TM%20665%20Project%20Planning%20

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TM 665Project Planning Control Dr. Frank
Joseph Matejcik
4th Session 2/14/05 Chapter 9 Resource
Allocation File 1

• South Dakota School of Mines and Technology,
  Rapid City

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Agenda New Assignment

• http//its.sdsmt.edu/Distance/New is the
  streaming site.
• a free program at http//www.flashget.com/ saves
  streams
• New Assignment Chap. 9 problems 3, 5
• Calendar
• M M (9 Resource Allocation)

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Tentative Schedule
Chapters Assigned Chapters 17-Jan Holiday
28-Mar Holiday 24-Jan 1 p24 questions
04-Apr 4 31-Jan 2 Prob 3-7 p93
11-Apr 5,6(start) 07-Feb 8prob12, MS
Project18-Apr 6, 7 14-Feb 9 prob 3, 5
25-Apr 11-13 21-Feb Holiday
02-May Final 28-Feb Test 07-Mar Break 1
4-Mar 10 21-Mar 3
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Resource Allocation

• Some definitions
• Resource allocation, loading, leveling
• Expediting and crashing projects
• Goldratts Critical Chain

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Some Definitions

• Resource allocation permits efficient use of
  physical assets
• Within a project, or across multiple projects
• Drives both the identification of resources, and
  timing of their application
• There are generally two conditions
• Normal
• Crashed

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Normal and Crashing

• Normal Most likely task duration, like m in
  Chapter 8
• Crash Expedite an activity, by applying
  additional resources
• Specialized or additional equipment
• More people (e.g., borrowed staff, temps)
• More hours (e.g., overtime, weekends)

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No Free Lunch Crashing Creates a Ripple Effect

• Crashing buys time, but nothing comes free
• Potential cost areas
• Additional equipment/material
• Extra labor
• Negative effects on other projects
• Reduced morale, from excessive hours/shifts
• Lower quality, from the pressure of time,
  inexperienced and tired staff
• If you want it bad, youll get it bad . . .

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Case Architectural Associates, Inc.

• Projects uniformly run late, thus over budget
• Is that the problem, or just the symptom?

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Case Architectural Associates, Inc. (contd)

• PROBLEM Deterministic task schedules cause
  workers to plan to meet schedule nothing more,
  nothing less
• Parkinsons Law Work expands to fill the time
  available.
• RESULT Issues arising early in each task can be
  worked around, but late-occurring issues cant be
  absorbed in schedule
• And most issues do arise late

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Case Architectural Associates, Inc. (concluded)

• The Solution
• Use probabilistic time estimates (optimistic,
  pessimistic, most likely)
• Have staff schedule work for effectiveness and
  efficiency, not just to fill x-number of days

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Critical Path Method - Crashing a Project

• CPM includes a way of relating the project
  schedule to the level of physical resources
  allocated to the project
• This allows the project manager to trade time for
  cost, or vice versa
• In CPM, two activity times and two costs are
  specified, if appropriate for each activity

Section 9-1
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Critical Path Method - Crashing a Project

• Careful planning is critical when attempting to
  expedite (crash) a project
• Expediting tends to create problems and the
  solution to one problem often creates several
  more problems that require solutions
• Some organizations have more than one level of
  crashing

Section 9-1
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When Trying to Crash a Project . . .

• Two basic principles
• 1. Generally, focus on the critical path
• Usually not helpful to shorten non-critical
  activities
• Exception When a scarce resource is needed
  elsewhere, e.g., in another project
• 2. When shortening project duration, choose
  least expensive way to do it

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Compute Cost per Day of Crashing a Project

• Compute cost/time slope for each expeditable
  activity
• Slope crash cost normal cost
  crash time normal time

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An Example (Table 9-1)
Partial crashing allowed Partial crashing
not allowed
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Example (contd) Cost per Day to Crash (Table
9-2)
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A CPM Example, Figure 9-1

Figure 9-1
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CPM Cost-Duration, Figure 9-2
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Another Approach to Expediting
Fast-tracking/Concurrency

• Different terms for similar concept
• Fast-tracking (construction), Concurrent
  engineering (manufacturing)
• Both refer to overlapping project phases
• E.g., design/build, or build/test

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Fast-tracking/Concurrency (contd)

• Pros
• Can shorten project duration
• Can reduce product development cycles
• Can help meet clients demands
• Cons
• Can increase cost through redesigns, excessive
  changes, rework, out-of-sequence installation,
  and more

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The 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
• Time itself is always a critical resource in
  project management, one that is unique because
  it can neither be inventoried nor renewed

Section 9-2
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The 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 managers
  success in project management is the skill with
  which the trade-offs among performance, time,
  and cost are managed

Section 9-2
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The Resource Allocation Problem

• The extreme points of the relationship between
  time use and resource use are these
• 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 LimitedThe project must be finished as
  soon as possible, but without exceeding some
  specific level of resource usage or some general
  resource constraint

Section 9-2
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Cost, Schedule, or Performance Pick Any Two .
. .

• Assuming fixed performance specifications,
  tradeoff areas must be in time or cost
• Time-limited or resource-limited
• If all three dimensions are fixed, the system is
  overdetermined
• Normally, no tradeoffs are possible
• But, something has to give . . .

