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Paper w78-1993-35:
Optimization of resource cost based on availability

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Shanmuganayagam V

Optimization of resource cost based on availability

Abstract: Project management software packages carry out resources planning on the basis that the allocation of any scarce resource is constrained by two levels of availability: the Normal Availability and the Total or Maximum Availability. Giving the usual interpretation to these two levels of availability, two types of inaccuracies can be detected in the resource cost computations. Firstly, the cost of unused resources below the normal availability is ignored. Secondly, the resources in excess of the normal availability are provided at the same unit cost as those within the normal avaialability. The software packages such as Hornet Project Management report identical resource costs irrespective of the chosen levels of normal and total availabilities because of these inaccuracies. Thus, the planner lacks an appropriate criterion for selecting the optimum levels of resource availability. The task of finding the optimum levels would be an operational research problem, the solution of which may not be easy to obtain. This paper describes a method that enables the planner to compute the real resource cost after eliminating the errors and to select the two levels such that the real cost is a minimum, The optimization process is carried out within the environment using a program compiled in the language of the software. The application of the method is illustrated with the resource planning for a construction project of 30 activities using the Hornet project management software. The variation of the real cost with the total availability indicates the existence of two distinct minimum cost solutions - one corresponding to a time-limited resource levelling schedule of the unlimited resources situation and the other to a resource scheduling schedule under a limited resources situation. The real cost is a minimum for a specific value of normal availability for the two optimum total availability values. An arbitrary choice of the norrnal and total availability levels could lead to the real cost being higher by amounts varying between 10 and 30 percent.



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Series: w78:1993 (browse)
Cluster: papers of the same cluster (result of machine made clusters)
Class: class.economic (0.016545) class.software development (0.009462) class.software-machine (0.008249)
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Permission to reproduce these papers has been graciously provided by the National University of Singapore. The assistance of the editors, particularly Prof. Martin Betts, is gratefully appreciated.


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