J.D. Birla Institute (Department Of Management)

GROUP NO. :- 12

NAME: -

BHAWESH MITTAL (77)

SHIVAM SHAH (78)

PRACHI SARAOGI (79)

DEEPAK DAGA (80)

PIYUSH MALHOTRA (81)

MADHUSUDAN MUNSHI (82)

ROLL NO. : - 77 – 82

SUBJECT: - PROJECT MANAGEMENT

TOPIC: - RESOURCE ALLOCATIO

DATE: - 14TH NOVEMBER, 2011

Critical Path Method – Crashing a Project

Critical Path Method (CPM), is a procedure for using network analysis to identify those tasks which are on the critical path: ie where any delay in the completion of these tasks will lengthen the project timescale, unless action is taken .For all tasks off the critical path, a degree of tolerance is possible (eg. late start, late completion,early start, etc.). The CPM formally identifies tasks which must be completed on time for the wholeproject to be completed on time. It Identifies which tasks can be delayed for awhile if resource needs to be reallocated to catch up on missed tasks. It helps you to identify the minimum length of time needed to complete a project. The CPM determines both the early start and the late start date for each activity in the schedule.

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

The essential technique for using CPM  is to construct a model of the project that includes the following:

1. A list of all activities required to complete the project 2. The time (duration) and cost that each activity will take to completion, and

3. The dependencies between the activities.

Using these values, CPM calculates the longest path of planned activities to the end of the project, and the earliest and latest that each activity can start and finish without making the project longer. This process determines which activities are "critical" (i.e., on the longest path) and which have "total float" (i.e., can be delayed without making the project longer). In project management, a critical path is the sequence of project network activities which add up to the longest overall duration. This determines the shortest time possible to complete the project. Any delay of an activity on the critical path directly impacts the planned project completion date (i.e. there is no float on the critical path). A project can have several, parallel, near critical paths. An additional parallel path through the network with the total durations shorter than the critical path is called a sub-critical or non-critical path.

Although the activity-on-arrow diagram ("PERT Chart") is still used in a few places, it has generally been superseded by the activity-on-node diagram, where each activity is shown as a box or node and the arrows represent the logical relationships going from predecessor to successor as shown in the diagram Activity-on-node diagram showing critical path schedule, along with total float and critical path drag computations.

In this diagram, Activities A, B, C, D, and E comprise the critical or longest path, while Activities F, G, and H are off the critical path with floats of 10 days, 5 days, and 20

days respectively. Whereas activities that are off the critical path have float and are therefore not delaying completion of the project, those on the critical path will usually have critical path drag 7, i.e., they delay project completion. The drag of a critical path activity can be computed using the following formula:

1. If a critical path activity has nothing in parallel, its drag is equal to its duration. Thus A and E have drags of 10 days and 20 days respectively. 2. If a critical path activity has another activity in parallel, its drag is equal to whichever is less: its duration or the total float of the parallel activity with the least total float. Thus since B and C are both parallel to F (float of 15) and H (float of 20), B has a duration of 20 and drag of 15 (equal to F's float), while C has a duration of only 5 days and thus drag of only 5. Activity D, with a duration of 10 days, is parallel to G (float of 5) and H (float of 20) and therefore its drag is equal to 5, the float of G.

These results, including the drag computations, allow managers to prioritize activities for the effective management of project completion, and to shorten the planned critical path of a project by pruning critical path activities, by "fast tracking" (i.e., performing more activities in parallel), and/or by "crashing the critical path" (i.e., shortening the durations of critical path activities by adding resources).

However, we first compute a cost/time slope for each activity that can be expedited(crashed) .

Activity Slope :

What is Crashing / Crunching?

Project crashing is a method for shortening the project duration by reducing the time of one or more of the critical project activities to less than its normal activity time. The object crashing is to reduce project duration while minimizing the cost of crashing.

OBJECTIVE OF CRASHING :

1. To reduce the scheduled completion time to reap the results of the project sooner.

2. As project continue over time, the team consume indirect costs.

3. There may be direct financial penalties for not completing a project on time.

4. reduce project duration at minimum cost.

