PROJECT

MANAGEMENT

RESOURCE
ALLOCATION
PROBLEM
The basic problems associated with resource allocation, their
causes and solutions for project based business
organizations.
Table of
Contents
PROJECT DETAILS.................................................................................................... 2
EXECUTIVE SUMMARY......................................................................................... 4
WHAT IS RESOURCE ALLOCATION?....................................................................4
INTRODUCTION..................................................................................................... 4
BACKGROUND....................................................................................................... 5
RELEVANT THEORY............................................................................................... 6
SUMMARY.............................................................................................................. 7
EXAMPLE............................................................................................................. 10
A CASE STUDY..................................................................................................... 10
SOLUTIONS FOR RESOURCE ALLOCATION PROBLEM....................................11
CONCLUSION....................................................................................................... 14
REFERENCES....................................................................................................... 14
PICTURE GALLERY.............................................................................................. 15
TABLES AND CHARTS......................................................................................... 23
APPENDICES........................................................................................................ 24
.............................................................................................................................. 24

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PROJECT DETAILS
GROUP MEMBERS:
Tooba Israr Chaudhry
13190920-019
Humera Naz
13190920-021
Amna Ashfaq
13190920-045
DilAwaiz Sajid
13190920-018
Sadaf Naz
13190920-022
Khizra Zahoor
13190920-026
Samra Malik
13190920-030

2
 Laraib Nafees
13190920-028
Nabila Shahzadi
13190920-010
TOPIC:
RESOURCE ALLOCATION
PROBLEM
Submitted to:
Ms. Mateena Hassan
DEPARTMENT OF MANAGEMENT
SCIENCES

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 RESOURCE ALLOCATION PROBLEM
EXECUTIVE SUMMARY
This report is based on a topic from book, Project Management a Managerial
Approach by J. R. Meredith and S. J. Mantel, Jr. in which we are going to discuss the
resource allocation problems faced by organizations. How projects are effected with
them and what are the consequences when the simple procedures are not
satisfactory and issues exist. A case study regarding the topic mentioned in the
book is also mentioned in between. At the end, we are also going to discuss some
possible solutions to the problem.

WHAT IS RESOURCE
ALLOCATION?
It is a process of distributing scarce resources among
various projects or organizational departments. And
it is a plan for using available resources efficiently
and effectively.
For example, Service Shoes is a shoe
manufacturing firm. Its resources for production
facility would include leather, rubber, dyes,
decorative items, manufacturing plants, labor, technical supervisors etc. its resources for marketing
department would include information regarding the products to be launched, channels of communication
through which the items will be endorsed, celebrity for brand endorsement, marketing personnel etc.

INTRODUCTION
An organization, regardless of the enormous
revenues earned, always follow some constraints.
The constraints are in terms of the time, cost,
performance etc. but one of the most important and
consistent constraint is, the resource constraint. Inter-
organizational and intra-organizational competencies
for scarce resources is a factor which keeps the
businesses running. If everyone would have excess of
everything, then the competition for survival will
stop. The survival in markets as business persons, the
survival in world as a species, everything. So, nature
maintains this constraint of physical resources to
keep the system running. Systems pay many costs,
the monetary cost, time cost, opportunity cost and
even the psychological costs to acquire sufficient
resources. And thus, these resources matter a lot to
them. To make sure they are utilized properly, the
owners and the authorities involved distribute the resources very carefully to the respective departments.

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What are departments? Departments are functional areas of an organization which perform a set of partial
and specified inter-related activities for the benefit of
entire organization. And what are projects? The subset
of organizations business, a complete business area
powered by a parent organization. Both of them work
for achieving the main purpose of existence of their
organization, i.e. profit earning. A question arises, that
how will they achieve it? They will transform the
provide resources into expected outputs which would
ultimately result in profit earning. This makes clear that
every department and every project needs resources.
The organizations are getting diverse day after day. The
expansion in knowledge results in so much complexity, that a simple decision making could be very
difficult. As mentioned earlier, there are authorities who allocate resources, they are also persons of an
organization who decide how much will be given to whom. And resource allocation is one of the major
cause of conflicts in corporate environment. People are not satisfied with their share of resources and they
compete and struggle for more. So, problems arise when allocation of resources in such circumstances
occur.

