Scheduling Resources and

Costs

The Resource scheduling

Problem
Resources and Priorities
Project network times are not a schedule
until resources have been assigned.
The implicit assumption is that resources will
be available in the required amounts when
needed.
Adding new projects requires making realistic
judgments of resource availability and
project durations.

Cost estimates are not a budget

until they have been time-phased.
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Project Planning Process

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FIGURE 8.1

The Resource scheduling

Problem
Resource Smoothing
(or Levelling)

Involves attempting to even out varying demands

on resources by using slack (delaying noncritical
activities) to manage resource utilisation when
resources are adequate over the life of the project.

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The Resource scheduling

Problem

Resource-Constrained Scheduling
resources are not adequate

The duration of a project may be

increased by delaying the late start of
some of its activities if resources are not
adequate to meet peak demands.

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Types of Project Constraints

Technical or Logic Constraints
Constraints related to the networked sequence
in which project activities must occur.

Physical Constraints
Activities that cannot occur in parallel or are affected
by contractual or environmental conditions.

Resource Constraints
The absence, shortage, or unique interrelationship and
interaction characteristics of resources that require a
particular sequencing of project activities

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Constraint Examples

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Types of Resource Constraints

Types of Resource Constraints
People
Skills they bring to the project, e.g., programmer,
mechanical engineer, inspector...
Some skills are interchangeable, usually with a loss of
productivity

materials
For example, chemicals for a scientific project,
concrete for a road project, survey data for a
marketing project.

equipment
For example, Earth moving tractor, a test rig
Copyright 2011 The McGrawHill Companies, Inc.

Classification of a scheduling
problem

Time-Constrained Project

Must be completed by an imposed date.

Time is fixed, resources are flexible:
additional resources are required to ensure
project meets schedule.

Resource-Constrained Project
Is one in which the level of resources
available cannot be exceeded.
Resources are fixed, time is flexible:
inadequate resources will delay the project.

Copyright 2011 The McGrawHill Companies, Inc.

Resource Allocation methods

Time-Constrained Projects
Must be completed by an imposed date.
Require use of levelling techniques that focus
on balancing or smoothing resource demands.
Use positive slack (delaying noncritical
activities) to manage resource utilisation over
the duration
of the project.
Peak resource demands are reduced.
Resources over the life of the project are reduced.
Fluctuation in resource demand is minimized.
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Botanical
Garden

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FIGURE 8.3

Resource Allocation methods

Resource Demand Levelling
Techniques
for Time-Constrained Projects
Advantages
Peak resource demands are reduced.
Resources over the life of the project are
reduced.
Fluctuation in resource demand is
minimized.

Disadvantages
Loss of flexibility
that
occurs
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2011 The
McGraw- from reducing
Hill Companies, Inc.
slack.

Resource Allocation methods

Resource-Constrained Projects
Resources are limited in quantity or availability.
Activities are scheduled using heuristics
(rules-of-thumb) that focus on:
1.Minimum slack
2.Smallest (least) duration
3.Lowest activity identification number

The parallel method is used to apply heuristics

. An iterative process starting at the first time
period
of the project and scheduling period-by-period the
start of any activities using the three priority rules.
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Example 1

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The Impacts of ResourceConstrained Scheduling

Reduces delay but reduces flexibility.

Increases criticality of events.
Increases scheduling complexity.
May make the traditional critical path
no longer meaningful.
Can break sequence of events.
May cause parallel activities to become
sequential and critical activities with
slack to become noncritical.
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Resource Allocation methods

Limiting Assumptions
Splitting activities is not allowedonce an
activity is started, it is carried to completion.
Level of resources used for an activity
cannot be changed.

Risk Assumptions
Activities with the most slack pose the least
risk.
Reduction of flexibility does not increase
risk.
The nature of an activity (easy, complex)
doesnt increase risk.
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Splitting
Splitting
A scheduling technique use to get a better
project schedule and/or increase resource
utilization.
Involves interrupting work on an activity to
employ the resource on another activity, then
returning the resource to finish the interrupted
work.
Is feasible when startup and shutdown costs are
low.
Is considered the major reason why projects fail
to meet schedule.
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Splitting Activities

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FIGURE 8.11

Benefits of Scheduling Resources

Leaves time for consideration
of reasonable alternatives:
Cost-time tradeoffs
Changes in priorities

Provides information for timephased work package budgets

to assess:
Impact of unforeseen events
Amount of flexibility in available
resources Copyright 2011 The McGrawHill Companies, Inc.

Multi-project Resource Schedules

Multi-project Scheduling Problems
1. Overall project slippage
Delay on one project create delays for other projects

2. Inefficient resource application

The peaks and valleys of resource demands create
scheduling problems and delays for projects.

