Chapter 9

1. Chapter 9 Allocating Resources to the Project Dr. AyhamJaaron

2. Critical Path Method—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

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. Types of costs Normally, crashing increases direct cost and reduces indirect costs.

5. Cost-Time Relationships in Cost Analysis

6. Activity Slope Another form of the formula is shown below, negative signs of slope only indicate that as the time of a task is decreased, the cost is increased. However, you could use any form you find suitable and the negative signs can be neglected in calculations:

7. Procedure for crashing projects • The procedure involves the following steps: • Step 1: determine the project’s critical path. • Step 2: find the activity or activities on the critical path with the lowest cost of crashing per week. • Step 3: reduce the time for this activity until: • Another path becomes critical • It cannot be further reduced. • The increase in direct costs exceeds the savings that result from shortening the project. • Step 4: repeat this procedure until the increase in direct cost is larger than the savings generated by shortening the project.

8. Example • Suppose that Glasgow Hospital is agreed to be completed in 65 weeks. The central Scotland Hospital Board imposes a penalty cost of $20000 per extra week if the hospital is not fully operational by the end of the 65 week. If the project indirect costs are $8000 per week, check the possibility of crashing the project, also calculate the net savings that can be achieved?

9. DIRECT COST AND TIME DATA FORTHE HOSPITAL PROJECT Maximum Normal Normal Crash Crash Time Cost of Time Cost Time Cost Reduction Crashing per Activity (NT) (NC) (CT) (CC) (wk) Week A 12 $ 12,000 11 $ 13,000 1 $ 1,000 B 9 50,000 7 64,000 2 7,000 C 10 4,000 5 7,000 5 600 D 10 16,000 8 20,000 2 2,000 E 24 120,000 14 200,000 10 8,000 F 10 10,000 6 16,000 4 1,500 G 35 500,000 25 530,000 10 3,000 H 40 1,200,000 35 1,260,000 5 12,000 I 15 40,000 10 52,500 5 2,500 J 4 10,000 1 13,000 3 1,000 K 6 30,000 5 34,000 1 4,000 Totals $1,992,000 $2,209,000 Glasgow hospital..crashing

10. Completion Time I 15 A 12 F 10 K 6 C 10 G 35 Start Finish B 9 D 10 H 40 J 4 E 24 Glasgow hospital network.

11. Path Expected Time (wks) A-F-K 28 A-I-K 33 A-C-G-J-K 67 B-D-H-J-K 69 B-E-J-K 43 Critical path method...

12. An Example of Two-Time CPM Table 9-1

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

14. The Resource Allocation Problem • As discussed, 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. Resource Allocation • It is common to see the resource allocation problem in terms of manpower, but it can apply to equipment and capital as well • Resource allocation in project management is very similar to capacity planning in production management • Both the approaches to the problem and potential solutions to the problem are very similar

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. Resource A Figure 9-6a

18. Resource B Figure 9-6b

19. Problem ARAMCO is the leading oil producer in the KSA, the extension for one of its main carrier pipes is necessary to promote productivity, based on the information given below develop the resources loading diagram for the labors and filters separately based on early time estimates?

20. Priorities & Sorts • The activities making up the network must be listed in order of their priority of resources allocation. • The network shows the logical sequence of activities. (predecessor and successor). • The listing of activities must therefore reflects the dependency of some activities .

21. Activities Sort Activity sort reflects the logic sequence of the network.

22. Major Sort Activity sort with ES time as Major sort

23. Allocated resources 8H A 9H 9H 9H 9H 9H 9H 9H 9H 9H B 7H 7H 7H 7H 7H C Activity 4H 4H 4H 4H E 5H 5H 5H 5H 5H D 2H 2H 2H 2H 2H 2H G 8H 8H 8H 8H F 4H H 2 4 6 12 8 10 14 16 18 20 Time

24. Resource Loading 4 8 16 16 16 16 16 13 13 13 13 7 7 7 7 7 10 8 8 8 Total Labor 16 14 Labor 12 10 8 6 4 2 2 4 6 12 8 10 14 16 18 20 24 Time Early start resources aggregation diagram (Histogram)

25. late Start Sorts Activity sort with LS time as Major sort.

26. Time 2 4 6 12 8 10 14 16 18 20 8H A 9H 9H 9H 9H 9H 9H 9H 9H 9H B 7H 7H 7H 7H 7H C 4H 4H 4H 4H E Activity 5H 5H 5H 5H 5H D 2H 2H 2H 2H 2H 2H G 8H 8H 8H 8H F 4H H 8 9 9 9 16 16 16 16 16 13 9 9 9 7 7 10 10 10 10 4 Total Labor Late start resources aggregation

27. 8 9 9 9 16 16 16 16 16 13 9 9 9 7 7 10 10 10 10 4 Total Labor 16 14 Labor 12 10 8 6 4 2 2 4 6 12 8 10 14 16 18 20 Time Late start resources aggregation diagram (Histogram)

28. Resource Leveling • Less hands-on management is required • Improves morale and efficiency. • Fewer personnel problems

29. 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

30. 8 9 9 9 16 16 16 16 16 13 9 9 9 7 7 10 10 10 10 4 Total Labor 16 14 Labor 12 10 8 6 4 2 2 4 6 12 8 10 14 16 18 20 Time 30 Early start vs Late start resources aggregation diagram (Histogram)

31. Constrained Resource Scheduling

32. Heuristic Methods • The only feasible way on large projects • While not optimal, the schedules are very good • Take the CPM/PERT schedule as a baseline • 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

33. 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

34. 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

35. Optimization Methods • Finds the one best solution • Uses linear programming • Not all projects can be optimized • Approaches only work with small to medium projects

36. 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 part of a much larger project • However, different projects have different goals so combining may not make sense • Must also tell us if there are resources to tackle new projects we are considering

37. Standards to Measure Schedule Effectiveness • Schedule slippage • Resource utilization • In-process inventory

38. Schedule Slippage • The time past a project’s due date when the project is completed • 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

39. 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

40. 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 • The cost here is holding cost