Master of Science in Project Management

GBEPM 520
Project Planning and Control

Project Resources Scheduling

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1. Schedule Duration and Resource
Limitations
 Both CPM and PERT implicitly assume that the
resources required to get the work of the project
completed will be available
 In practice, resources, which may involve
people, equipment, and even funding have
practical limits
 It is essential to analyze resources considered
so that the final schedule is executable and is
realistic in duration

Project Resources

 Human Resources:
 Personnel with varied skill sets, may be
assigned full- or part-time, and may be added or
removed from the project team as the project
progresses

 Physical Resources:
 Include equipment, materials, supplies,
facilities, and infrastructure

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 Steps in Resourcing Projects

1. Estimate and Assign Activity Resources

2. Determine possible Resource Overlaps
(Resource Conflicts) by inspecting Resource
Loading over units of Project time
3. Resolve the Resource Overlaps to establish a
Schedule Baseline

Activity resource estimating – “the process of estimating

the types and quantities of resources required to perform
each scheduled activity.” PMBOK® Guide

Resource Loading
 Resource loading describes the amounts of
individual resources an existing schedule
requires during specific time periods
 The loads (requirements) of each resource type
are listed as a function of time period
 Resource loading gives a general
understanding of the demands a project or set
of projects will make on a firm’s resources

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Schedule and Resource Histogram

2. Resource Conflict Resolution

 Workaround Strategies
 Increasing Resources
 Utilizing Resources
 Fast-Tracking
 Scope Reduction

 Schedule Delay
 Resource optimisation techniques

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 Resource Optimisation Techniques (1/2)
1. Resource levelling. A technique in which start and
finish dates are adjusted based on resource constraints
with the goal of balancing the demand for resources
with the available supply.
 Resource levelling can be used when shared or
critically required resources are available only at
certain times or in limited quantities, or are over
allocated, such as when a resource has been assigned to
two or more activities during the same time period or
there is a need to keep resource usage at a constant
level.
 Resource levelling can often cause the original critical
path to change.

Resource Optimisation Techniques (2/2)

2. Resource smoothing. A technique that adjusts the
activities of a schedule model such that the
requirements for resources on the project do not exceed
certain predefined resource limits.
 In resource smoothing, as opposed to resource
levelling, the project’s critical path is not changed and
the completion date may not be delayed. In other
words, activities may only be delayed within their free
and total float.
 Resource smoothing may not be able to optimize all
resources.

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 Time-Constrained Projects
 …Are projects that must be completed by an
imposed date
 Require the use of resource optimisation
technique that focus on balancing or smoothing
resource demands by using slack to manage
resource utilization 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.

Example: Botanical Garden Project

Given the following project network, we would like to:
 minimize total resources (rented backhoes) used
 smooth capacity requirements (avoid large fluctuations)

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Pre and Post Resource Smoothing

Time-Constrained Projects
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 from reducing slack
 Increases in the criticality of all activities

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 Resource-Constrained Projects
 …Are projects that involve resources that are limited in
quantity or by their availability
 There are two fundamental approaches to Resource-
Constrained allocation problems:
 Heuristic Methods
 Optimization Models
 Heuristic approaches employ rules of thumb that have
been found to work reasonably well in similar
situations
 Optimization approaches seek the best solutions but are
far more limited in their ability to handle complex
situations and large problems

Heuristic-Based Resource Scheduling

Scheduling of activities through use of heuristics (rules-of-
thumb), according to the following priorities:
 Start from beginning of project time and, when resources
used exceed the resources available, retain activities first
by:
 Minimum slack
 Smallest (least) duration
 Lowest activity identification number
 …and push the others out further in time
 An unarticulated rule: in later periods, do not move
activities that have already started
 Additional caveat: when considering activities not to delay,
consider the resources each activity uses.

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Example: Resource-Constrained Project
Assume we only have 3 people available to do the
following project, and we cannot afford to hire more.

