MANAGING PROJECT RESOURCES

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MANAGING PROJECT RESOURCES

  1. 1. MANAGING PROJECT RESOURCES
  2. 2. Project Crashing <ul><li>The process of accelerating a project is referred as crashing . </li></ul><ul><li>Crashing a project relates to resource commitment; the more resources expended, the faster the project will finish . </li></ul><ul><li>There are several reasons to crash a project: </li></ul><ul><ul><li>Initial schedule was too optimistic </li></ul></ul><ul><ul><li>Market needs change and the project is in demand earlier than anticipated </li></ul></ul><ul><ul><li>The project has slipped considerably behind schedule </li></ul></ul><ul><ul><li>There are contractual late penalties </li></ul></ul>
  3. 3. Project Crashing <ul><li>Principal methods for crashing are: </li></ul><ul><ul><li>Improving existing resources’ productivity </li></ul></ul><ul><ul><li>Changing work methods </li></ul></ul><ul><ul><li>Increasing the quantity of resources </li></ul></ul><ul><li>Increasing the quantity of resources is the most commonly used method for project crashing. There are 2 approaches: </li></ul><ul><ul><li>Working current resources for longer hours (overtime, weekend work, etc.) </li></ul></ul><ul><ul><li>Adding more personnel </li></ul></ul>
  4. 4. Project Crashing Time-Cost Trade-Offs for Crashing Activities Fully expedited (no expense is spared)
  5. 5. Project Crashing <ul><li>In analyzing crash options, the goal is to find the point at which time and cost trade-offs are optimized. </li></ul><ul><li>Various combinations of time-cost trade-offs for crash options can be determined by using the following formula: </li></ul>Slope = crash cost – normal cost normal time – crash time
  6. 6. Project Crashing Example <ul><li>SUPPOSE: </li></ul><ul><ul><li>NORMAL ACTIVITY DURATION = 8 WEEKS </li></ul></ul><ul><ul><li>NORMAL COST = $14,000 </li></ul></ul><ul><ul><li>CRASHED ACTIVITY DURATION = 5 WEEKS </li></ul></ul><ul><ul><li>CRASHED COST = $23,000 </li></ul></ul><ul><li>THE ACTIVITY COST SLOPE = </li></ul><ul><li>23,000 – 14,000 OR $ 9,000 = $3,000 per w eek </li></ul><ul><li>8 – 5 3 </li></ul><ul><li>Cease crashing when </li></ul><ul><ul><li>the target completion time is reached </li></ul></ul><ul><ul><li>the crash cost exceeds the penalty cost </li></ul></ul>
  7. 7. Project Crashing Example Normal Crashed Activity Duration Cost Duration Cost A 4 days $1,000 3 days $2,000 B 5 days $2,500 3 days $5,000 C 3 days $750 2 days $1,200 D 7 days $3,500 5 days $5,000 E 2 days $500 1 day $2,000 F 5 days $2,000 4 days $3,000 G 9 days $4,500 7 days $6,300 <ul><li>Calculate the per day costs for crashing each activity </li></ul><ul><li>Which are the most attractive candidates for crashing? Why? </li></ul>
  8. 8. Project Crashing Example Activity Per Day Cost A $1,000 B $1,250 C $450 D $750 E $1,500 F $1,000 G $900
  9. 9. Project Crashing Example When deciding on whether or not to crash project activities, a project manager was faced with the following information. Activities of the critical path are highlighted with an asterisk: 5 weeks 3,000 6 weeks 2,500 H 6 weeks 2,500 7 weeks 3,000 G* 7 weeks 5,000 8 weeks 7,500 F 2 weeks 2,500 3 weeks 1,500 E* 4 weeks 4,000 6 weeks 4,500 D* 1 week 3,500 2 weeks 3,500 C 4 weeks 3,000 5 weeks 10,000 B* 3 weeks 4,000 4 weeks 5,000 A Duration Extra Cost Duration Cost Activity Crashed Normal
  10. 10. Project Crashing Example <ul><ul><ul><li>The correct sequence for crashing activities is listed as: </li></ul></ul></ul><ul><ul><ul><ul><ul><li>Activity E or G (they both cost $2,500 more) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Activity E or G </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Activity B </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Activity D </li></ul></ul></ul></ul></ul>
  11. 11. Project Crashing Example <ul><ul><li>Suppose project overhead costs accrued at a fixed rate of $500 per week. </li></ul></ul><ul><ul><li>Assume that a project penalty clause kicks in after 19 weeks. </li></ul></ul><ul><ul><li>The penalty charged is $5,000 per week . </li></ul></ul>56,500 8,000 - 0 - 49,500 16 weeks 54,000 9,000 - 0 - 45,500 18 weeks 52,000 9,500 - 0 - 42,500 19 weeks 55,000 10,000 5,000 40,000 20 weeks 58,000 10,500 10,000 37,500 21 weeks Total Overhead Penalties Direct Costs Duration
  12. 12. Resource Allocation Problem <ul><li>A shortcoming of most scheduling procedures is that they do not address the issues of resource utilization and availability . </li></ul><ul><li>Scheduling procedures tend to focus on time rather than physical resources . </li></ul>
