Resource Management in
the Corporate Project
Management Systems
Vladimir Liberzon
Victoria Shavyrina
Liubov Guzhova
Spider Project Team
Introduction
• In this presentation we will discuss proven resource
management methodologies, tools and techniques that
are used in the corporate project management systems
in Russia, Eastern Europe, Brazil.
• The questions during the presentation are welcomed!
Introduction
• We will discuss the following topics:
1. Project Schedule Model Data Structure
2. Corporate Project Management System
Requirements
3. Project Resource Constrained Scheduling
4. Project Success Criteria
5. Portfolio Resource Constrained Scheduling
6. Project Performance Measurement
Part 1
Project Schedule
Model Data Structure
Data Structure
• The main elements of any project schedule model are:
– project activities,
– activity dependencies,
– resources,
– resource assignments,
– calendars,
– costs,
– Work, Resource and Cost Breakdown Structures.
Activities
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
In the majority of well-known PM software packages project
activities are characterized by their duration or effort.
But in most projects it is necessary to set the activity’s
physical volume of work.
Activity volume can be measured in physical units (meters,
tons, etc.), planned work hours, percents or any other units.
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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.
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Dependencies


Special Requirements:
 It is necessary to be able to set more than one link
between two activities.
 Besides the positive and negative time lags, it is useful
to set volume lags, that is preferable in many cases.
One of the potential problems with time lags is that slower
performance of the preceding activity may lead to time lag
too early completion when expected volume of work was
not done. The time lags call for special attention and
regular adjustments.
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Resources


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Resources are divided into two classes:
 renewable (human resources and mechanisms) and
 consumable (materials, equipment).
In our software they are not just resource types, but
different objects (Resources and Materials).
It makes possible to define that renewable resources
consume materials during their work (car consumes gas,
etc.).
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Complex Resources



Besides the individual resources it is useful to set resource
crews (we call them multi-resources) and resource skills
(roles).
Multi-resource is the settled group 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.
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Resource Skills


Resources belong to the same Skill set If they can do the
same types of work (share the same skill).
Resources belonging to the same Resource Assignment
Skill are interchangeable though individual resources may
have the same skills but different productivities performing
the same activities.
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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.
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Resource Assignments


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
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 skills.
Resources belonging to different teams can work at different
time periods. Teams work independently of each other.
An example: resources that work in different shifts belong to
different teams.
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Resource Assignments


If 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 activity duration.
It should be noted that when the skills are assigned, activity
duration can be calculated only in the process of scheduling
when assigned resources are selected from the skill set.
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Resource Assignments


When assigning resource skills, one should either set a
total number of resources necessary for activity execution
or their total productivity.
Example: a skill set consists of the trucks with different
carrying capacity. One may set a number of trucks
necessary for the activity execution or the total productivity
(dependent on capacities) of all assigned trucks.
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Resource Assignments


Resources can be assigned to activities part time.
In this case one shall set percentage of assigned
resources utilization (resource workload) 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).
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Resource 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 an activity will start if two units of assigned resource
are available not less than 40% of their work 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%.
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Material assignments



Resources can consume materials in the process of their
work, so materials may be applied to resources.
Besides materials can be assigned to activities or resource
assignments directly. Material assignments may be defined
as fixed quantities, or quantities per hour or volume unit.
In some projects it is necessary to simulate not only
material consumption but also production of resources
and materials on activities and assignments.
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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.
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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 labour 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).
Assignment cost is an example of setting contract costs for
the project activities.
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Centres




