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Resource Limited Project Management

Resource Limited Project Management

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Resource Limited Project Management

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  1. Resource LimitedProject Management Vladimir Liberzon

  2. Introduction • We will discuss methodologies and techniques that are necessary for the proper project management when project resources are limited. • And to my knowledge they are always limited. • Please feel free to ask questions any time during my presentation. • We shall learn from each other and more discussions create more understanding.

  3. Introduction • My name is Vladimir Liberzon. • I am a head of the leading Russian project management consulting company that: • Implements project management systems at the different enterprises, • Manages projects for our customers, • Provides project management training, • Develops the most powerful project management software Spider Project.

  4. Topics of Discussion • We will discuss: • Organizing data for the proper project computer simulation and corporate resource management, • Resource constrained scheduling and Resource Critical Path, • Project Success Criteria, • Project Risk Simulation, • Success Driven Project Management.

  5. Organizing data • It is Data Structure that defines the possibilities of simulating the situations occurring in the actual projects. • The main elements of a project computer model are project activities, activity dependencies, project resources and their assignments, project calendars, costs, and Work, Resource and Cost Breakdown Structures. • We will discuss the main elements of Data Structure that are vital for understanding the specific approaches to project simulation.

  6. Activities • In the majority of well-known PM software packages project activities are characterized by their duration. • Besides duration, it is frequently necessary to set the activity’s physical volume of work. • Activity volume can be measured in meters, tons, etc., planned work hours, percents or any other units.

  7. Activities • Activity volume is often used as an initial activity information instead of duration. If assigned resource productivity is defined in volume units per hour then activity duration may be calculated during project scheduling. • Unlike activity duration activity volume does not depend on assigned resources.

  8. Dependencies • Sometimes it is necessary to set more than one link between activities. • Besides the positive and negative time lags, it is useful to set volume lags, which is preferable in many cases. • The problem with time lags is that if the preceding work has started but is executed slower than it was planned, the time lag may be satisfied earlier than the planned volume of work is fulfilled. • The time lags call for special attention and regular adjustments.

  9. Resources • Resources are divided into two classes: • renewable (human resources and mechanisms) and • consumable (materials). • In most PM software packages, both are set together, differing only in setting the costs of their use - per work hour or per unit. • Thus you can not define that renewable resource spends materials during the work.

  10. Complex Resources • Besides the individual resources one may set resource crews (we call them multi-resources) and resource skills (roles). • Multi-resources are the settled groups of resources working together (e.g. a team, a crew, a car with a driver, etc.). • Multi-resource can be assigned to activity which means assignment of all resources comprising the multi-resource.

  11. Resource Skills • Resources sharing the same skills comprise Resource Assignment Pools. • Resources belonging to the same Poolare interchangeable though individuals in a pool may have different productivities performing the same activities.

  12. Calendars • The calendars can be set for all activities, resources and time lags. • Availability of all these calendars is important for the proper project simulation.

  13. Assignments • Assigning resources to activities implies the notion of a team - a group of resources working on an activity together. • The team can include individual resources, multi-resources and pools. • If the activity’s initial information is work volume, one should set the productivity of at least one of assigned resources, to enable the calculation of the work duration. It should be noted that when the pools are assigned, activity duration can be calculated only in the process of scheduling.

  14. Assignments • In assigning resource assignment pool, one should either set a total number of pool resources necessary for the execution of activity or their aggregate productivity. • Example: a pool consists of the tip lorries (dump trucks) with different carrying capacity. One may set a number of lorries necessary for the execution of this activity or the aggregate productivity (dependent on capacity) of assigned tip lorries.

  15. Assignments • If more than one team is assigned then resources belonging with the different teams work on an activity independently of each other. • One may set the volumes or duration of work for each team, but it is not obligatory. • When the volume or duration of assignment are not defined the team will continue working until the work on the activity is completed. • Such approach allows to simulate the shift work efficiently.

  16. Assignments • Resources can be assigned to activities part time. • In this case one shall set percentage of assigned resources utilization together with resource quantity (not just the total percentage calculated by multiplying percents and quantities, that leaves the necessary amount of resources unclear - two resource units with 50% utilization are equivalent to one resource unit used to its full capacity).

