Resource & Costs Analysis

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Location:  PMKI > Project Controls and Scheduling > Resource & Costs Analysis
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This subject considers the effect of including costs and resources in the CPM schedule.

Topics included in Resource & Costs Analysis:

- Schedule cost analysis
- Resource analysis, challenges and opportunities
- Useful External Web-links & Resources.


Other related sections of the PMKI:

- Schedule Development & Time Analysis 
- Reporting & Communicating Controls Information
- Cost Management
- Earned Value Management


Schedule cost analysis

Project cost management has two distinct aspects, both of which are important but both of which have a very different focus:
- Cost Management is the process of planning and controlling the budget of a project, see more.
- Earned Value Management, which links cost and schedule performance, see more.
Both are dependent on the efficient acquisition and use of resources to accomplish the work needed to achieve the project objectives; the focus of this section.



Resource analysis, challenges and opportunities

The current focus of CPM scheduling on activities, sequences, float and criticality is failing to deliver successful project outcomes. This section looks at the alternative approach based on workflows and the optimization of the deployment of the available resources; the underlying approach in methodologies such as Flow-Line, ToC and Critical Chain (although non of these methodologies use optimization). Current CPM scheduling approaches are failing to deliver successful project outcomes. Construction project’s have shown no improvement in productivity for 40 years,the automatic resource leveling systems in most tools, most of the time, produce sub-optimal results and changing a few settings in any of the tools can produce wildly different outcomes. Current scheduling practice has clearly demonstrated that trying to predict detailed resource requirements years in advance when no-one knows who will be doing the work, how effective they will be and frequently what the details of the work actually are is pointless – the only use for this type of schedule is measuring failure after the event. Unfortunately the requirement for a multi-year, detailed, resource loaded schedule is a far too common contractual and legal requirement. There are two solutions to this problem, one is to move to a proper resource optimization approach (already included, in part, in tools such as Spider) the second is to adopt a more pragmatic approach to scheduling based on ‘what you know’.

The short-term pragmatic approach: A realistically achievable approach in the short term, can be summarized as ‘plan what you know and budget the rest’. This is the approach adopted in the CIOB ‘Guide to good practice in the management of time in Complex Projects’. The Guide introduces the concept of Schedule Density where:
- Work more than 12 months in the future is planned at Low Density and defines the long-term
   strategic commitments of the project
- Work more than 3 months in the future is scheduled at Medium Density and defines the tactical
   approach to achieving the overall strategy set out in the Low Density schedule
- Work in the near term is scheduled at High Density and defines in detail who will be doing what,
   where and when based on the resources actually available and their measured productivity.
The Low Density schedule is developed and agreed with the client and represents the contractual commitment to deliver the project. The Medium Density schedule is developed and agreed with the key suppliers and subcontractors, but only for the work planned to be accomplished in the next year or so. It defines the way the organizations committed to the project will achieve the strategic objectives defined in the Low Density schedule. The High Density schedule is developed and agreed with the people actually doing the work and should be realistic and achievable statement of what will occur in the next 3 months. If this does not achieve the overall strategic objectives, the problems are resolved in the Medium Density schedule so as to minimize disruption to current workflows. See more on Schedule Density.

A Resource Optimization approach: Adopting a resource optimization approach would involve changing the underlying philosophical approach embedded in CPM from a belief that the per-determined duration and sequencing of activities takes precedence, constrained by the availability of resources (if resource leveling is used); to one that recognizes the real objective of scheduling is to keep the resources working effectively (resource work flows) and any activity sequencing represents a constraint on the locations where resources can work. This change in approach would represent a totally new paradigm in the modern age, although interestingly, the original objective of CPM was resource optimization! CPM was dumbed down to its current form to achieve realistic processing times on the computers available in the late 1950s; unfortunately almost no-one has moved on from the basic structure for a CPM model that were fully defined by the early 1960s despite the massive advances in computer power. Re-introducing resource optimization would result in recognizing that:
- Activities are variable, any division of work into activities is arbitrary and can be changed
- Durations are a consequence of both the quantity and quality of resources actually assigned
   to the work, this relationship is complex (not simplistic resource driven durations) and capable
   of optimization based on the project objectives
- Understanding resource workflows are the core determinant of project outcomes.

Optimizing resource workflows minimizes cost and time outcomes. Sub-optimal or disrupted workflows increases cost and time outcomes (SCL Delay and disruption Protocol). Some tools that are introducing optimization capabilities include:
- Aurora and Aurora-CCPM: uses advanced mathematical resource-constrained multi-pass algorithms
   in conjunction with heuristics:
- Spider: uses a multi-pass approach: 

The shift from CPM to resource optimization is a longer term option that could be as radical as the shift from barcharts to CPM. Developing this paradigm will require academic research, resulting in new approaches to software, contracts and the management of projects.

Prs: Resource optimisation - a new paradigm for project scheduling. An effective resource optimization approach would involve changing the underlying philosophical approach embedded in CPM from a belief that the predetermined duration and sequencing of activities takes precedence, to one that recognizes the real objective of scheduling is to keep the resources working effectively. The focus of this presentation is to outline the shortcomings of CPM, review the alternative methodologies and approaches including Flow-Line, ToC, Critical Chain, Momentology, Location Based Scheduling, and RD-CPM, then consider the additional requirements needed to fully implement resource optimization. The presentation looks at two alternative approaches to achieving this objective. Download the presentation.

Art: Resource Optimization. The best schedule outcome is achieved by maximizing the use of the available resources, but most scheduling tools fail to achieve this.



Useful External Web-links & Resource

Access the Guild of Project Controls Body of Knowledge. A suite of process-based documents which define Project Controls (membership required):



A course in a book

Communication management template

A course in a book

Communication management template

A course in a book

Stakeholder management tools