It may be necessary to get different reports on the groups
of cost components, materials and resources. That is why
Cost, Material and Resource Breakdown Structures and
Centres are created and used.
Material centre can include any group of materials.
Resource centre can include any group of resources.
Cost centre includes selected cost components.
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Part 2
Corporate Project
Management System
Requirements
Organizing corporate data
• Corporate project management systems have specific
requirements that are vital for successful implementation.
• It is necessary to be sure that:
– Project costs have the same structure in all projects
(same cost components are used)
– Cost Accounts are the same in all projects
– The same Project, Phase, Activity, Resource, and
Department coding structures are used in all projects
– Activities of the same type have the same characteristics
in all projects (like unit cost, material requirements per
work volume unit, etc.)
Organizing corporate data
– Resources that are used in all projects belong to the
corporate resource pool
– Resources of the same type share the same
characteristics (like production rates, material
consumption per work hour)
– Typical resource assignments have the same
characteristics in all projects (like productivity, cost, and
material requirements)
– Typical processes are modeled in the same way in all
projects.
Corporate PM System
Requirements
 Project Management in the Corporate Project Management
System sets certain requirements to the project schedule
models development and decision making.
 Project schedule models shall be created with the use of:
 Corporate methodology,
 WBS templates,
 Resource, Cost, Material dictionaries,
 Corporate production norms, unit costs and material
requirements.
Corporate PM System
Requirements
•
•
•
Program Databases
(Reference-Books)
•
•
•
•
•
•
Typical Fragment Library
•
•
•
Project Management
Guidelines
•
•
WBS
Template
•
Multiple WBS
•
•
Contract Breakdown
Structure
•
•
Cost Breakdown Structure
•
•
•
•
Project Archives
•
Part 3
Project/Program
Resource Constrained
Scheduling
Project Scheduling Tasks
•
•
•
•
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.
• Simple heuristics used by most PM software does not
guarantee satisfactory resource constrained scheduling
results.
• That is why we pay most attention to resource-constrained
schedule optimization.
Resource constrained
scheduling
• This is an example of the simple project but resource
constrained schedules created by most PM software for
this project are at least two weeks late.
Resource constrained
scheduling
• The schedule stability is no less important, especially at
the project execution phase.
• That is why our project management software Spider
Project features an additional option - the support of the
earlier project version schedule (keeping the order of activity
execution the same as in selected earlier project schedule).
Sample Project before
leveling
• Traditional notion of Critical Path works only in case of
unlimited resources availability.
• Let’s consider a simple project consisting of five
activities, presented at the next slide:
• Activities 2 and 4 are performed by the same resource.
Sample Project after
leveling
• Please pay attention to activities that became critical. Now
delaying each of the activities 3, 4 and 5 delays project
finish date.
• We call these activities Resource Critical and their
sequence comprises Resource Critical Path.
Resource Critical Path
• In many projects it is necessary to simulate financing and
production, and calculate project schedules taking into
account all limitations (including availability of renewable
resources, material supply and financing schedules).
• True critical path should account for all schedule
constraints including resource and financial limitations.
• We call it Resource Critical Path (RCP) to distinguish it
from the traditional interpretation of the critical path
definition.
Resource Critical Path
• 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) levelling.
• This technique permits to obtain resource constrained
floats.
• Activity resource constrained float shows the period for which
activity execution may be delayed without postponing project
finish within the current schedule with the set of resources
available in this project.
Super Float
•
•
•
Resource Dependencies
•
•
•
RCP and Critical Chain
•
•
•
Portfolio Scheduling
•
•
•
Part 4
Project Success Criteria
Project Success Criteria
• If project success criteria are set as finishing project on time
and under budget then proper decision making will be
complicated.
• Project managers will not be able to estimate if it is
reasonable to spend more money but to finish the project
earlier.
• We suggest to set one integrated criterion of the
project/program success or failure.
• For this it is necessary to estimate the cost of time for
current project.
Project Success Criteria
• The delay of project finish date usually increases project
cost, and acceleration means saving some money.
• So each day of project delay means some money losses
and finishing project earlier means additional profit.
• Estimating these profits and losses we can define the cost
of the project day (maybe separate and different for
acceleration and delay).
Project Success Criteria
• Another option – to set the profit (NPV) that should be
achieved at some point in time basing on the forecast of
the revenues that will be obtained after the project will
deliver its results.
• Such success criterion permits to weight time and money
making managerial decisions for project investors.
• At the next slide you may see the project schedule that is
calculated without allowing for project financial restrictions.
There are periods when project has no money to proceed.
Project Success Criteria
• This schedule was
calculated without
considering
financial limitations.
• Expected profit to
the specified date
is $231,141.
Project Success Criteria
• This schedule of
the same project
was calculated
considering
financial and
supply limitations.
• The profit to the
same date is
$196,692,
approximately
$35,000 lower.
Project Success Criteria
• Project Manager may analyze different options like
borrowing money or delaying payments.
• To be able to weight options and to select the best it is
necessary to consider not only expenses but also
revenues and financing.
• Proper project (program, portfolio) schedule model is
the powerful tool that helps to select the best decisions.
Part 5
Portfolio
Resource Constrained
Scheduling
Portfolio Success Criterion
• Project Portfolio shall be planned to maximize the benefits
for the organization.
• Usually the benefits mean maximizing portfolio NPV that
looks similar to the project success criterion.
• For projects it is clear that shorter schedule means smaller
expenses and faster payback. If resource-constrained
schedule has minimal duration it means minimal expenses
or maximal profit.
• It is not that simple for project portfolio.
Portfolio Success Criterion
• Minimizing total portfolio duration does not mean
maximizing NPV.