  17. Assignments • Another useful option – variable resource assignments. • Example: • You may define that the number of resources that may be used at some work is between 2 and 4, and their workload should be not less than 40% and not more than 80%. • In this case activity will start if two units of assigned resource are available not less than 40% of their time, and the team may be increased if additional resources become available. Finishing other assignments resources may apply more of their time to the specified assignment but not more than 80%.

  18. Assignments • Resources can consume materials in the process of their work, • Besides materials can be assigned to activities or resource assignments directly. • In some projects it is necessary to simulate not only material consumption but also production of resources and materials on activities and assignments.

  19. Cost • Usually it is not enough just to define activity and resource costs. It is necessary to know project expenses and revenues, what will be spent on wages, on machinery and equipment, on taxes, etc. • Sometimes it is necessary to allow for multiple currencies. • So there is a need to define and assign cost components. • Besides setting the cost of an hour of renewable resource work and the cost of material unit, it is necessary to be able to set the cost directly for activities and assignments.

  20. Cost • People may be paid not only for the hours spent on the task but also by the quantity of work they have done. • It means that labor resource cost that is usually defined by the cost of work hour is not enough. • Frequently it is necessary to set costs for resource assignments (fixed or per unit of volume). • Cost of assignment is one example of setting contract costs for the project.

  21. Centers • Setting costs for the components of the project expenses, materials and resources you may need to get different reports on the groups of cost components, materials and resources. That is why it is necessary to define Cost, Material and Resource Breakdown Structures or Centers. • Material center can include any group of materials. • Resource center can include any group of resources. • Cost center includes selected cost components.

  22. Multiple Breakdown Structures • It is also very useful to have an opportunity to get project reports that aggregate project data different ways. • Usually we use at least three Work Breakdown Structures in our projects: based on project deliverables, project processes and responsibilities. • The use of multiple breakdown structures allows not only to obtain different project reports as seen from the different standpoints, but also to provide that the project model is truly comprehensive.

  23. Multiple Breakdown Structures • The use of resource breakdown structures is especially important in multi-project management. • In this case the matrix organizational structure determines the necessity of obtaining the reports on both Project and Functional Resource Breakdown Structures.

  24. Project Archives • Another feature that is necessary for the proper project control is an ability to store project history. • The planners should be able to store project versions and to analyze the progress in project execution, comparing current project schedule not only with the baseline but with any other previous version too. • This possibility enables to assess the progress in project execution for the last week, last month, last year, compared to the baseline, etc.

  25. Project Reference Books • Corporate project management has to be based on the corporate standards. • These standards shall include not only processes and documents that should be used in all projects but also estimates of the typical activity and assignment parameters.

  26. Project Reference Books • Reference books that should be created should include at least: • Activity cost and material requirements per activity volume unit, • Assignment cost and material requirements per activity volume unit, • Assignment productivity, • Assignment work load.

  27. Fragnet Library • Another necessary thing – to create a library of typical project fragnets. • Project fragnets usually describe typical processes and technologies that are used more than once. • Creating project computer models using the corporate library of typical fragnets will help to avoid inconsistencies and assures that the project model follows corporate standards.

  28. Fragnet Library • A library of typical fragments is a very important tool for the development of corporate culture and management standards. • An interesting side effect of the use of typical fragnets library is the technology of work breakdown structure development not top-down, as usual, but bottom-up. • In such structure typical fragments serve as work packages. Since we commonly use several Work breakdown structures top-down and bottom-up technologies are used in parallel, complementing each other.

  29. Resource constrained schedulingand Resource Critical Path • The problems solved with the help of project management software usually include: • Project scheduling without the limitations of resources taken into the consideration, • Project resource constrained scheduling (resource leveling), • Determination of critical path and time float for project activities, • Determination of the project requirements for finance, materials and equipment for any time period,

  30. Resource constrained schedulingand Resource Critical Path • Determination of renewable resources utilization in time, • Risk analysis and development of the project schedule and other project characteristics allowing for the risks, • Project performance measuring, • Project performance analysis and forecasting main project parameters.