Before Resource Balancing

Early Start Resource Load Chart

(slack shown in grey)

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Resource Load now Feasible

The Impact of Resource-Constrained

Scheduling

 Reduces delay but reduces flexibility

 Increases sensitivity of the network
 Increases scheduling complexity
 Can break the sequence of events
 May cause parallel activities to become
sequential and change the critical path

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3. Project Cost Management
 Project Cost Management is primarily concerned
with the cost of the resources needed to complete
project activities
 Project Cost Management should consider the
effect of project decisions on the subsequent
recurring cost of using, maintaining, and
supporting the product, service, or result of the
project
 Another aspect of cost management is recognizing
that different stakeholders measure project costs
in different ways and at different times

Cost Estimation
 Cost estimating is linked to scope, schedule,
and resource planning (after resolving resource
conflicts)
 Never lie to yourself
 You must understand what the project costs really
are
 Never lie to anyone else
 Avoid shading the truth to secure necessary funding

Estimate Costs – The process of developing an

approximation of the monetary resources needed to
complete project work. PMBOK® Guide

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Types of Costs
 Fixed and Variable costs
 Direct costs only occur because of the project
 Direct labour
 Other direct costs – material, travel, consultants,
subcontracts, purchased parts, computer time
 Indirect costs are costs necessary to keep the
organization running that are not associated with
one specific project
 Salaries, buildings, utilities, insurance, clerical
assistance
 Costs are allocated across projects

Accuracy and Timing of Cost Estimates

 Costs in Project Initiation
 Necessary for project charter approval
 Estimates are only approximate
 Costs in Project Planning
 Cost estimates are more precise
 Cost estimates should be documented
 The level of confidence in the cost estimate
should be described
 Cash accounting is more frequently used on
projects

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Cost Estimation Methods
Analogous estimating – “an estimating technique that uses the
cost along with measures of scale such as size, weight or
complexity from a previous project to estimate cost for a similar,
future project.” PMBOK® Guide
Parametric estimating – “an estimating technique that uses a
statistical relationship between historical data and other variables
to calculate project costs.” PMBOK® Guide

Bottom-up estimating – “a method of estimating project costs in

which the work is decomposed into more detail. An estimate is
prepared of what is required to meet the requirements of each of
the lower, more detailed pieces of work, and these estimates are
then aggregated into a total quantity for the project.” PMBOK®
Guide

Cost Budgeting
 Cost estimates are aggregated by work packages in
accordance with the WBS.
 The work package cost estimates are then
aggregated for the higher component levels of the
WBS (such as control accounts) and, ultimately, for
the entire project.
 The key benefit of this process is that it determines
the cost baseline against which project performance
can be monitored and controlled.

Determine Budget – The process of aggregating the

estimated costs of individual activities or work packages
to establish an authorized cost baseline. PMBOK® Guide

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Cost Baseline
 Direct and indirect costs add up to the cost
baseline
 The cost baseline is an integral part of the
project management plan
 It is used as a basis for comparison to actual
results

Cost Baseline – The approved version of the time-phased

project budget, excluding any management reserves,
which can only be changed through formal change control
procedures. PMBOK® Guide

Project Budget and Cost Baseline

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Integrated Scope, Schedule and Cost
 Since the cost estimates that make up the cost baseline are directly tied to the
schedule activities, this enables a time-phased view of the cost baseline, which
is typically displayed in the form of an S-curve

Budgeted Cost of Work Scheduled

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Determining Cash Flow
 The cash-flow statement is a document which
models the flow of money in and out of the
project
 Expenses are applied to individual activities in
the schedule to see when cash is needed
 Cash may be supplied through organization
budgets on a periodic basis
 The cumulative amount of cash coming in to
the project must meet or exceed demands for
cash payouts

Project Cumulative Cash and Revenue

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Cash-Flow Statement

January February March

Brought Forward
Income
Total Available
Expenses:
Total Expenses
Closing Balance

Project Cash-Flow Response

 Positive closing amount:
 Start activities earlier than planned
 Make sure the cash flow stays positive
 Look into ways of investing the money at a good
rate of return
 Negative closing amount:
 Delay expenditure payment/longer credit periods
 Bring forward the income payments
 Arrange finance well in advance
 Delay working on activities with float

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4. Project Schedule Compression

 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

Accelerating Project Completion

 Schedule compression techniques are used to

shorten or accelerate the schedule duration
without reducing the project scope in order to
meet schedule constraints, imposed dates, or
other schedule objectives.
 A helpful technique is the negative float
analysis. The critical path is the one with the
least float. Due to violating a constraint or
imposed date, the total float can become
negative.

