Resource%20Limited%20Project%20Management

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Resource LimitedProject Management

• Vladimir Liberzon
• spider_at_mail.cnt.ru

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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.

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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.

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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.

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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 activitys physical volume of work.
• Activity volume can be measured in 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

• 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.

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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.

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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.

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Resource Skills

• Resources sharing the same skills comprise
  Resource Assignment Pools.
• Resources belonging to the same Pool are
  interchangeable though individuals in a pool may
  have 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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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 activitys 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.

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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.

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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.

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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).

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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.

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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.

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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 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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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,

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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.

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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.

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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.

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Resource constrained scheduling

• The schedule stability is no less important,
  especially at the project execution phase.
• Thats 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).

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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

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Resource Critical Path
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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.

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Resource Critical Path
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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.

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MS Project Example
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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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Risk Simulation

• Monte Carlo simulation is very time consuming and
  not practical for the large projects.
• Current practice of its implementation mostly do
  not consider correlation between activity
  duration and cost estimates that exists if
  activities are performed by the same resources,
  do not consider risk events that may change a set
  of project activities.

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Risk Simulation

• Even if everything is properly simulated the
  number of necessary iterations is too high for
  receiving reliable results in the reasonable
  time.
• A project planner may be happy with the
  probability estimates that has plus or minus 10
  accuracy but only if the error will be stable. If
  it may change from one calculation to another
  then these estimates can not be used as
  performance management tool.

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Risk Simulation three scenarios approach

• A project planner obtains three estimates
  (optimistic, most probable and pessimistic) for
  all initial project data (duration, volumes,
  productivity, calendars, costs, etc.).
• Risk events are selected and ranked using the
  usual approach to risk qualitative analysis.
• Usually we recommend to include risk events with
  the probability exceeding 90 in the optimistic
  scenario, exceeding 50 in the most probable
  scenario, and all selected risks in the
  pessimistic scenario.

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Risk Simulation three scenarios approach

• These data are used to calculate optimistic, most
  probable and pessimistic project schedules and
  budgets.
• The most probable and pessimistic project
  scenarios may contain additional activities and
  costs due to corresponding risk events and may
  employ additional resources and different
  calendars than the optimistic project scenario.

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Risk Simulation three scenarios approach

• As the result project planner obtains three
  expected finish dates, costs and material
  consumptions for all major milestone.
• They are used to rebuild probability curves for
  the dates, costs and material requirements.
• Defining desired probabilities of meeting project
  targets a project planner obtains desired finish
  dates, costs and material requirements for any
  project deliverable.

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Risk Simulation setting targets

• There is a preferable interval for setting
  project targets that is defined by market
  competition.
• Lets consider an example
• Some company delivers projects that bring her
  10,000 profit per project if the project is
  successful.
• Unsuccessful project means 10,000 lost.

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Risk Simulation setting targets

• Lets create a table with the following data
• P - Probability of project success
• M - Mean profit from the single project
• N - Number of expected customers
• T - Expected total profit

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Risk Simulation setting targets
P M N T
100 10000 3 30000
90 8000 5 40000
80 6000 8 48000
70 4000 12 48000
60 2000 20 40000
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Risk Simulation setting targets

• For this company it is reasonable to propose
  project targets that will be met with the
  probability that is between 70 and 80.
• These data form basis for the negotiations that
  may result in establishing other target dates,
  costs, material consumption.

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Success Probabilities

• In this case it is necessary to calculate the
  probabilities of meeting required project
  targets.
• If they are reasonable then they may be accepted.
• Probabilities to meet approved project targets we
  call Success Probabilities.

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Baseline

• Target dates do not belong to any schedule.
  Usually they are between most probable and
  pessimistic dates.
• A set of target dates and costs (analogue of
  milestone schedule) is the real project baseline.
  But baseline schedule does not exist!
• A schedule that should be used for setting tasks
  for project implementers is optimistic.

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Critical Schedule

• Project planner obtains not only the set of
  target dates but also a critical schedule a
  project schedule calculated backward from target
  dates.
• Usually this schedule is based on most probable
  estimates of activity durations and the
  difference between current and critical dates
  shows current schedule contingency reserves
  (buffers).
• At the next slide critical schedule is shown in
  blue.

