Project Resource Management – Part 4 of 8

This is the fourth post in an eight part series that covers the fundamental theory of project management. The focus of this post is Project Resource Management. It is based on our online learning course Hands on Project Management Theory and Practice.
In this post we will discuss project resource management, focusing on the effect of resources on the project schedule. We will classify the types of resources used and the resulting problems the project manager faces when dealing with different types of resources. We will focus on two problems: the resource utilization problem and the problem of delays caused by scarce resources. We will present the way resources are managed in project including the impact of alternative mode selection on resources and on activity duration. This is known as activity crashing. Finally, we will discuss the concept of baseline schedule - a feasible schedule selected by the stakeholders as the plan for the project execution.

There are many methods for classifying resources:

  • Classification by cost: expensive resources vs. inexpensive resources. This classification is helpful when the project manager needs to focus on expensive resources to cut costs.
  • Classification by resource availability: resources that are available in unlimited quantity vs. resources with limited availability. This classification is important when some activities can be performed in several alternative ways or modes and the project manager wants to use resources that are readily available.
  • Classification by lead time: resources that are available on a very short notice vs. resources that need a very long lead time to acquire. This classification is important, as items with long lead times should be ordered well in advance to prevent project delays.

 

An important classification is the availability of resources. We distinguish between renewable resources and depleting resources.
Renewable resources are available at the same quantities every period and this availability is not a function of past usage. A typical example is people who are assigned full-time to the project, such as the project manager. Another example is a piece of equipment fully dedicated to the project, such as a crane in a construction site. Good management of renewable resources minimizes the idle time, or the time the resource is not used, but costs money.
Depleting or non-renewable resources can be used up and their future availability depends on past usage. A typical example is material bought for the project and kept in inventory. As this material is consumed, the amount left in inventory for future use is reduced.
Project managers strive to minimize the idle time of renewable resources and to maximize the effectiveness, or the amount of output produced by each unit of the non-renewable resources.
When creating a project plan an important consideration for choosing one plan rather than another is the resource usage. Specifically the project team should identify for each possible mode of execution for a task what would be the resources required. A mode of execution typically has two types of resources requirements:

  • Resources which are dependent on the task duration, for example human resources
  • Resources which are a one-time cost and are not affected by the task duration.
    • Once a project plan is created the resource profile or the resource histogram can be created.

       

       

       

      In this view, the bars in the resource histogram show how many units of the resource are required in each period, while the horizontal blue line shows the number of units available.
      This chart is derived from the Gantt chart, so the early start histogram may be completely different from the late start histogram. The information on the number of units required to perform each activity and the information on the start and end time of the activity are combined. By adding the resource requirement, per period, for all the activities using that resource, the resource profile is created.
      Since the resource profile indicates the number of resource units required for each period, a simple comparison to the resource availability provides information on resource idle time when availability is higher than the requirements, and information on resource shortages when availability is lower than the requirements.

      Resource availability may be deterministic or stochastic. Stochastic availability represents the uncertainty in resource availability, due to breakdown of machines, or people not coming to work on a given period for any reason. Since things don’t always work out as planned it is important to take the stochastic nature of resources into account when creating the project plan and when preparing for risk. More on this in a future post about Risk Management. 
      Red bars indicate that the resource requirement in that period is higher than the resource availability, which is shown as the horizontal blue line. This is a signal to the project manager that the current schedule of the project is not feasible and that a corrective action is needed to solve the resource availability problem. The corrective action can be in the form of assigning more resource units, delaying some activities that did not start yet, splitting activities that already started, or changing the mode of activities that did not start yet. Each corrective action may impact cost, schedule and performance, and a tradeoff analysis is required.

      There is a clear motivation to minimize idle time and idle cost of renewable resources. However, it should be remembered that when the resource availability is stochastic, and there is a probability that a resource unit will not be available when needed, a tradeoff exists between the idle cost of the resource and the cost associated with a delay of activities due to lack of resources, or the need to split an activity due to the same reason. To mitigate risk and to buffer against uncertainty, the project manager can maintain excess capacity of resources. It is the tradeoff between the cost of idle resources and the risk of delay that should lead the project manager in his decision regarding the size of this resource buffer.
      When conflicting constraints are present, for example, project due date constraints and resource availability constraints, the project manager must weigh the results of violation of these constraints. For example, if a violation of the due date constraint leads to a penalty, the cost of this penalty should be considered as part of the project cost and may be preferred over a schedule that is not feasible and cannot be implemented.
      Resource availability constraints that lead to a non-feasible schedule must be resolved as part of the project planning process. The solution may involve one or more of the following:

      • Delaying non-critical activities by using up their slack
      • Delaying the whole project if other higher priority projects compete for the same resources
      • Assigning more resource units
      • Changing the activity mode of execution, for example: using subcontractors to perform some activities
      • Splitting activities that already started to free up resources for other more critical activities

       

      When managing the resources during the project lifecycle the project team should take into account the following characteristics of each type of resource:

      • The cost of the resource per period, which is the cost of using the resource in a specific time period
      • The idle cost of the resource per period, which is the cost of having the resource available but not using it in a specific period
      • How reliable the resource is, that is what are the chances that it will actually be available when needed
      • What is the cost of assigning or releasing resources
      • How long would it take to assign or release this resource? Typically assigning or releasing resources does not happen instantly

       

      When the schedule is infeasible due to lack of resources and it is impossible to fix the problem by assigning more units or changing the mode, delaying some activities may solve the problem. The selection of activities to which scarce resources will be allocated can be based on priority rules. A common, intuitive priority rule is the minimum slack rule that allocates resources to activities based on their slacks, giving the highest priority to the activities with the smallest slack.
      The minimum slack priority rule is applied in an iterative two-step procedure:

      • The first step is to identify the feasible activities—activities that can start, as their predecessors are already finished.
      • The second step is to allocate or assign the available resources to feasible activities identified in the first step, giving priority to those activities with minimum slack.

      When all the available resource units are allocated, the procedure pauses until one or more activities are finished and the resources released by those activities can be reassigned by repeating steps 1 and 2 above.

       


      If a resource-feasible solution is found, but it does not satisfy due date constraints, it might be possible to switch the mode of one of the critical activities—an activity on the critical path. This is done by checking if any critical activity has a mode with a smaller duration than the currently used mode. If several such critical activities exist, it is logical to select the activity for which mode changing is the least expensive.
      To summarize, we saw several problems related to the management of project resources:

      • Resource availability is limited and therefore activities are delayed and the project is late
      • Resource availability is limited and therefore the number of resource units required for the current schedule is higher than the number available.

       

      We discussed several possible solutions:

      • Changing the activity mode, for example using subcontractors to perform some activities
      • Delaying non-critical activities by using up their slack
      • Delaying the whole project if other higher priority projects compete for the same resources
      • Splitting activities that already started to free up resources for other more critical activities
      • Assigning more resource units

       

      The solution techniques discussed in are aimed at developing a good feasible schedule that does not violate resource and due date constraints. In the next post we will discuss cash flow and budget constraints and ways to develop good schedules that do not violate these constraints as well. Once such a schedule is found and is accepted by the project stakeholders, it can serve as a baseline or a plan for the project.