BACKGROUND
To learn the resource allocation problems of an organization, it must be made clear what resources are. A
resource is a supply of something that someone has and can use when it is needed. There are 3 types of
resources involved in an organization:
1. Human Resource:
The most useful resource, is the persons you recruit
for your organization. Depending on the size and
complexity of an organization, several types of
persons are to be hired and in specified numbers.
There is a lot of cost in recruiting and retaining
employees, and thus the human resource is highly
limited. Allocating employees to various departments
and projects is a conflict arising decision. It may vary
according to the type of people needed, e.g. the
production department may need cheap labor, and the
engineering department would require qualified engineers, which are costly as compared to basic
production labor.
2. Equipment:
The second most important resource is the equipment,
machinery or plant used to complete the transformation
process. It is a requirement of personnel that they must
receive quality equipment which would enhance their
productivity and assist them towards reaching their goals.
The equipment can be the technical machinery for
production purposes, the communication media for
awareness purposes, and latest computer software for data
processing and data maintenance procedures etc.

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 Figure 1
3. Material:
Transformat Last but not the
Input Output least is the
on Process
material
resource i.e. the
inputs required
for the
transformation process. These can be tangible or intangible depending on the type of
business a firm operates in. For example, raw materials or semi-finished parts for
production process, instructions and techniques for service industry or information for
the research based tasks etc.

The economic problem of resource scarcity and unlimited wants can be summarized as follows:

SCARCITY UNLIMITED WANTS,

LIMITED RESOURCES

WHAT? HOW? FOR

WHOM?
CHOICES
This diagrams shows the basic reason for the requirement of resource allocation procedures. Nothing is
excess, so the authorities are required to distribute them properly throughout the areas. For a project
manager, he must be fair and perform appropriate analyses (like cost and benefit analysis) to make sure
the most deserving one gets it. As the requirements are unlimited, so there is a constant need of check on
resource management and timely provisions to the personnel.

RELEVANT THEORY
Scientists are continually proving the existence and importance of constraints in an organization. The
theory of Constraints by Eliyahu M. Goldratt is one of the famous theory emphasizing the importance of
constraints in an organization. It states that:
It is a management paradigm that views any manageable system as being limited in achieving more of
its goals by a very small number of constraints.
This theory supports the scarce resources and their importance in organizations. The people competing for
resources, to minimize or eliminate constraints are actually performing helpful operations to carry out
business successfully. The competition for maximum resource acquisition gives rise to challenging
resource allocation methods, which results in further complications. And these complications lay the
foundation of Resource Allocation Problem associated with the companies.

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SUMMARY
A shortcoming of most scheduling procedures is that they do not address the issues of
resource utilization and availability
Having sufficient resources and utilizing them efficiently are two different perspectives. Sometimes the
employees are having issue of absence of required amount of resources, and other times they are having
sufficient resources but they dont know how to utilize them effectively. A limitation of scheduling
techniques imposed by the management includes that they do not account for the issues of resource
utilization and resource availability. A schedule is a conversion of a project work breakdown
structure into an operating timetable. It serves as the basis for monitoring and
controlling project activity and taken together with plan and budget, is probably the
major tool for the management of projects. In a project environment, the
scheduling function is more important than it would be in an ongoing operation
because projects lack the continuity of day-to-day operation and often presents
much more complex problems of coordination. Not all projects are required to
design and schedule them with equal details.

Scheduling procedures tend to focus on time rather than physical resources

We can mainly focus on those which need to be

monitored for maintaining adequate control over the
project. Such packages are usually expensive difficult
or have a relatively short timeframe for
accomplishment. The basic approach of all scheduling
techniques is to form a network of activity and event
relationship that graphically portrays the sequential relationship between the
tasks in a project. The task that may precede or follow are there tasks are
then clearly identified as in time and in function.

