CHAPTER 8

RESOURCE ALLOCATION
During the development phase of a project, the need will arise for various
types of resources at different times. Ensuring the timely delivery of these
resources to the project development team is of great importance, as late
delivery will most probably mean that the project development will fall behind
schedule. Study Chapter 8 of the textbook, which deals with resource
allocation.

Objectives:
The aim of Chapter 8 of the textbook is to introduce the following concepts:
 the nature of resources;
 identification of resource requirements;
 scheduling of resources including:
o creation of critical paths, and
o counting cost;
 being specific;
 publishing the resource schedule;
 cost schedules; and
 the scheduling sequence.

Outcomes:
After studying Chapter 8 of the textbook, you should be able to:
 identify the resources required for a project;
 ensure that the demand for resources is more evenly distributed
throughout the life of a project; and
 produce a work plan and resource schedule.

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EXAMPLE 1
The third month of a seven-month project has just been completed and actual figures (in
person-months) are given in the table below:

Month Budgeted effort Value completed Actual effort

1 11 5 7
2 15 7 8
3 20 11 12
4 20
5 16
6 13
7 5
TABLE 1

1. What percentage of work should be completed at this stage, according to the

original plan?
2. What percentage of work is actually complete?
3. What percentage of the total budget has been expended?
4. What do these figures tell us about the project?

SOLUTION:
1. Total budget 100
Budget months 1 to 3: 46
Estimated % complete (46 / 100 * 100) = 46%

2. Total budget 100

Value completed months 1 to 3: 23
Estimated % complete (23 / 100 * 100) = 23%

3. Total budget 100

Actual effort months 1 to 3: 27
Estimated % complete (27 / 100 * 100) = 27%

4. The project is late with regard to completion: 23% actually completed ( = value
completed during month 1 to month 3 = 5+7+11 = 23) versus 46% planned
completion ( = budgeted effort = 11+15+20 = 46).

Estimating 15% low: 23% of the work is actually complete (refer q.2) and 27% of the
budget has been spent (refer q.3). Not too much has been overspent, i.e. the
budget was estimated (27-23)/ 27 * 100% = 4/27 * 100% = 15%.

Resource allocation seems to be the main culprit: 27% actually spent versus 46%
planned. Seeing that the budget has only been underestimated by 15%, it doesn't
seem to be a problem. The only other alternative to the work being so far behind
schedule is that resources are a problem. (For example, too few staff, incompetent
staff, incorrectly allocated staff, etc.). Insufficient resources have had a much
greater impact than under-estimating.
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EXAMPLE 2
Below is partial precedence network for an IT project. Specific individuals have not been
allocated to activities yet, but all the activities will be carried out by ‘standard’ analysts or
software developers. Draw up a bar chart and resource histogram for the information
given in the precedence network below.

17 12 29 36 6 42
Activity 2 Activity 7
Specify Module A Design Module A

22 6 34 36 0 42

17 10 27 * 36 5 41
*
Activity 3 Activity 8
Specify Module B Design Module B
0 17 17 34 2 36
24 7 34 37 1 42
START Activity 1 Activity 6
Specify Overall System Check Specs END
0 0 17
* 17 17 34
* 34 0 36
36 4 40
Activity 4 Activity 9
Specify Module C Design Module C

17 0 34 42 6 46

17 10 27 36 4 40
Activity 5 Activity 10
Specify Module D Design Module D

24 7 34 40 4 44

* CRITICAL PATH: Activity 1-4-6-7 = 42

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SOLUTION: Bar chart and resource histogram

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EXAMPLE 3
The staff cost of the Phumzani Project is shown below. Nomsa is the project leader of the
Phumzani project and will spend 10 extra days on the project to plan and carry out the
post project review. The project is scheduled to be finished in 26 days. An amount of R350
per day is charged by the Phumzani team for overhead costs. Busi will work on the project
every day, Samuel and Amy will work only half of the days and Juan will work only 10 days