The project team should estimate require time, require the cost, crash time, crash cost for each activities. And then the team can estimate total crash time, total crash cost, the crash cost per week to reduce project duration at minimum cost.

KEY TERMS

CRASHING is reducing project time by expending additional resources.CRASH TIME is an amount of time an activity is reduced.CRASH COST is the cost of reducing activity.

Resource Allocation :

Resource allocation is used to assign the available resources in an economic way. It is part of resource management. In project management, resource allocation is the scheduling of activities and the resources required by those activities while taking into consideration both the resource availability and the project time

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. It is common to see the resource allocation problem in terms of costs, manpower, but it can apply to equipment ,kinds of materials, capital etc. Schedules need to be evaluated in terms of both time (i.e. projects must be finished by a certain time, using as few resources as possible) and resources(i.e. projects must be finished as soon as possible, but without exceeding some specific level of resource usage or some general resource constraint).

Occasionally, it is possible that some useful resources can be added at little or no cost to a project during a crisis period. At other times, some resources in abundance may be traded for scarce ones. Most of the time, however, these trades entail additional costs to the organization ,so a primary responsibility for the PM is to make do what is available.

Moreover,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 individual resources an existing schedule requires during specific. Therefore , it is irrelevant whether we are considering a single work unit or several projects; the loads of each resource type are simply listed as a function of time period. It gives an understanding of the demands a project will make of a firm’s resources. It is an excellent guide for early, rough project planning.

Resource leveling :

Resource leveling is a project management technique used to examine unbalanced use of resources (usually people or equipment) over time, and for resolving over-allocations or conflicts.

When performing project planning activities, the manager will attempt to schedule certain tasks simultaneously. When more resources such as machines or people are needed than are available, or perhaps a specific person is needed in both tasks, the tasks will have to be rescheduled concurrently or even sequentially to manage the constraint. Project planning resource leveling is the process of resolving these conflicts. It can also be used to balance the workload of primary resources over the course of the

project[s], usually at the expense of one of the traditional triple constraints (time, cost, scope).

Constrained Resource Scheduling:

There are two fundamental approaches to constrained resource allocation problem:

1. Heuristics- employ rules of thumb that have been found to work reasonably well in similar situations. They seek better solution.

2. Optimization method- seeks the best solutions but is far more limited in their ability to handle complex situations and large problems.

Heuristic Methods

Heuristics approaches to constrained resource scheduling problems are in wide, general use for a number of reasons.

This approach is the only feasible way of attacking the large, nonlinear, complex problems that tend to occur in the real world of project management.

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 allocated the scarce resources to them sequentially, according to some priority rules.

Some of the most common priority rules are:

As soon as possible- the default rule for scheduling. This provides the general solution for critical path and time.

As late as possible- all activities are scheduled as late as possible without delaying the projects. The main purpose of this heuristic is to defer cash outflows as long as possible.

Shortest task first- tasks are ordered in terms of duration, with the shortest first. In general, this rule will maximize the number of tasks that can be completed by a system during some period.

Most resources first-activities are ordered by use of a specific resource, with the largest user heading the list. The assumption behind this rule is that more important tasks usually place a higher demand on scarce resources.

Minimum slack first- this heuristic orders activities by the amount of slack, least slack going first. (it is common, when using this rule, to break ties by using the shortest-task-first rule.)

Most critical followers- tasks are arranged by the number of critical activities following them. The one with the greatest number of critical followers go first.

Most successors- this is the same as the previous rule, except that all followers, not merely critical ones, are counted.

Arbitrary- priorities are assigned to activities according to some rule not associated with task length, slack, or resource requirements. Such rules might be that tasks on projects of higher value to the parent organization are taken before those of lower value.

These are the most common priority rules. There are many more priority rules. Like, the heuristic can either start at the beginning or work forwards or it can start at the end and work backwards.

Optimizing method

The methods to find an optimal solution to the constrained resource scheduling problem fall into two categories- mathematical programming (linear programming for the most part) and enumeration.

