Chapter 9

Resource Allocation

Copyright 2009 John Wiley & Sons, Inc.

Critical Path MethodCrashing 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

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

Activity Slope

Crash Cost - Normal Cost

Slope
Crash Time - Normal Time

An Example of Two-Time CPM

Table 9-1

Activity SlopesCost per Period for

Crashing

Table 9-2

Crashing the Project

Figure 9-1a

Seven Day Schedule

Figure 9-1b

Six Day Schedule

Figure 9-1c

Five Day Schedule

Figure 9-1d

Four Day Schedule

Figure 9-1e

Cost-Crash Curve

Figure 9-2

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

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

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

Resource A

Figure 9-6a

Resource B

Figure 9-6b

Resource Leveling
Less

hands-on management is
required
May be able to use just-in-time
inventory
Improves morale
Fewer personnel problems

Resource Leveling
When

Continued

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

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.

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

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

Heuristic Methods
These

Continued

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

Optimization Methods
Finds

the one best solution

Uses either linear programming or
enumeration
Not all projects can be optimized
Approaches only work with small to
medium projects

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

Standards to Measure Schedule

Effectiveness
1.
2.
3.

Schedule slippage
Resource utilization
In-process inventory

Schedule Slippage
The

time past a projects 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

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

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

Heuristic Techniques
Multi-projects

are too complex for

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

Additional Priority Rules

Resource

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

Goldratts Critical Chain

1.
2.
3.
4.
5.
6.
7.
8.

Optimism
Capacity should be equal to demand
The Student Syndrome
Multitasking to reduce idle time
Assuming network complexity makes no difference
Management cutting time to motivate workers
Game playing
Early finishes not canceling out late finishes

Required
Find the
Given
theall-normal
followingschedule
information
and cost.
Find the all-crash
regarding
a construction
scheduleproject.
and cost.
Find the total cost required to expedite all
activities from all-normal to all-crash.
Find the least-cost plan for the all-crash
time schedule.

Activity

1-2
1-3
1-4
2-5
2-6
3-6
4-5
4-7
5-7
6-7
6-8
7-8

Normal schedule
Time
(weeks)
3
4
3
5
4
8
6
10
8
5
6
7

Cost
(000)
$15
26
21
15
12
20
15
25
20
15
18
28

Crash Schedule
Time
(weeks)
1
2
2
3
2
4
4
6
5
3
3
5

Cost
(000)
$25
32
30
24
20
28
20
40
28
21
24
38