04 Resources Management and Allocation

Construction Management
By
Akash Padole
Department of Civil Engineering
Resources Management & Allocation

Contains
4.1 Material Management- Importance, objectives,
functions of material management, Inventory
control, A-B-C analysis, E.O.Q etc.
4.2 Human Resource Management- Manpower
planning, recruitment, Selection training,
performance evaluation of worker etc.
4.3 Resources Allocation Methods- Resource
levelling and Resource smoothening.
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Material Management
• Materiel management is defined as an approach for
planning, organizing and controlling all those
activities principally concerned with the flow of
material into an organization.
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Objectives of material management
• Minimizing the use capital in an efficient and
scientific manner.
• Lowering inventory investment and increasing the
inventory turnover by cutting the costs related to
purchases.
• Responding to the market changes with respect to
new products.
• Ensuring cooperation of all departments for
achieving the objectives of all material management.
• Providing best services to the level of customer of
working ’s delight.
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Functions of Material Management
• Materials planning
• Purchasing
• Inventory control
• Store-keeping
• Stores accounting
• Transportation – internal and external
• Disposal of scrap, surplus and obsolete materials
• Materials economics
• Waste management
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Inventory Control
• The term “inventory” means the value or amount of
materials or resource on hand. It includes raw
material, work-in-process, finished goods & stores &
spares.
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• Inventory Control is the process by which inventory is
measured and regulated according to predetermined
norms such as economic lot size for order or
production, safety stock, minimum level, maximum
level, order level etc.
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Objectives of inventory control
• To meet unforeseen future demand due to variation
in forecast figures and actual figures.
• To average out demand fluctuations due to seasonal
or cyclic variations.
• To meet the customer requirement timely, effectively,
efficiently, smoothly and satisfactorily.
• To smoothen the production process.
• To gain economy of production or purchase in lots.
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Benefits of Inventory Control
• Ensures an adequate supply of materials
• Minimizes inventory costs
• Facilitates purchasing economies
• Eliminates duplication in ordering
• Better utilization of available stocks
• Provides a check against the loss of materials
• Facilitates cost accounting activities
• Enables management in cost comparison
• Locates & disposes inactive & obsolete store items
• Consistent & reliable basis for financial statements
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Types of inventory costs
✓ Ordering (purchasing) costs
✓ Inventory carrying (holding) costs
✓ Out of stock/shortage costs
✓ Other costs
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A-B-C Analysis
• This technique divides inventory into three
categories A, B & C based on their Annual
Consumption Value.
• It is also known as Selective Inventory Control
Method (SIM)
• This method is a means of categorizing inventory
items according to the potential amount to be
controlled.
• A-B-C analysis has universal application for fields
requiring selective control.
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Procedure for A-B-C Analysis
• Make the list of all items of inventory.
• Determine the annual volume of usage & money
value of each item.
• Multiply each item’s annual volume by its rupee
value.
• Compute each item’s percentage of the total
inventory in terms of annual usage in rupees.
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• Select the top 10% of all items which have the
highest rupee percentages & classify them as “A”
items.
• Select the next 20% of all items with the next highest
rupee percentages & designate them “B” items.
• The next 70% of all items with the lowest rupee
percentages are “C” items.
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❖Advantages of ABC analysis:
• Helps to point out obsolete stocks easily.
• In case of “A” items careful attention can be paid at
every step such as estimate of requirements,
purchase, safety stock, receipts, inspections, issues,
etc. & close control is maintained.
• Helps better planning of inventory control
• Provides sound basis for allocation of funds & human
resources.
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❖Disadvantages of ABC analysis:
• Considers only money value of items & neglects the
importance of items for the production process or
assembly or functioning.
• Periodic review becomes difficult if only ABC analysis
is recalled.
• When other important factors make it obligatory to
concentrate on “C” items more, the purpose of ABC
analysis is defeated.
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Economic Order Quantity (EOQ)
• EOQ is the technique of ordering materials whenever
stock reaches the reorder point.
• Economic order quality deals when the cost of
procurement and handling of inventory are at
optimum level and total cost is minimum.
• In this technique, the order quantity is larger than a
single period’s requirement, so that ordering costs &
holding costs balance out.
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• The goal of the EOQ formula is to identify the optimal
number of product units to order.
• If achieved, a company can minimize its costs for
buying, delivery, and storing units
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Human Resource Management
• Human resource management can be defined as
“employing people, developing their resource,
utilizing maintaining and compensating their services
in tune with the job and organizational
requirements”.
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Objectives of Human Resource Management
• To help the organization reach its goal
• To employ the skills and abilities of the workforce
efficiently
• To provide the organization with well trained & well
motivated employees
• To increase employees job satisfaction and self
actualization (stimulate employees to realize their
potential)
• To develop & maintain a quality of work life.
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• To communicate HR policies to all employees.
• To provide an opportunity for expression in
management
• To provide fair, acceptable & efficient leadership
• To establish sound organizational structure &
desirable working relationships.
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Manpower Planning
• Manpower planning is the process of estimating the
optimum number of people required for completing a
project, task or a goal within time.
• Manpower planning includes parameters like number
of personnel, different types of skills, time period etc.
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• It is a never ending continuous process to make sure
that the business has the optimized resources
available when required taking into consideration
the upcoming future projects and also the
replacement of the outgoing employees.
• It is also called as Human Resource Planning.
• Manpower planning is also known as Personnel
Planning or Human Resource Planning.
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Importance of Manpower Planning
• It is the first step towards Manpower Management.
• It refers to the process of using available assets for
the implementation of the business plans.
• It also involves the process of coordinating and
controlling various activities in the organization.
• Efficient utilization & skilled labour.
• Higher productivity.
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Objectives of Manpower Planning
• To utilize the present employees fully.
• To fill up future manpower requirements.
• To check the development of the employees for
organizational growth.
• To achieve organizational goals in an efficient way.
• To manage and utilize resources properly and
effectively.
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Need of Manpower Planning
• Shortages and surpluses can be identified.
• All the recruitment and selection programs are based
on manpower planning.
• Reduce labour cost & over staffing can be avoided.
• Manpower can be utilized properly.
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Recruitment
• Recruitment is a key responsibility of the HR
department.
• While HR works in many areas including employee
engagement, employee development, statutory
compliance, data management and many others, one
of the key areas of focus for HR is to attract, select
and onboard suitable candidates for the
organization.
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• According to Edwin B. Flippo defined recruitment as
“the process of searching for prospective employees
and stimulating them to apply for jobs in the
organization”
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Why do we need an appropriate Recruitment
and Selection process?
• ‘Recruitment’ is the process of attracting qualified
candidates for a job role and ‘Selection’ is the
process of identifying and selecting the right
candidate for that job.
• The contributions of each employee play a pivotal
role in the growth of a business. Hence it is
extremely important to select the right person for
the job.
• The same way as a square peg does not fit in a round
hole, a bad hire can affect the overall business
outcomes. Akash Padole 33