  31. Resource constrained schedulingand Resource Critical Path • The problem of project schedule development without allowing for resource constraints has a correct mathematical solution (critical path method), which would be the same for all PM packages, provided that initial data are identical. • All other problems are solved using different approaches and yielding different results.

  32. Resource constrained scheduling • Resource constrained schedules produced by different PM software are different. • The software that calculates shorter resource constrained schedules may save a fortune to its users. • Spider Project is based on advanced heuristics that consistently obtains shorter resource constrained schedules than using other PM software packages.

  33. Resource constrained scheduling • The schedule stability is no less important, especially at the project execution phase. • That’s why Spider Project features an additional option - the support of the earlier project version schedule (the order of activity execution is the same as in selected earlier project schedule).

  34. Resource Critical Path • Traditional notion of Critical Path works only in case of unlimited resources availability. • Let us consider a simple project consisting of five activities, presented at the next slide. • Activities 2 and 5 are performed by the same resource

  35. Resource Critical Path

  36. Resource Critical Path • At the next slide you will see the results of resource constrained scheduling (leveling). • Please pay attention to activities that became critical (red on the diagram). • Now delaying each of the activities 1, 2 and 5 will delay the project finish date. • And though these activities are not linked we call them Resource Critical and their sequence comprise Resource Critical Path.

  37. Resource Critical Path

  38. MS Project Example • At the next slide you may find MS Project resource constrained schedule for the same project. • Please pay attention to the total slack figures and which activities were considered as critical. • Unfortunately resource constrained floats are not calculated not only by MS Project but by other popular PM software as well.

  39. MS Project Example

  40. Resource Critical Path • In many projects it is necessary to simulate financing and production, and calculate project schedules taking into account all limitations (availability of renewable resources, material supply and financing schedules). • True critical path should account for all schedule constraints including resource and financial limitations.

  41. Resource Critical Path • We call it Resource Critical Path (RCP) to distinguish it from the traditional interpretation of the critical path definition. • The calculation of RCP is similar to the calculation of the traditional critical path with the exception that both early and late dates (and corresponding activity floats) are calculated during forward and backward resource (and material, and cost) leveling.

  42. Resource Constrained Floats • Activity resource constrained floats have one large advantage over the total floats calculated by most PM software. This advantage is feasibility. • Activity resource constrained float shows the period for which activity execution may be postponed within the current schedule with the set of resources available in this project.

  43. Resource Critical Path and Critical Chain • It appears that by adding financial and supply constraints to the Critical Chain definition as well as the way of the Critical Chain calculation, we will obtain something very similar to RCP. • Thus the proven technology of project management based on RCP that is described further may be of particular interest for the Critical Chain theory supporters.

  44. Project Success Criteria • If project success criteria are set as finishing project in time and under budget then proper decision making will be complicated. • Project managers will not be able to estimate the effect of their decisions to spend more money but to finish the project earlier. • If some project is business oriented then this project has to have business criteria of its success or failure.

  45. Project Success Criteria • One of potential options – to set the profit that should be expected at some point in time basing on the forecast of the profit that will be obtained after the project will deliver its results. • Such success criterion will permit to weight time and money making managerial decisions.

  46. Project Success Criteria • At the next slide you may see the project schedule that is calculated without allowing for project financing and supply restrictions. • There are periods when project has no money to proceed and necessary materials are absent. • But if project manager will find money and materials then total profit to some imposed date will be close to $225,000.

  47. Project Success Criteria • If to calculate project resource, financing and supply constrained schedule than total profit will become more than $16,000 less. • Maybe it will be reasonable to borrow $41,000 for ten days or to find some other solution? • To be able to weight options and to choose the best it is necessary to simulate not only expenses.

  48. Risk Simulation • Our experience of project planning shows that the probability of successful implementation of deterministic project schedules and budgets is very low. • Therefore project planning technology should always include risk simulation to produce reliable results. • Risk simulation may be based on Monte Carlo simulation or use three scenarios approach that will be described further.