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Buffers

• There are time, cost and material buffers that
  show contingency reserves not only for a project
  as a whole (analogue of Critical Chain project
  buffer) but also for any activity in the
  optimistic project schedule.
• Time buffer for activity is defined as the
  difference between activity starts (finishes) in
  the current and critical schedules.
• During project execution it is necessary to
  estimate if these buffers are properly utilized.

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Success Probability Trends

• The best way to measure project performance is to
  estimate what is going on with the project
  success probabilities.
• If they rise it means that contingency reserves
  are spent slower than expected, if they drop it
  means that project performance is not as good as
  it was planned and corrective actions are needed.
• In any case if the project meets project targets
  then corresponding success probabilities will
  reach 100 before project finish.

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Success Probability Trends

• Success probabilities may change due to
• Performance results
• Scope changes
• Cost changes
• Risk changes
• Resource changes
• Thus success probability trends reflect not only
  project performance results but also what is
  going on around the project.

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Success Probability Trends

• We consider success probability trends as the
  really integrated project performance measurement
  tool.
• Success probability trends may be used as the
  only information about project performance at the
  top management level this information is
  sufficient for performance estimation and
  decision making.
• We call the described methodology Success Driven
  Project Management.

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Success Probability Trends

• If project performance is estimated by success
  probability trends then project managers are
  encouraged to resolve uncertainties ASAP
• This can increase success probabilities even with
  activity finish delays cost overruns.
• Postponing problem activities leads to negative
  trends in success probabilities.
• This attribute of success probability trends is
  especially useful in new product development
  project management.

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Success Probability Trends

• It is useful to set not one but several targets
  for the same project parameter.
• In this case success probability trends will show
  to what interval of final results project is
  going.
• In any case there are always several sets of
  target data for each project.
• Lets discuss it using project budget as an
  example.

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Project Budgets

• The first project budget is the optimistic budget
  that is set as a target for the project team.
• The second one is the budget of the project
  management team that includes approved
  contingency reserves.
• The third budget includes management reserves and
  may be called executive budget.
• And at last the project may have contract cost
  that includes profit.

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Project Budgets

• Optimistic budget has zero success probability.
• As for others it is useful to know what is going
  on with the probabilities to meet project
  management team budget, executive budget and
  contract cost.

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Critical Chain

• You may notice that the approaches to the project
  management discussed today are similar to those
  that are used in Critical Chain Project
  Management.
• I do not see the difference between Resource
  Critical Path and Critical Chain except I have
  never met the description of the Critical Chain
  calculation.

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Critical Chain

• Both the SDPM and the Critical Chain theories
  recommend project managers to use optimistic
  estimates of the project data to set the tasks
  for the project manpower and to control
  contingency and management reserves. SDPM also
  offers a technique for calculating necessary
  contingency reserves, while CCPM suggests to use
  qualitative estimates.

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Critical Chain

• Unlike Critical Chain theory SDPM approach states
  that
• RCP can change during the project execution,
• multitasking is sometimes necessary, and
• critical (drum) resources can be different at the
  different stages of the project life cycle.

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Critical Path

• RCP and classical Critical Path are the same if
  project resources are unlimited.
• If project resources are limited then the
  classical Critical Path is useless and total
  floats calculated without considering resource
  limitations are not feasible.
• Really critical activities belong to Resource
  Critical Path and resource constrained floats
  show real activity time reserves.

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Conclusions

• Resource Limited Project Management requires
  implementing special techniques that include
• Organizing data in a way that supports proper
  resource work simulation and application of
  corporate norms and standards.
• Creating a set of reference-books and a fragnets
  library that are obligatory for creating project
  computer models.

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Conclusions

• Calculating Resource Critical Path and resource
  constrained floats.
• Risk assessment and simulation.
• Defining target dates and costs (and
  corresponding contingency reserves) that may be
  achieved with reasonable probability.
• Recalculating the current probabilities of
  meeting project targets during project execution
  and analyzing success probability trends.
• Applying corrective actions if these trends are
  negative.

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Thank you

• Thank you for your participation.
• I am looking forward to your feedback and
  comments.
• My E-mail spider_at_mail.cnt.ru
• Vladimir Liberzon
• ???????? ????????