Article Review

1

• Article Review
• Scheduling Resources and Project Cost
• Presented by
• Joanne Hiu-Yan Pak, Ashwin Jain, Rodrigo De Lara,
  David Beyer

2
Presentation Agenda

• Purpose
• To review and understand the importance of
  scheduling resources and estimating time and
  cost as necessary activities before the start of
  a project. More specifically to present methods
  for and problems of these activities and to link
  them to a latest journal article.
• Agenda
• Review (Chapter 5, 8, 9(partial))
• Synopsis Article
• Analysis Article
• Conclusion Article

3
Scheduling Resources

• Project network times are not a schedule
• until resources have been assigned
• 2 situations
• Resources are adequate but the demand varies over
  life of the project
• -gt resource leveling / smoothing
• Resources are not adequate to meet peak demands
• -gt resource-constrained scheduling

4
Scheduling Resources
Time Constrained
Resource Constrained

• Classification of a Scheduling Problem as

• Must be completed by an imposed date
• Time is fixed
• Resources are flexible
• Additional resources are required toensure
  project meets schedule

• Must be completed withavailable resources
• Time is flexible
• Resources are fixed
• Level of resources availablecannot be exceeded

5
Scheduling Resources

• Resource Allocation Method for
• time-constrained projects
• Balancing or smoothing resource demands by using
  positive slack
• Three goals of smoothing
• Reduce peak of demand for the resource.
• Reduce resources over life ofthe project.
• Minimize fluctuation in resource demand.

• Resource Allocation Method for
• resource-constrained projects

6
Scheduling Resources
7
Scheduling Resources

• Resource Allocation Method for time-constrained
  projects
• Balancing or smoothing resource demands by using
  positive slack
• Three goals of smoothing
• Reduce peak of demand for the resource.
• Reduce resources over life ofthe project.
• Minimize fluctuation in resource demand.

• Resource Allocation Method for resource-constraine
  d projects
• Scheduling of activities requires the use of
  heuristics
• Prioritize activities by
• Minimum slack
• Smallest duration
• Lowest activity identification number

8
Scheduling Resources

• Minimum slack
• Smallest duration
• Lowest activity ID

2
2
2
2
1
1
1
1
1P
1P
3P
3P
9
Scheduling Resources
Resource allocation generally occurs in a
multiproject environment and is linked to three
common problems
Resourcebottlenecks
Overall scheduleslippage
Inefficient resourceutilization
10
Cost Estimating

• What is estimating?
• process of forecasting or approximating the time
  andcost of completing project deliverables
• Task of balancing the expectations of
  stakeholders
• Need for control while the project is implemented
• Types of estimating
• Top-Down (macro)
• Bottom-Up (micro)

11
Cost Estimating

• Macro Approaches for Estimating

Apportion Method
Ratio Methods
Consensus Methods
Learning Curves
Function point methods
12
Cost Estimating

• Micro Approaches for Estimating

Detailed Estimates for the WBS Work Packages
Parametric Procedures Applied to Specific Tasks
Phase Estimating
Template Method
13
Cost Estimating

• Several factors influence
• the quality of estimates

14
Cost Estimating

• Refining estimates
• Why?
• Interaction costs are hidden in estimates, normal
  conditions do not apply, things go wrong in
  projects and any change in the scope or plans
• Adjusting the new estimates.
• Estimates on specific activities ? adjusted as
  they become more
  defined
• A BASELINE is needed.
• Contingency Funds and Time Buffers
• Changing Baseline Schedule and Budget

15
Project Cost Overruns

• Article The Amoebic Growth of Project Costs
• In both public and private sector, projects
  always suffer massive cost overruns
• Although management already acknowledges and
  anticipates the uncertainty in projects, there is
  a high probability of unexpected events
• Surprise overruns are out of managements
  expectation
• It is just like the growth of an amoeba

16
Seven Stages of Project Expenditure

• Authors provide an analysis of many large
  projects for whose involved delay and disruptive
  claims
• They highlight Seven Stages for extraordinary
  project expenditures
• 1st stage Estimating for the bid - general
  estimation for project cost,
• set up maximum and minimum cost for
  different part of project
• 2nd stage The planning or control estimator -
  ensuring that the project follows the project
  plan and managing remaining uncertainty
• 3rd stage Unexpected growth external changes -
  contingency is required to estimate for
  additional time and cost

17
Seven Stages of Project Expenditure

• 4th stage Growing further impact of naughty
  customer and silly contractor - One or both
  parties cause change to the product, thus change
  to the project
• 5th stage Customer behavior dealing with
  inference beyond whats anticipated both
  parties do not behave the way the contractor/
  customer expect them to behave
• 6th Stage Systemicity the whole produces more
  than the sum of its part one department delay,
  lead to other departments delay (the growth of
  Amoeba)
• 7th stage Accelerating to compensate - high
  investment and sunk cost
• Lastly, they provide lessons and state that
  clients, contractors and project managers are all
  responsible

18
Time Cost

• TIME

• COST

UNCERTAINTY
19
Why and how is project cost amoebic?

• Multiple arenas that can be affected.
• Not linear, dependant on each other.
• Initially prepared for uncertainty but savings
  quickly eaten up

20
Why and how is project cost amoebic?

• For example
• Arena A - Giveaway costs
• To add value
• Arena C - Acceleration Techniques
• For the project to remain on time
• Plausible solution - Reduce the Scope
• To save time money
• But what about naughty customer
• interpreted the qualityand deliverables to
  allowfor change in scope.

21
Why and how is project cost amoebic?

• Result is the Amoeba shape
• Project costs far beyond expectationseven with
  contingencies (padding)
• Project suffers massive reworkingproblems.

22
Parallels and Divergences in Theory

• Estimating is the beginning and the root of most
  problems
• Use Macro approach to estimating because of
• Size of project
• High uncertainty
• Unstable Scope
• Use several estimators
• Bring back estimators when there are changes to
  constraints
• Eden More Realistic
• Gray More Theoretical

23
Parallels and Divergences in Theory

• Accelerating to Compensate
• The psychological NPV calculation
• Contradicting Methodology
• Fast Tracking, Adding Resources, and Scheduling
  Overtime are good means to catch up (Gray).
• Forgot about Reducing Project Scope
• Fear of losing value
• Taking back your words (leads to unhappy customer)

24
Conclusion
Resource Schedulling
Great Importance to a Project
Cost Estimations
Time Estimation
Seven Stages of Project Expenditure

• Customer behavior

• Estimating a Bid

• The planning or control estimate

• Systemicity

• Unexpected growth

• Growing further

• Accelerating to compensate

25
Amoebic Nature
Projects Orignal Shape
Transformation due to Unexpected costs
Amoebic Shape
26
Critique

• Not ground breaking theories.
• Warns against common pitfalls for largecomplex
  projects.
• More relevant as companies become projectized.

27

• Do you think their theories are sound?
• Have you experienced any of these stages inyour
  project management experience?
• Thank you for your attention.