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Resource Loading

• Resource loading types and quantities of
  resources, spread by schedule across specific
  time periods
• One project, or many
• Identifies and reduces excess demands on a firms
  resources

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Resource Usage Calendar, Figure 9-3
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AOA Network, Figure 9-4
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Modified PERT/CPM AOA, Figure 9-5
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Resource Leveling

• Resource leveling minimizes period-by-period
  variations in resource loading, by shifting tasks
  within their slack allowances
• Advantages
• Less day-to-day resource manipulation needed
• Better morale, fewer HR problems/costs
• Leveling resources also levels costs, simplifies
  budgeting and funding

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Resource Leveling

• When resources are leveled, the associated costs
  also tend to be leveled
• The project manager must be aware of the cash
  flows associated with the project and of the
  means of shifting them in ways that are useful to
  the parent firm
• Resource leveling is a procedure that can be used
  for almost all projects, whether or not
  resources are constrained

Section 9-4
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Load Diagrams, Figure 9-6
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Network Before and After Resource Loading, Figure
9-7
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Load Diagrams, Figure 9-8
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Resource Loading Chart, Figure 9-9
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Constrained Resource Scheduling

• Two basic approaches
• Heuristic
• Rule-based, rules of thumb
• Priority rules, tie-breakers
• Optimization
• Not finding an answer that works, but the best
  answer

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Heuristic Methods

• Heuristic approaches to constrained resource
  scheduling problems are in wide, general use for
  a number of reasons
• 1. They are the only feasible methods of
  attacking the large, nonlinear, complex problems
  that tend to occur in the real world of project
  management
• 2. While the schedules that heuristics generate
  may not be optimal, they are usually quite good-
  certainly good enough for most purposes

Section 9-5
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Heuristic Methods

• Most heuristic solution methods start with the
  PERT/CPM schedule and analyze resource usage
  period by period, resource by resource
• In a period when the available supply of a
  resource is exceeded, the heuristic examines the
  tasks in that period and allocates the scarce
  resource to them sequentially, according to
  some priority rule
• Technological necessities always take precedence

Section 9-5
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Heuristic Methods

• 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 (Organizational Priority)

Section 9-5
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Heuristic Methods

• Most priority rules are simple adaptations of the
  heuristics used for the traditional job shop
  scheduling problem of production/operations
  management
• Most heuristics use a combination of rules a
  primary rule, and a secondary rule to break ties
• As the scheduling heuristic operates, one of two
  events will result
• The routine runs out of activities before it runs
  out of resources
• The routine runs out of resources before all
  activities have been scheduled

Section 9-5
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Optimizing Methods

• The methods to find an optimal solution to the
  constrained resource scheduling problem fall into
  two categories
• Mathematical programming
• Enumeration
• Mathematical programming can be thought of as
  linear programming (LP) for the most part

Section 9-5
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Optimizing Methods

• Linear programming is usually not feasible for
  reasonably large projects where there may be a
  dozen resources and thousands of activities
• In the late 1960s and early 1970s, limited
  enumeration techniques were applied to the
  constrained resource problem
• Tree search, and branch and bound methods were
  devised to handle up to five resources and 200
  activities

Section 9-5
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Multiproject Scheduling and Resource Allocation

• The most common approach to scheduling and
  allocating resources to multiple projects is to
  treat the several projects as if they were each
  elements of a single large project
• Another way of attacking the problem is to
  consider all projects as completely independent
• To describe such a system properly, standards
  are needed by which to measure scheduling
  effectiveness

Section 9-6
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Multiproject Scheduling and Resource Allocation

• Three important parameters affected by project
  scheduling are
• Schedule slippage
• Resource utilization
• In-process inventory
• The organization (or the project manager) must
  select the criterion most appropriate for its
  situation

Section 9-6
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Multiproject Scheduling and Resource Allocation

• Schedule slippage, often considered the most
  important of the criteria, is the time past a
  projects due date or delivery date when the
  project is completed
• Resource utilization is of particular concern to
  industrial firms because of the high cost of
  making resources available
• The amount of in-process inventory concerns the
  amount of work waiting to be processed because
  there is a shortage of some resource

Section 9-6
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Multiproject Scheduling and Resource Allocation

• All criteria cannot be optimized at the same time
• As usual, the project manager will have to make
  trade-offs among the criteria
• A firm must decide which criterion to evaluate
  its various scheduling and resource allocation
  options

Section 9-6
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Mathematical Programming

• Mathematical programming can be used to obtain
  solutions to certain types of multiproject
  scheduling problems
• These procedures determine when an activity
  should be scheduled, given resource constraints
• Mathematical programming, however, is rarely
  used in project management to handle the
  multiproject problem (mostly, heuristics are
  used)

Section 9-6
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Mathematical Programming

• The three most common objectives of mathematical
  programming are
• 1. Minimum total throughput time (time in the
  shop) for all
  projects
• 2. Minimum total completion time for all
  projects
• 3. Minimum total lateness or lateness penalty
  for all projects
• These objectives are most appropriate for job
  shop solutions to resource constraints

Section 9-6
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Heuristic Techniques

• There are scores of different heuristic-based
  procedures in existence
• They represent rather simple extensions of
  well-known approaches to job-shop scheduling
• Resource Scheduling Method
• Minimum late finish time
• Greatest resource demand
• Greatest resource utilization
• Most possible jobs

Section 9-6