Optimization finds the one best solution. As mentioned before, it uses either linear programming or enumeration method. All projects cannot be optimized. Approached work with small to medium projects i.e., it is limited to small and medium projects. Other approaches have combined programming and enumeration methods. Paterson and Huber (1974) employed an integer programming approach combined with a minimum bounding procedure to reduce the computation time for minimizing project duration

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.

Scheduling and allocating resources to multiple projects are much more complicated than for the single-project case. The most common approach is to treat the several projects as if they were elements of a single large project. However, different projects have different goals. Therefore, combining them may not make sense. There are several projects, each with its own set of activities, due dates and resource requirements. In addition, the penalties for not meeting time, cost, and performance goals for the several projects may differ. Usually, the multi-project problem involves determining how to allocate resources to, and set completion time for, a new project that is added to an existing set of ongoing projects. This requires the development of an efficient, dynamic multi-project scheduling system. To describe such a system,

standards are needed by which to measure scheduling effectiveness. These standards are:

1. Schedule slippage- it is considered the most important standard or criteria. It is the time past a project’s due date or delivery date when the project is completed. Slippage may result in penalty cost that reduces profits. Slippage of one project may have a ripple effect, causing other projects to slip. Indeed, expediting a project in order to prevent slippage may, and usually does, disturb the overall organization to the point where slippage due to resource shortages may then be caused in other projects.

2. Resource utilization- resource utilization is of particular concern to industrial firms because of the high cost of making resources available. A resource allocation system that smooth’s out the peaks and valleys of resource usage is ideal, but it is extremely difficult to attain while maintaining scheduled performance because all the projects in a multi-project organization are competing for the same scarce resources. It is expensive to change the size of the human resource pool on which the firm draws.

3. In-process inventory- it concerns the amount of work waiting to be processed because there is a shortage of some resources. It is similar to work in progress in manufacturing. Most industrial organizations have a large investment in in-process inventory, which may indicate a lack of efficiency and often represents a major source of expense for the firm. The remedy involves a trade-off between the cost of in-process inventory and the cost of resources, usually capital equipment, needed to reduce the in-process inventory levels. It is almost axiomatic that the most time consuming operation in any production system involving much machining of metals is an operation called “wait”.

Heuristic Techniques

It refers to experience-based techniques for problem solving, learning, and discovery. Heuristic methods are used to speed up the process of finding a satisfactory solution, where an exhaustive search is impractical. In more precise terms, heuristics are strategies using readily accessible, though loosely applicable, information to control problem solving in human beings and machines. Multi-projects are too complex for optimization approaches.

Many of the heuristics are extensions of the ones used for one project.

There are some additional priority rules such as:

Resource scheduling method - in calculating activity priority, give precedence to that activity with the minimum value of Dig, where

o Dig= increase in project duration resulting when activity j follows activity i

o = max [0;( EFii- LSj )]

o Where

o EFi= early finish of activity i

o LSj=latest start of activity j

o The comparison is made on a pairwise basis among all activities in the

conflict set.

Minimum late finish time - this rule assigns priorities to activities on the basis of activity finish times as determined by ADM/PERT or PCM/CPM. The earliest late finishers are scheduled first.

Greatest resource demand - this method assigns priorities on the basis of total resource requirements, with higher priorities given for greater demands on resources. Project or task priority is calculated as:

Resource requirements must be stated in common terms, usually dollars. This heuristic is based on an attempt to give priority to potential resource bottleneck activities.

Greatest resource utilization - this rule gives priority to that combination of activities that results in maximum resource utilization during each scheduling period. This rule was found to be approximately as effective as the minimum slack rule for multiple project scheduling, where the criterion used was project slippage. Variations of this rule are found in commercial computer programs such as RAMPS.

Most possible jobs - here, priority is given to the set of activities that results in the greatest number of activities being scheduled in any period. It differs from the

greatest-resource-utilization heuristic in that the determination of the greatest number of possible jobs is made purely with regard to resource feasibility.

Goldratt’s Critical Chain :

What is Critical Chain?