3. Resource bottlenecks
Shortages of critical resources required for multiple
projects cause delays and schedule extensions.

Copyright 2011 The McGrawHill Companies, Inc.

Multi-project Resource Schedules

Managing Multi-project Scheduling:
Create project offices or departments to
oversee the scheduling of resources
across projects.
Use a project priority queuing system:
first come, first served for resources.
Centralise project management: treat all
projects as a part of a megaproject.
Outsource projects to reduce the number
of projects handled internally.
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Time Phased budget

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Types of costs
Direct Costs
Costs that are clearly chargeable to a specific
work package.
Labor, materials, equipment, and other

Direct (Project) Overhead Costs

Costs incurred that are directly tied to an
identifiable project deliverable or work package.
Salary, rents, supplies, specialised machinery

General and Administrative Overhead Costs

Organisation costs indirectly linked to a specific
package that are apportioned to the project
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Project CostDuration
Graph

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FIGURE 9.1

Constructing a Project CostDuration Graph

Find total direct costs for selected

project durations.
Find total indirect costs for selected
project durations.
Sum direct and indirect costs for
these selected project durations.
Compare additional cost alternatives
for benefits.
Copyright 2011 The McGrawHill Companies, Inc.

Time-Phased Budgets
A cost estimate is not a budget unless it is
time-phased.
Time phasing begins with the time estimate
for a project.
Time-phased budgets mirror how the
projects cash needs (costs) will occur or
when cash flows from the project can be
expected.
Budget variances occur when actual and
forecast events do not coincide.
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Time phased work package

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Creating a time phased

budget

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Reducing Project Duration

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Companies, Inc.

Rationale for Reducing Project

Duration
Time Is Money: Cost-Time Tradeoffs
Reasons for imposed project duration
dates:
Customer requirements and contract
commitments
Time-to-market pressures
Incentive contracts (bonuses for early
completion)
Unforeseen delays
Overhead and goodwill costs
Pressure to move resources to other projects
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Accelerating Project Completion

When resources are not constrained
Adding Resources
Outsourcing Project Work
Scheduling Overtime
Establishing a Core Project Team
Do It TwiceFast and Correctly

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Accelerating Project
Completion
When resources are constrained
Fast-Tracking/ concurrent activities
Critical-Chain- longest technical dependency
path
Reducing project scope
Compromise quality

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Accelerating Project
Completion
Cost-time solutions focus on reducing
(crashing) activities on the critical path to
shorten overall duration of the project.
Reducing the time of a critical activity usually
incurs additional direct costs.

Copyright 2011 The McGrawHill Companies, Inc.

Explanation of Project Costs

Direct costs
Normal costs that can be assigned directly to a
specific work package or project activity.
Labor, materials, equipment, and subcontractors

Crashing activities increases direct costs.

Project Indirect costs

Costs that cannot be associated with any
particular work package or project activity.
Supervision, administration, consultants, and interest

Reducing project time directly reduces indirect

costs.
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Activity Graph

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FIGURE 9.2

Constructing a Project CostDuration Graph

Determining activities to shorten
Shorten the activities with the smallest
increase in cost per unit of time.
Assumptions:
The time- cost relationship is linear.
Normal time assumes low-cost, efficient methods to
complete the activity.
Crash time represents a limitthe greatest time
reduction possible under realistic conditions.
Slope represents a constant cost per unit of time.
All accelerations must occur within the normal and
crash times.
Copyright 2011 The McGrawHill Companies, Inc.

Reducing Project Duration to Reduce

Project Cost
Identifying
Identifying direct
direct costs
coststo
toreduce
reduceproject
projecttime
time
Gather
Gatherinformation
informationabout
aboutdirect
directand
andindirect
indirectcosts
costs
of
specific
project
durations.
of specific project durations.
Search
Searchcritical
criticalactivities
activitiesfor
forlowest
lowestdirect-cost
direct-cost
activities
activitiesto
toshorten
shortenproject
projectduration.
duration.
Compute
Computetotal
totalcosts
costsfor
forspecific
specificdurations
durationsand
and
compare
compareto
tobenefits
benefitsof
ofreducing
reducingproject
projecttime.
time.

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Reducing project duration:

Example1

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Practical Considerations
Using the project costDuration
Graph
Crash times
Linearity assumption
Choice of activities to crash revisited
Time reduction decisions and
sensitivity
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What if Cost, Not Time is the Issue?

Commonly used options for cutting
costs
Reduce project scope
Have owner take on more responsibility
Outsourcing project activities or even
the entire project
Brainstorming cost savings options

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