• Though total duration become shorter some projects may
finish later than possible thus postponing receiving project
revenues. Overall NPV may become lower than for longer
portfolio duration but faster achievement of first projects
results.
• Let’s look at the sample portfolio that consists of 6 projects.
• At the next slide portfolio schedule was calculated without
considering resource constraints.
Portfolio Success Criterion
Portfolio Success Criterion
• Resource Constrained schedule calculated without setting
project priorities makes NPV (that is calculated at the same
moment) much lower because resource limitations delay
project performance and achieving expected profits.
• Spider Project permits to create any number of parallel WBS
for projects and portfolios.
• Next slide shows full structure and then we will look at the
structure that shows only investment phases of all projects.
• At this structure we will see project finish dates.
Portfolio Success Criterion
Portfolio Success Criterion
Portfolio Success Criterion
• After resource leveling:
• Last project will finish on 18 November 2015
• Expected NPV=14,413,316
• Now let’s calculate the resource-constrained portfolio
schedule applying project priorities.
• The result is on the next slide.
Portfolio Success Criterion
Portfolio Success Criterion
• After resource leveling with project priorities:
• Last project will finish on 14 January 2016
• Expected NPV=17,093,327
• Last project finished two months later but NPV increased by
2.6 millions.
• Conclusion: always set project priorities. In this example any
set of priorities lead to better results than multitasking.
• Next priority option is the worst but still better than leveling
without applying project priorities,
Portfolio Success Criterion
Portfolio Success Criterion
• After resource leveling with these priorities:
• Last project will finish on 31 December 2015
• Expected NPV=15,014,726
• Now let’s delete multi-project 6 from our portfolio.
• The multi-project 6 looked attractive but we have limited
resources and without project 6 we will accelerate the
execution of other projects.
• The result is on the next slide
Portfolio Success Criterion
Portfolio Success Criterion
• After resource leveling with the same priorities but without
multi-project 6:
• Last project will finish on 26 May 2014
• Expected NPV=16,674,013
• Deleting profitable project from the portfolio we accelerated
other projects for 1.5 years and will earn additional 1.65mln.
• Conclusion: project selection for including into corporate
portfolio shall be confirmed by the whole portfolio leveling.
• Even most profitable project may lead to large losses if the
resources are limited and shared by portfolio projects.
Part 6
Performance
Management
Performance Measurement
• Project activities have volumes, durations, require materials
and have costs.
• Measuring activity performance it is necessary to measure
all these parameters.
• Estimating % complete is not clear - % of what?
• If 70% of volume was done, 50% of activity duration was
passed, 80% of money and all materials were spent then
what is % complete?
Performance Measurement
• Project status information is not sufficient for decision
making.
• If project is 10 days behind the schedule is it good or bad?
• If a month ago project was 25 days behind the schedule,
two months ago project was 40 days behind the schedule,
then only 10 days delay now is very good achievement.
• Project trend information is much more useful for decision
making than the information on project status.
Trend Analysis
• Project Performance Management shall be based on trend
analysis.
• It is necessary to discover problems as soon as possible
and, by analyzing trends of the major project parameters,
the project manager can quickly understand if there are
problems with project performance.
Trend Analysis
• It is natural to analyze trends of those data that are used in
the success criterion definition.
• If we defined that the project performance will be considered
successful if cash flow forecast for the specific date exceeds
the target value then we will analyze if this forecast is
growing or not.
• Negative trend shows problems in project performance and
requires consideration of corrective actions.
Project Archives
• It is necessary to be able to restore and analyze trends of
any project parameter.
• It is possible only if project archives are properly stored and
can be analyzed.
• Spider Project keeps project archives and can restore
trends of any user selected parameter from the project start
to the current date.
What is missed
• We have no sufficient time for discussing risk management
methods and tools.
• Without risk management even most accurate project
scheduling is not reliable,
• Any schedule model requires time and cost contingency
reserves (project time and cost buffers) that shall be
calculated and added to the deterministic project goals.
• Calculating necessary contingency reserves is Risk
simulation task.
Conclusions
Tips for Corporate
Project Management
1. Corporate Project Management requires common
methodology, templates, reference-books that are used
in all corporate projects.
2. Most norms and standards are applied to the activity
volume physical units (m, t, m3, piece, etc.). So it is
necessary to create project schedule and to monitor
project performance basing on physical quantities
(volumes of work) measurement.
3. It is necessary to create a library of project fragments that
may be used for fast and reliable development of the
detailed project computer models.
Tips for Corporate
Project Management
4. There is a need for Project Management Office –
organizational unit that develops corporate project
management norms and standards, manages corporate
databases and libraries, and manages Project Portfolio,
creating and updating portfolio schedule and analyzing
portfolio performance.
5. Portfolio and Program Schedule Models includes the
models of individual projects and shall be resource and
cost loaded.
Tips for Corporate
Project Management
6. It is necessary to set integrated project and portfolio
success criteria.
7. It is necessary to be able to calculate project and
portfolio schedules considering not only resource but
also financial and supply constraints.
8. The choice of projects for their inclusion in the Project
Portfolio shall be justified by scheduling the portfolio
model that includes project schedules and analyzing
their impact on the portfolio success criteria.
Tips for Corporate
Project Management
9. It is necessary to avoid multitasking and always apply
priorities to the portfolio projects.
10. It is necessary to keep project and portfolio archives and
to analyze trends of project and portfolio parameters.
11. If trends are negative then corrective actions shall be
considered even if the project/portfolio status is good.
12. Risk simulation shall be applied basing on the solid resource
management foundation and corporate standards for
scheduling. Applied to the simplified models, without
considering resource constraints, it is not only useless but
dangerous – creates wrong illusions.
Thank You
For Attending!