Time itself is always a critical resource

in project management, one that is
unique because it can neither be
inventoried nor renewed
Because time is not in our hands, so it is one of the
most uncontrollable factor. We can manage other
activities to use time effectively, but time cannot be
altered according to our requirements. Time is not
collectable, no one can save it for future. Once time
has passed never comes back and it is very
important in our lives. So, a project manager must utilize this resource effectively.
Schedules should be evaluated not merely in terms of meeting project milestones, but also in terms
of the timing and use of scarce resources

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 Importance of project is not only factor on which
schedule is evaluated there is also some other factors
which effect the performance of project, are timing
and scarce resources. Schedule should be tested in
term of time because in many project process if less
or excess time is given to any product it is not
fruitful like in heat treating process if any product
give extra or less time for its making it will not be
according to the requirement and it will adversely
effect its quality. So, in scheduling time is also
considered when scheduling is evaluated as well as
scarce resources. Because without reaching goals no project can be accomplish due to limited
resources and when time is not enough. Also keep in mind how much resources are required and
how it can be managed when project is executed.

A fundamental measure of the project managers success

in project management is the skill with which the trade-
offs among performance, time, and cost are managed
A measure thorough which project success is evaluated is
also skills of project manager that how he trade-offs among
performance,time and cost how he managed all these things
is also a fundamental measure of the project manager
success in the project management. a good project manager
knows how much time he have to give to the project and he
have to manage cost also and maintain quality as well. If
resources are unlimted then there is no need to trade-off
among them and there is no need of survival. It is
exceptional and impossible case because there are limited
resouces in reality, some problems arise due to limited resources and it is responsibility of project
manger to handle these problems efficiently which leads to the success of project management.
In resource dimensions he may make trade-offs with:
cost when you have to pay for extra resources that you have to pay for the overtime
Time when you cannot solve over allocations in any other way than by delaying tasks.

The extreme points of the relationship between time use and

resource use are these:
Time Limited: The project must be finished by a certain
time, using as few resources as possible. But it is time, not
resource usage, which is critical: Sometimes, there is
maximum availability of resources but due to limited time these
resources could not be used. So, completion in specified time is
a situation emphasized here and only can be removed through
good scheduling and through proper planning.

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 Resource Limited: The project must be finished as soon as possible, but without
exceeding some specific level of resource usage or some general resource constraint:
If there is unlimited resources then this world would be heaven and no problem would
arise and there will be no need to make plans and different strategic techniques. As we
know scarce resources are also a problem for project manager as he also receives them
from a higher authority. Resources are allocated by top management to every department
and project. Sometime insufficient resources for project make hurdles in the execution of
project which create conflicts among top management and project team which cause
ignorance of project requirement and problems so a good manager is one who remove all
these problems, by accomplishing the project with minimal resources in specified time.
This time the focus is on resources.

If all three variables - time, cost, specifications - are fixed, the system is over determined

These three variables time cost and specifications are the important parts of
a project. Both time and resources may be limited but in this case the
specification is also fixed. When the project managers start a project he must
keep the following things in mind time cost specifications etc. After dealing
these things efficiently, he might be able to accomplish projects and become
a good project manager

In this case, the project manager has lost all flexibility to perform the trade-offs that are so
necessary to the successful completion of projects
When the resources are fixed, the decision to be made are not necessary because it is pre-determined that
what would be the quality and quantity of the resources. And thus the project manager cannot perform a
tradeoff decision between the available options, because he cannot vary the quantities or qualities, but he
will have to manage with the existing criteria as prescribed by the authorities.

A system-constrained task requires a fixed amount of time and known quantities of

resources
Project Manager must have knowledge about the given amount of time and resources for project if he
is asked to maintain it because no trade-offs are possible. Otherwise it cause failure of project. Some
tasks provide fixed amount of time and known quantities of resources for completion of project.
Absence or worse quality of one resource make project incomplete so such type of system cannot be
accomplish without availability of required quality resources. Such type of systems are called system-
constrained and such type of task gives a fixed amount of time and exact quantities of resources and
without availability of needed resources even project cannot be accomplished, instead of leading
success.

