The Resource Allocation Problem

396 CHAPTER 9 / RESOURCE ALLOCATION Table 9-3 Official Pace of a Project

Title_

Approved Project Definition

Study of Alternates Engineering Design

Issue Engineering to Field

Purchasing

Premium Payments Field Crew Strength

Probable Cost Difference Compared with Normal Pace, as a Result of: ♦Design and Development •Engineering and Construction costs Probable Time

Normal

Full

Reasonable

Begins near end of Approved Project Definition.

Allow adequate time for field to plan and purchase field items. Usually 1/2-2 months lead time between issue and field erection.

Begins in latter stages of Approved Project Definition.

Negligible

Minimum practical or optimum cost.

Base Base Base

Rush

Some abbreviations from normal pace.

Quick study of major profitable items.

Begins when Approved Project Definition 50-75% complete.

Little or no lead time between issue and field erection.

Done concurrently with Approved Project Definition. Rush purchase of all long delivery items. Many purchases on "advise price" basis.

Some to break specific bottlenecks.

Large crew with some spot overtime.

Blitz

Only as necessary for major management decisions, purchasing and design engineering.

Only those not affecting schedule.

Concurrently with such Approved Project Definition as is done.

No lead time between issue and field erection.

Done concurrently with such Approved Project Definition as is done. Rush buy anything that will do job. Overorder and duplicate order to guarantee schedule.

As necessary to forestall any possible delays.

Large crew; overtime and/or extra shifts.

15% and up, more 10% and up, more Up to 50% less be sufficient to refer to resource usage simply as "costs." Instead, we must refer to individual types of labor, specific facilities, kinds of materials, individual pieces of equipment, and other discrete inputs that are relevant to an individual project but are limited in availability. Last, we must not forget that time itself is always a critical resource in project management, one that is unique because it can neither be in« ventoried nor renewed.

The relationship between progress, time, and resource availability/usage is the major focus of this chapter. Schedules should be evaluated not merely in terms of meeting project milestones, but also in terms of the timing and use of scarce resources. A fundamental measure of the PM's success in project management is the skill with which the trade-offs among performance, time, and cost are managed. It is a continuous process of cost-benefit analysis: "I can shorten this project by a day at a cost of $400. Should I do it?" "If 1 buy 300 more hours of engineering time, I may be able to improve performance by 2 or 3 percent. Should I do it?"

Occasionally it is possible that some additional (useful) resources can be added at little or no cost to a project during a crisis period. At other times, some resources in abundant supply may be traded for scarce ones (á la M.A.S.H.'s "Radar"). Most of the time, however, these trades entail additional costs to the organization, so a primary responsibility for the PM is to make do with what is available.

The extreme points of the relationship between time use and resource use are these:

• 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.

• 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.

The points between these two extremes represent time/resource-use trade-offs. As in Figure 9-2, they specify the times achievable at various resource levels. Equivalently, they specify the resources associated with various completion times. Clearly, the range of time or resource variability is limited.

Occasionally, both time and resources may be limited, but in this case, the specifications cannot also be fixed. If all three variables—time, cost, specifications—are fixed, the system is "overdetermined." The PM has lost all flexibility to perform the trade-offs that are so necessary to the successful completion of projects. Of course, it is possible that all three variables might be fixed at levels that allowed the PM plenty of maneuvering room, but this is most unlikely. Far more likely, our project manager acquaintances tell us, is the case in which senior management assigns budgets, schedules, and specifications without regard for the uncertainties of reality. It is the PM's responsibility, possibly with help from the project's champion, to warn senior management of the impropriety of such restrictions in spite of the chance that a senior manager might respond with "I'll get someone who can. . . 1"

On occasion, it may be that one or more tasks in a project are system-constrained. A system-constrained task requires a fixed amount of time and known quantities of resources. Some industrial processes—heat treating, for instance—are system-constrained. The material must "cook" for a specified time to achieve the desired effect. More or less "cooking" will not help. When dealing with a system-constrained task or project, no trade-offs are possible. The only matter of interest in these cases is to make sure that the required resources are available when needed.

In the following sections we discuss approaches for understanding and using these relationships in various project situations.

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