Critical Chain Project Management (CCPM) is a methodology for planning, executing and managing projects in single and multi-project environments. Critical Chain Project Management was developed by Dr Eli Goldratt and was first introduced to the market in his Theory of Constraints book “Critical Chain” in 1997. It was developed in response to many projects being dogged by poor performance manifested in longer than expected durations, frequently missed deadlines, increased costs in excess of budget, and substantially less deliverables than originally promised. To deal with strong optimistic bias in many project schedules,let us consider few of the following things that tend to create it.

Thoughtless Optimism - some project managers, apparently with a strong need to deny that lateness could be their fault, deal with every problem faced by the their projects as strict exceptions, acts as chance that cannot be forecast and hence need not be the subject of planning. These individuals simply ignore risk management.

Capacity should be set to equal demand - some senior managers refuse to recognize that projects are not assembly lines and are not subject to standard operations management line of balance methods.

The “Student Syndrome ”- This phrase is Goldratt’s name for the fact that students always want more time to complete the project. Give more time, students delay starting the project until the last possible moment. One of the most common occurrences is for activities with high slack to be delayed and ignored until the slack is gone. If any problems arise with such activities they will be late.

Multitasking to reduce idle time - Consider a situation where there are two projects, A & B, each with three sequential activities and has a single resource required by both projects. Each activity requires 10 days. A Gantt chart is to be used for sequencing both the two projects. In the first, switch from project A to project B for each of the 3 activities, this is , carry out Activity 1 for project A , then Activity 1 for project B , then Activity 2 for A, and soforth. In the second sequence, complete project A before starting project B. In both the cases, the total time required will be 60 days. However. In the second sequence, project A

is completed after 30 days and B after 60 days. In the first case, project A will be finished after 50 days and B after 60 days. While the total time required is the same project A has been delayed for 20 days by the multitasking. Further, it ignores the fact that switching back and forth between tasks is neither a particularly efficient nor effective way to complete two different jobs.

People need a reason to work hard - senior managers of our acquaintances have been known to argue that project workers- and they include project managers in that category-“always” have enough slack time in their activity duration estimates to make sure that they can complete the activities on time and “without too much sweat”. Therefore, it makes some managerial sense to cut back on the time allowances until they can serve as an incentive to the project team. It has, however, long been known that for people with a high need for achievement, the maximum level of motivation is associated with only moderate, not high, levels of risk of failure.

Game playing - this is possibly the most common cause of late projects. It is certainly a major cause of frustration for anyone involved in a project. Senior managers, firm are in the belief that project workers add extra time and resources to activity time and budget estimates in order to ensure a safe and peaceful life on their potion of a project, routinely cut schedules and budget. Project workers, suspecting that senior management will cut schedules and budgets without regard to any logic or reason, increase their schedules and budgets as much as they guess will be allowed. Each assumes that the order is not to be trusted. The outcome is simple. Rather than practice careful risk management, each blames the other for any lateness or budget overage.

Assuming network complexity makes no difference- Consider two different projects constituting of two activities. Each activity requires 10 days and is known with certainty. Clearly, both the projects are completed in 40 days though one is considerably more complex than the other. But in reality complexity, uncertainty and merging paths all join to make trouble.

Early finishes not canceling out late finishes - Assume two activities, A & B. A is a predecessor of B.If activity A is late, then activity B will start late by whatever amount of lateness is bequeathed to it by A. Similarly , if in spite of all forces tending to thwart such things, activity A finishes early, B will start early. The assumption is generally true for first case, when A is late. But for the case when A is early, the assumption is rarely true. Unfortunately, a finish by A in less than its expected duration almost never translates to a start by B before its expected start time.

Bibliography:

PROJECT MANAGEMENT (A Managerial Approach) By Jack R. Meredith & Samuel J. Mantel

http://en.wikipedia.org/w/index.php?title=Special%3ASearch&search=complexity+of+networks+makes+no+difference

http://www.google.co.in/imgres?q=resource+allocation+table&hl=en&safe=off&biw=1366&bih

http://www.mhcc.edu/About-mhcc.aspx?id=943

http://en.wikipedia.org/wiki/Resource_allocation

http://www.netmba.com/operations/project/cpm/

www.pmipr.org/html/.../The%20Critical%20Path%20Method.pdf

Class notes and ppts