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 Schedule Compressing Techniques
Crashing – A technique used to shorten the schedule duration for
the least incremental cost by adding resources. Examples of crashing
include approving overtime, bringing in additional resources, or
paying to expedite delivery to activities on the critical path.
PMBOK® Guide
Fast Tracking – A schedule compression technique in which
activities or phases normally done in sequence are performed
in parallel for at least a portion of their duration. An example
is constructing the foundation for a building before
completing all of the architectural drawings. PMBOK® Guide
 Crashing does not always produce a viable alternative and may
result in increased risk and/or cost.
 Fast tracking may result in rework and increased risk. Fast
tracking may also increase project costs.

Schedule Compressing Comparison

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 Project Crashing
 Focuses attention on the trade-off between time and
cost objectives.
 Crash time estimate is the shortest time that could be
achieved if all effort (at any reasonable cost) were
made to reduce the activity time.
 The use of more workers, better equipment, overtime,
etc., would generate higher direct costs for individual
activities.
 On the other hand, shortening the overall time of the
project would reduce certain fixed and overhead
expenses of supervision, as well as indirect costs that
vary with project duration.

Project Crashing and Costs

 Project Indirect Costs
 Costs that cannot be associated with any particular work
package or project activity.
 Supervision, administration, consultants, and interest
 Costs that vary (increase) with time.
 Reducing project time directly reduces indirect costs.
 Direct Costs
 Normal costs that can be assigned directly to a specific
work package or project activity.
 Labour, materials, equipment, and subcontractors
 Crashing activities increases direct costs.

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 Project Cost-Duration Graph

Reducing Project Duration at Reduced

Project Costs
Identifying direct costs to reduce project time

Gather information about direct and indirect

costs of specific project durations.

Search critical activities for lowest direct-cost

activities to shorten project duration.

Compute total costs for specific durations and

compare to benefits of reducing project time.

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Determining Activities to Shorten
 Shorten the activities with the smallest increase in
cost per unit of time
 Assumptions:
1) The cost relationship is linear. You can crash less than
the limit.
2) Normal time assumes low-cost, efficient methods to
complete the activity
3) Crash time represents a limit—the greatest time
reduction possible under realistic conditions.
4) Slope represents a constant cost per unit of time.
Typically it is the “per-day crash cost”
5) Any acceleration must be bounded so that activity
duration is within the normal and crash times.

Activity Graph

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 Time-Cost Trade-Off Example
Assume we want to reduce project duration and have recourses to do so.
we value each day it is shortened at $50. Starting Indirect cost is $400

Predecessors
Calculate --
these A
A
A
B
C,D
E,F

• First, calculate Slope (in days) and max Crash time

• Next build the AoN network, with normal times
• Lastly, crash activities that are most cost effective to reduce overall
project duration until cost of crashing exceeds benefits

Time-Cost Trade-Off Example Calculations

Current Days Activity Cost per Unit Least-Cost Total Direct
Critical Path may be Time to Crash Activity to Cost of all Project
Shortened Activity Crash Activities in Completion
Network Time

ADFG - - - $450 25

ADFG A-1,D-4,F-1 A-20, D-25, A $470 24

F-30
ADFG A-0,D-4,F-1 D-25, F-30 D $495 23

ADFG & D-3,F-1,C-1 C-30, D-25, F due to $525 22

ACFG F-30 two CPs
ABEG; B-2, C-1, B-40, C-30, C, D & E $610 21
ACFG; D-3, E-2 D-25, E-30 due to CPs
ADFG in
Network

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Time-Cost Trade-Off Example Calculations

Project Cost-Duration Graph

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