  13. 13. Resource Allocation Problem <ul><li>Schedules should be evaluated not merely in terms of meeting project milestones, but also in terms of the timing and use of scarce resources . </li></ul><ul><li>A fundamental measure of the project manager’s success in project management is the skill with which the trade-offs among performance, time, and cost are managed . </li></ul><ul><li>“ I can shorten this project by 1 day at a cost of $400. Should I do it?” </li></ul>
  14. 14. Resource Allocation Problem <ul><li>The extreme points of the relationship between time use and resource use are the following: </li></ul><ul><ul><li>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 </li></ul></ul><ul><ul><li>Resource Limited : The project must be finished as soon as possible, but without exceeding some specific level of resource usage or some general resource constraint </li></ul></ul>
  15. 15. Resource Loading <ul><li>Resource loading describes the amounts of individual resources an existing schedule requires during specific time periods . </li></ul><ul><li>The loads (requirements) of each resource type are listed as a function of time period . </li></ul><ul><li>Resource loading gives a general understanding of the demands a project or set of projects will make on a firm’s resources . </li></ul>
  16. 16. Resource Loading <ul><li>The project manager must be aware of the flows of usage for each input resource throughout the life of the project . </li></ul><ul><li>It is the project manager’s responsibility to ensure that the required resources, in the required amounts, are available when and where they are needed . </li></ul>
  17. 17. Resource Loading Table
  18. 18. Resource L eveling (Smooting) <ul><li>Resource leveling aims to minimize the period-by-period variations in resource loading by shifting tasks within their slack allowances. </li></ul><ul><li>The purpose is to create a smoother distribution of resource usage. </li></ul><ul><li>Resource leveling, referred to as resource smoothing, has two objectives: </li></ul><ul><ul><li>To determine the resource requirements so that they will be available at the right time, </li></ul></ul><ul><ul><li>To allow each activity to be scheduled with the smoothest possible transition across usage levels. </li></ul></ul>
  19. 19. Resource L eveling (Smooting) <ul><li>Resource management is a multivariate, combinatorial problem, i.e. multiple solutions with many variables, the mathematically optimal solution may be difficult or infeasible. </li></ul><ul><li>More common approach to analyzing resource leveling problems is to apply some resource leveling heuristics. </li></ul>
  20. 20. Resource L eveling Heuristics <ul><li>Prioritizing resource allocation include applying resources to activities: </li></ul><ul><ul><li>with the smallest amount of slack </li></ul></ul><ul><ul><li>with the smallest duration </li></ul></ul><ul><ul><li>that start earliest </li></ul></ul><ul><ul><li>with the most successor tasks </li></ul></ul><ul><ul><li>requiring the most resources </li></ul></ul>
  21. 21. Resource L eveling Steps <ul><li>Create a project activity network diagram </li></ul><ul><li>Create a table showing the resources required for each activity, durations, and the total float available </li></ul><ul><li>Develop a time-phased resource loading table </li></ul><ul><li>Identify any resource conflicts and begin to smooth the loading table using one or more heuristics </li></ul>
  22. 22. Resource Leveling Example Critical path:A-C-F-H-K
  23. 23. Resource Leveling Example Critical path:A-C-F-H-K
  24. 24. Resource Leveling Example 194 Total 25 5 0 5 K 6 2 5 3 J 20 4 3 5 I 21 3 0 7 H 16 4 3 4 G 12 2 0 6 F 18 3 1 6 E 18 3 3 6 D 20 4 0 5 C 8 2 1 4 B 30 6 0 5 A Total Resources Required Resource Hours Needed Per Week Total Float Duration Activity
  25. 25. Resource Leveling Example
  26. 26. Resource Leveling Example <ul><li>On day 10 the required resource hours is 10 </li></ul><ul><li>If project is budgetted for up to 10 resource units per day, then it is acceptable. </li></ul><ul><li>C, D, and E are all scheduled on this day and have require 4, 3, and 3 hours respectively </li></ul><ul><ul><li>Which activity should be adjusted? </li></ul></ul><ul><ul><li>C is on the critical path </li></ul></ul><ul><ul><li>E has 1 day slack </li></ul></ul><ul><ul><li>D has 3 days of slack (we can split the activity) </li></ul></ul>