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EXAMPLE
A CASE STUDY

COST/ BENEFIT ANALYSIS SAVES CHICAGOS TUNNEL PROJECT

As we know the cost and benefit analysis is necessary for each project to meet the success, because
companies who initiate those projects check if they are beneficial for them and should incur lowest cost to
get maximum benefits, like there is a case about the project where possibility of success is judged through
the cost and benefit analysis of project done by the federal government of USA.
Case Facts: In 1970, the Chicago deep tunnel project was conceived and scheduled for completion as
early as possible. The cost that can be spent on project was estimated about 3-4 billion. The project
consists of 110 miles of 300 foot underground tunnel, and there is reservoirs and pollution control system
which hold sewage and excess rainwater. The project was in a threat of loss of funding because the
benefit/cost ratio was exceeding the federal governments standards.
Problem: Like every project the same problems raised with Chicago deep tunnel project which is the
resource allocation problem i.e. how to get sufficient funding for the project? How to minimize the costs
and maximize the benefits of the project? Allocation of resources is one of the major problems occurring
in all projects. If finances would stop, the project manager will not have sufficient funds to acquire
necessary resources and the project may terminate. There is limited time, labor and other resources with
which the project manager has to carry on the project. He and his project must be competent enough to
acquire those resources, which is by making the projects benefit/cost ratio feasible in the specific
scenario.
Solution: To enhance the benefit/cost ratio, the project team altered the basic project strategies and
redesigned their resource allocation techniques, which resulted in a drastic improvement. The costs were
reduced by $100 million to improve the benefits and consequently, the ratio was upgraded up to the
required level of funding by the government. The Chicago tunnel project continued due to their effective
management of resources.
Inference: A project manager must effectively manage his resources to minimize costs and maximize
benefits to make sure the investors are willing to finance the project and the project is continued.

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SOLUTIONS FOR RESOURCE ALLOCATION PROBLEM
Most of the project managers are facing the problem of resource allocation. It is a
possible task to manage them manually, or handle them with MS excel
spreadsheets, but at the end, project manager is also a human. He may become
overwhelmed with excessive data handling and maintenance. Now a days, IT
developers are working very hard to make sure that the management sector will
also be at ease. There are numerous software available in the market from which
you can choose the best according to your resource allocation needs. Some are
based on Gantt charts, and some on complex algorithm to manage all types of
resources of a corporate world. Yes, including human resources.
Some famous software include Clarizen, Conceptdraw Project, Ganttic, Mavenlink,
Project Insight, RationalPlan, Replicon, TenRox, WorkOtter, Workfront, etc. You can
see below the screenshots of some of those resource management software sand
take a look at how they manage our resource allocation needs, so that the problem
may not arise.

Image 1: ConceptDraw Project

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 Image 2: Clarizen

Image 3: Workfront

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 Image 4: Project Insight

Image 5: Maven Link

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CONCLUSION
During project execution, the Project Manager faces so many problems, for
allocating resources to certain projects. There are so much uncertainties that occur
before the execution of the project. The uncertainties happen from a number of
possible sources i.e. the resources may be unavailable or limited, activities may
take less or more than originally estimated time, material may arrive behind
schedule, etc. as resources are scarce and time is unpredictable, therefor Project
Manager should carefully allocate resources in order to obtain the desired results.

REFERENCES
The data is authentic. Some of the references of the picture sources are given
below:
www.upload.wikimedia.org
www.linkedin.com
www.scu.edu
blog.capterra.com
onthefly.onemillionskates.com
pas-wordpress-media.s3.amazonaws.com
image.shutterstock.com
Software details from:
Blog.capterra.com

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PICTURE GALLERY

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TABLES AND CHARTS

Input Transformat Output

on Process

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APPENDICES
APPENDIX A The project report topic, as published in the book is follows:

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APPENDIX B For case study discussed above, following is the original script as
quoted by the book:

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