Staff member Daily cost

Nomsa R400
Samuel R200
Juan R300
Busi R400
Amy R300
TABLE 2

Calculate the total cost for the Phumzani project. [14]

SOLUTION:

STAFF MEMBER DAILY COST DAYS REQUIRED COST

Nomsa R400 26 +10 = 36 R 14,400 2 marks
Samuel R200 26 / 2 =13 R 2,600 2 marks
Juan R300 10 R 3,000 2 marks
Busi R400 26 R 10,400 2 marks
Amy R300 26 / 2 =13 R 3,900 2 marks
Overhead costs** R350 26 R 9,100 2 marks
Total Total R 43,400
Table for solution to question: Total cost for Phumzani project

**Note: The overhead cost per day is very important to include in the calculation of the
cost of the entire project. The overhead cost is calculated for the number of days for whic h
the project is scheduled and not for additional days that some staff members may work.
This cost can easily be overlooked with great influence on the final cost. In this scenario
the overhead cost was only R 9100 but in bigger projects this cost can grow exponentially
to have a staggering influence on the total cost of the project.

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EXAMPLE 4
ACTIVITY DURATION (WORKING DAYS) PRECEDENTS RESOURCES TYPE
A 3 days None System Analyst (SA)
B 1 day A System Designer (SD)
C 2 days A System Designer (SD)
D 4 days A System Designer (SD)
E 3 days B Software Coder (SC)
F 3 days C Software Coder (SC)
G 6 days D Software Coder (SC)
H 3 days E,F,G System Analyst (SA)
TABLE 3

4.1 Use the information in table 3 to draw activity-on-node network, include all the
node calculations.

3 1 4 4 3 7
B E
9 6 10 10 6 13

0 3 3 3 2 5 5 3 8 13 3 16
START A C F H FINISH
0 0 3 8 5 10 10 5 13 13 0 16

* *
3 4 7 7 6 13
D G
3 0 7 * 7 0 13

* CRITICAL PATH: A-D-G-H = 16

4.2 Produce a resource table showing the number of specialists of each type needed
on each day of the project.
days 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
SA1 A A A
SD1 B
SD2 C C
SD3 D D D D
SC1 E E E
SC2 F F F
SC3 G G G G G G
SA2 H H H
SD’s 3 2 1 1
SC’s 1 2 2 2 1 1 1 1 1
SA’s 1 1 1 1 1 1

4.3 How many of each type of resource (minimum) will need to be recruited for the
project as a whole if the earliest finish date is to be preserved?
SOLUTION: 1 System Analyst; 3 System Designers and 2 Software Coders
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4.4 What impact would there be on the project in table 3 if there were only two system
designers?
SOLUTION:
days 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
SA1 A A A
SD1 B C C
SD2 D D D D
SC1 E E E
SC2 F F F
SC3 G G G G G G
SA2 H H H
SD’s 2 2 1 1
SC’s 1 2 2 2 1 1 1 1 1
SA’s 1 1 1 1 1 1

• So if there were only two system designers, the completion date of the project
will still be 16 weeks and the critical path is still the same, so there’s no impact
on the completion date.
• But now we have 5 staff members (1 SA, 2 SD, 2 SC) instead of 6 as before
(1 SA, 3 SD, 2 SC) , which could result in reducing the project expenditure
(cost).

4.5 What impact would there be on the project in table 3, if there were only one system
designer but you had three software coders?
SOLUTION:
days 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
SA1 A A A
SD1 D D D D C C B
SC1 E E E
SC2 F F F
SC3 G G G G G G
SA2 H H H
SD’s 1 1 1 1 1 1 1
SC’s 1 1 2 3 3 2
SA’s 1 1 1 1 1 1

• So if there were only one system designer but you had three software coders,
the completion date of the project still will be 16 weeks, so there’s no impact
on the completion date.
• But now we have 5 staff members (1 SA, 1 SD, 3 SC) instead of 6 as before (1
SA, 3 SD, 2 SC), which could result in reducing the project expenditure (cost).
• Also now we have 2 critical paths “start A‐ D‐ G‐H-finish” and “start A‐ C‐
F‐H‐finish”, instead of only one critical path as before “start A‐ D‐ G‐H‐finish”.

