is decreased, the cost is increased.

  10. Crashing the Project Figure 9-1a

  11. Seven Day Schedule Figure 9-1b

  12. Six Day Schedule Figure 9-1c

  13. Five Day Schedule Figure 9-1d

  14. Four Day Schedule Figure 9-1e

  15. Cost-Crash Curve Figure 9-2

  16. Crashing the Project When crashing a project, first task is to develop a table or graph of the cost of a project as a function of the project’s various possible completion dates. Crash selected activities, one at a time, to decrease the project duration.

  17. Crashing the Project • Two principles: • Focus on the critical path(s) when trying to shorten the duration of a project. (Crashing a non-critical activity will not influence project duration.) • When shortening a project’s duration, select the least expensive way to do it.

  18. Question 1 (Crashing example) Direct Cost – Rs. 25,500Indirect Cost – Rs. 200/day D [10,8] 10 5 2 G [6,6] 0 A [5,3] 50 E [22,19] 75 H [10,8] 250 6 B [25,15] 100 4 1 F [7,5] 90 C [8,7] 120 3 The above figure gives data on normal time and cost and crash time and cost for a project. (a) What is the normal project duration and associated cost? (g) Crash the relevant activities systematically and determine the optimum project time and crashing cost.

  19. Step 1. Identify critical path Step 2. Rank activity on critical path according to crash costs. A – 50 (Lowest) can be crashed by 2 days E – 75 H – 250

  20. Step 3: Now there are 2 critical paths : AEH & BHRank activity on critical paths according to crash costs. A – 50 (can’t be crashed) B-100 E – 75 H-250 H – 250 Activities B & E (100+75) can be crashed by 3 days.

  21. Step 4: Again there are 2 critical paths : AEH & BHRank activity on critical paths according to crash costs. A – 50 (can’t be crashed) B-100 E – 75 (can’t be crashed) H-250 H – 250 Activities H (250) can be crashed by 2 days.

  22. Step 5 Step 6: Again there are 2 critical paths : AEH & BHRank activity on critical paths according to crash costs. A – 50 (can’t be crashed) B-100 E – 75 (can’t be crashed) H-250 H – 250 (can’t be crashed) No further crashing is possible.

  23. Crashing table

  24. Question 2 The normal time, crash time and crashing cost per day are given for the following network: Activity Event Normal Time Crash Time Crashing Cost (Days) (Days) (Rs./day) A 1-2 18 14 40 B 1-3 23 22 20 C 2-3 8 5 60 D 2-4 10 6 40 E 3-4 3 2 80 F 4-5 8 6 50 (i) Find AOA network. (ii) Crash the project duration in steps and arrive at the minimum duration. What will be the min. duration and the cost of crashing? (iii) If there is a direct cost of Rs. 10,000 & an indirect cost of Rs. 70 per day, what will be the optimal project duration and associated cost of crashing?

  25. Solution Q2 (Crashing example) Direct Cost – Rs. 10,000 Indirect Cost – Rs. 70/day 2 A 18 D 10 F 8 5 C 8 4 1 E 3 B 23 3 Paths: 1. ACEF -37 Days 2. BEF -34 Days 3. ADF -36 Days

  26. Step 1. Identify critical path Step 2. Rank activity on critical path according to crash costs. A – 40 (Lowest) can be crashed by 3 days C – 60 E – 80 F – 50

  27. Step 3: Now there are 2 critical paths : ACEF & BEF.Rank activity on critical paths according to crash costs. A – 40 B – 20 C – 60 E – 80 E – 80 F – 50 F – 50 Activity F (50) can be crashed by 2 days.

  28. Step 4: Again there are 2 critical paths : ACEF & BEF Rank activity on critical paths according to crash costs. A – 40 B – 20 C – 60 E – 80 E – 80 F – 50 (can’t be crashed) F – 50 (can’t be crashed) Activities A+ B (40+20) can be crashed by 1 day.

  29. Step 5 Step 6: Again there are 2 critical paths : ACEF & BEF Rank activity on critical paths according to crash costs. A – 40 (can’t be crashed) B – 20 (can’t be crashed) C – 60 E – 80 E – 80 F – 50 (can’t be crashed) F – 50 (can’t be crashed) Activities E(80) can be crashed by 1 day.