  27. 27. Resource Leveling Example
  28. 28. Resource L oading Chart <ul><li>Another way to create a visual diagram of resource management problem is to use resource-lo a ding charts. </li></ul><ul><li>Resource conflicts can be seen in the r esource -l oading c harts. </li></ul><ul><li>They are used to display the amount of resources required as a function of time on a graph. </li></ul><ul><li>Each activity’s resource requirements are represented as a block (resource requirement over time). </li></ul>
  29. 29. Resource L oading Chart <ul><li>Resource limit is set at 8 hourly units per day. </li></ul><ul><li>Display the amount of resources required as a function of time. </li></ul><ul><li>Start with a network diagram </li></ul>0 A 4 Res = 6 4 B 5 Res = 2 5 D 9 Res = 7 9 E 11 Res = 3 4 C 7 Res = 2 11 F 12 Res = 6
  30. 30. Resource Loading Chart <ul><li>Produce a table that shows the duration, early start, late finish, slack, and resource(s) required for each activity. </li></ul>12 0 11 1 6 F 11 0 9 2 3 E 9 0 5 4 7 D 11 4 4 3 2 C 5 0 4 1 2 B 4 0 0 4 6 A LF Slack ES Duration Resource Activity
  31. 31. Resource Loading Chart <ul><li>Draw an initial loading chart with each activity scheduled at its ES. </li></ul>Resource imbalance A 2 4 6 8 2 12 10 8 6 4 14 C B D E F Project Days Resources
  32. 32. Resource Loading Chart <ul><li>Rearrange activities within their slack to create a more level profile. Splitting C creates a more level project. </li></ul>A 2 4 6 8 2 12 10 8 6 4 14 C B D E F Project Days Resources C
  33. 33. Resource Loading Chart
  34. 34. Critical Chain Project Management <ul><li>Critical Chain Project Management (CCPM), which was developed and publicized by Dr. Eliyahu M. Goldratt (1997) in his book Critical Chain, is a novel approach for managing projects. </li></ul><ul><li>Goldratt is well known in the operations management community as the inventor of the Theory of Constraints (TOC). </li></ul><ul><li>TOC is a tool for managing repetitive production systems based on the principle that every system has a constraint, and system performance can only be improved by enhancing the performance of the constraining resource . </li></ul>
  35. 35. Critical Chain Project Management <ul><li>CCPM identifies the critical chain as the set of tasks that results in the longest path to project completion after resource leveling. </li></ul><ul><li>CCPM is the same as conventional project management except for the terminology &quot;critical chain&quot;, which would otherwise be called the &quot;leveled critical path&quot;. </li></ul>
  36. 36. Critical Chain Project Management <ul><li>CCPM planning consists of recalculating the project schedule based on shortened task duration estimates. </li></ul><ul><li>The rationale for shortening the original duration estimates is as follows: </li></ul><ul><li>all tasks in the project are subject to some degree of uncertainty </li></ul><ul><li>when asked to provide an estimate of the duration, the task owner adds a safety margin in order to be almost certain of completing the task on time. This means that, in general, task durations are overestimated </li></ul><ul><li>In most cases, the task will not require the entire amount of safety margin and should be completed sooner than scheduled </li></ul><ul><li>Because the safety margin is internal to the task, if it is not needed, it is wasted. </li></ul>
  37. 37. Critical Chain Project Management <ul><li>For project plan execution, CCPM prescribes the following principles: </li></ul><ul><li>Resources working on critical chain tasks are expected to work continuously on a single task at a time. They do not work on several tasks in parallel or suspend their critical tasks to do other work </li></ul><ul><li>Resources are to complete the task assigned as soon as possible, regardless of scheduled dates </li></ul>
  38. 38. Critical Chain Project Management <ul><li>I f the task is completed ahead of schedule, work on its successor is to begin immediately. I f the task successor utilizes a critical resource for which a resource buffer has been defined, advance warning is provided to that resource at the point in time where the resource buffer begins </li></ul><ul><li>I f the task is completed past its planned completion date, as shown on the CCPM schedule, this is no reason for immediate concern, as the buffer will absorb the delay. </li></ul><ul><li>Source: http ://en.wikipedia.org/wiki/Critical_chain </li></ul>

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