4.6 Assuming that the systems designers were employed for the duration of the project,
what would be the % utilization of the systems designers in the case of both (1.4)
and (1.5) above?
• 7/(13x2) x 100 = 27%
• 7/13 x 100 = 54%

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QUESTION 5:
ACTIVITY DURATION (WORKING DAYS) PRECEDENTS RESOURCES TYPE
A 2 days None SA
B 10 days A SD
C 2 days A SD
D 2 days C SC
E 3 days C SC
F 2 days C SC
G 4 days B, D, E, F SA
TABLE 4: SA = Systems analyst; SD = Systems designer; SC = Software coder

5.1 Draw up an activity network for the activities below, identifying the critical path

A D

C
E

ACTIVITY ES DURATION EF LF LS FLOAT

A 0 2 2 2 0 0
B 2 10 12 12 2 0
C 2 2 4 9 7 5
D 4 2 6 12 10 6
E 4 3 7 12 9 5
F 4 2 6 12 10 6
G 12 4 16 16 12 0

Critical path is A-B-G

5.2 Draw up a resource table showing the number of each type of resource needed on
each day of the project and assuming that there is only one Systems Designer.

days 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15-18
SD1 C C B B B B B B B B B B
SC1 D D E E E F F
SA A A G
Note: This illustrates that the best policy is not always to give priority to activities on the critical path when allocating resources.

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QUESTION 6
With the information on the table 5, draw an activity-on-node network. Calculate earliest
start (ES) and Latest finish (LF).

ACTIVITY DESCRIPTION RESOURCES DURATION PRECEDENTS

(WORKING DAYS)
A Requirement analysis System analyst 5 None
B System design System Designer 9 A
C Programming Programmer 4 None
D Hardware installation Hardware 2 A
Installer
E System testing Tester 5 C
F Training and Support Trainer and 6 B
supporters
TABLE 5

6.1 One of the final results of resource allocation is “Resource Schedule” which
shows the dates each resource will be required and the level of the requirement.
Table 5 has activity description and resources that are needed per activity.

a) Use the information on table 5 to draw activity-on-node network, include all

the node calculates.

5 9 14

0 5 5 * B
*
5 0 14 14 6 20
A
F
0 0 5
5 2 7 14 0 20 *
START
* FINISH
D
18 13 20
0 4 4
C
4 5 9
11 11 15
E
15 11 20

* CRITICAL PATH: A-B-F = 20

b) Using a bar chart, schedule the resources of this project to the

activities plan drawn (i.e map out the resources indicated in column 3 of
table 5 to the activity plan you draw). Other thing being equal, assume all
resources are required only once and each activity has been scheduled to
start at its earliest start date.

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 DAYS 
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
A SYSTEM ANALYST
B SYSTEM DESIGNER
C PROGRAMMER
D INSTALLER

E TESTER
F TRAINER AND SUPPORTERS
 ACTIVITIES

6.2 Why is it important to prioritize activities in projects?

SOLUTION:
Allocating a resource to particular activity limits the flexibility for resource allocation
and scheduling of other activities. Therefore it is important to prioritize activities so
that resources can be allocated to competing activities in some rational order. The
priority should always be to allocate resource to critical path activities and then to
activities that would most likely affect others.

6.3 Discuss at least two ways of prioritizing activities.

SOLUTION:
Total float priority: With this method, activities are ordered according to their total
float. Activities with smallest total float have the highest priority. This means that
activities are allocated resource in ascending order of total float.

Ordered list priority: this method allows activities that can proceed at the same
time to be ordered according to a set of simple criteria.

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