  30. Step 7 Step 8: Now there are 3 critical paths : ACEF, ADF & BEF.Rank activity on critical paths according to crash costs. A – 40 (can’t be crashed) B – 20 (can’t be crashed) A – 20 (can’t be crashed) C – 60 E – 80 (can’t be crashed) D – 20 E – 80 (can’t be crashed) F – 50 (can’t be crashed) F – 20 (can’t be crashed) F – 50 (can’t be crashed) No further crashing is possible.

  31. Crashing table

  32. Solution Q2 (Crashing example) Ans.: (ii) Min. Duration is 30 days & total cost is Rs. 12460. (iii) Optimum Duration is 31 days & total cost is Rs. 12450.

  33. Question 3 The above figure gives data on normal time and cost and crash time and cost for a project. Crash the relevant activities systematically and determine the optimum project time and crashing cost. 3 E [8,6] 120 D [8,7] 100 H [2,1] 300 F [10,5] 50 G [5,3] 180 A [9,6] 210 6 7 4 1 2 C [10,9] 180 B [9,5] 50 5 • Direct Cost – Rs. 37,500Indirect Cost – Rs. 250/day

  34. Crashing table

  35. Question 4: Indirect cost: Rs. 100/day The above table gives data on normal time and cost and crash time and cost for a project. (a) What is the normal project duration and associated cost? (g) Crash the relevant activities systematically and determine the optimum project time and crashing cost.

  36. Risks in Project Crashing Various external and internal factors may lead project manager to go for crashing, but it usually affects the quality of work as the time taken (besides cost) is the major issue on his mind: • New resources aren't going to be familiar with the tasks at hand, so they will probably be less productive than current team members. • Who will guide the new members up the learning curve? Usually it will be the most productive members of the team, who could themselves be working to get the task finished more quickly. • Being available does not equal being qualified. For example, while outsourcing, one can't be sure that workers are trained enough to deliver as per expected standards.

  37. Project Fast Tracking • Fast tracking means that the activities that are normally done in sequence are instead performed partially in parallel. In other words, Fast tracking is applied by re-scheduling various activities within the project to be worked on simultaneously instead of waiting for each piece to be completed separately.  • Fast-tracking always involves risk that could lead to increased cost and some rework later. • A good rule of thumb is that sequential activities can sometimes be fast-tracked by up to 33%. In other words, if you're fast-tracking, you can start the second of two sequential activities when the first activity is 66% complete.

  38. The Resource Allocation Problem As discussed, CPM/PERT ignore resource utilization and availability Critical resources can’t be renewed or inventoried. Schedules need to be evaluated in terms of both time and resources (scarce ones) Time Limited vs. Resource Limited

  39. 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

  40. Resource A

  41. Resource B

  42. Resource Leveling Approach to even out the peaks and valleys of resource requirements so that a fixed amount of resources can be employed over time. Less hands-on management is required May be able to use just-in-time inventory Improves morale Fewer personnel problems

  43. Resource Leveling Continued When an activity has slack, we can move that activity to shift its resource usage 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 very complex to levelize

  44. Resource Leveling Steps Create a project activity network diagram and mention the duration of the activities Calculate EOT (Earliest occurrence time) for all the events. This helps in calculation of float/ slack of activities Develop a time-phased resource loading diagram Identify any resource conflicts and begin to smooth the loading table using slacks

  45. Resource Leveling Techniques Shift the start date of an activity within its slack time Splitthe activity within its slack time

  46. Resource Leveling Example: Q: Reduce the peak manpower requirement and smoothen the period to period resource requirement.

  47. Solution

  48. Question: • A job requires the following resources: • Scenario 1: Six crane operators have been recruited for the job. How would you manage the job so as to complete it at the earliest? • Scenario 2: Six crane operators have been recruited for the job, but one would join on the 7th day. How would you manage the job so as to complete it at the earliest?

  49. Solution – Scenario 2 • Resource loading diagram

  50. Solution contd… • Levelled

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