• The impact to your business when you hire the
wrong candidate is often much more than not hiring
a person at all.
• Recruitment is not only an operational activity but a
key strategic activity for the business.
• Hence there is a need for developing a strong
recruitment and selection process.
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Training
• Training is the process for providing required skills to
the employee for doing the job effectively, skillfully
and qualitatively.
• Training of employees is not continuous, but it is
periodical and given in specified time.
• Generally training will be given by an expert or
professional in related field or job.
• Training is required at every stage of work and for
every person at work. To keep oneself updated with
the fast changing technologies, concepts, values and
environment, training plays a vital role.
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• Training programmes are also necessary in any
organization for improving the quality of work of the
employees at all levels.
• Training is a process of learning a sequence of
programmed behavior. It is the application of
knowledge & gives people an awareness of rules &
procedures to guide their behavior.
• It helps in bringing about positive change in the
knowledge, skills & attitudes of employees. Training
is investment in getting more and better quality work
from your talent.
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Performance Evaluation
• Evaluations are a mechanism to provide feedback
and documentation about an employee's
performance through a defined time period, and can
provide clear communication of job expectations and
goals.
• A performance evaluation system is a systematic way
to examine how well an employee is performing in
his or her job.
• Performance evaluations can also be called
Performance Appraisals, Performance Assessments,
or Employee Appraisals.
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• There are four reasons why a systematic performance
evaluation system should be implemented.
1. First, the evaluation process should encourage
positive performance and behavior.
2. Second, it is a way to satisfy employee curiosity as to
how well they are performing in their job.
3. Third, it can also be used as a tool to develop
employees.
4. Lastly, it can provide a basis for pay raises,
promotions, and legal disciplinary actions.
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Resources Allocation Methods
❖RESOURCES:
• Any means to complete an activity e.g., capital,
people, machinery, plant or materials are called
Resources.
• Time is also a valuable resource.
• Plot of Resource requirements versus time is called
Resource profile or Resource Use Graph or Histogram
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• The job of the project manager is to plan and
allocate the resources for the different activities such
that the resource utilization is optimized.
• The resource is a physical variable which is required
for completion of an activity.
• It can be Material, Man Power, Machinery, Space,
Money or Time Resource.
• Resource allocation means the decision to allocate
the resources for each activity.
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• Due to limited resources or limited project duration,
it is required to allocate the resources such that more
or less uniform demand is generated throughout the
project duration.
• The diagram which shows the variation of the
requirements with the time is called 'Resource Usage
Profile’ or 'Resource Histogram’.
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• Resource allocation may be achieved by the following
two processes:
– A. Resource leveling
– B. Resource Smoothening
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• Resource Leveling: A technique in which start and
finish dates are adjusted based on resource
constraints with the goal of balancing demand for
resources with the available supply.
• Resource Smoothing: A technique that adjusts the
activities of a schedule model such that the
requirements for resources on the project do not
exceed certain predefined resource limits.
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Example:
• Consider a project with 7 activities as shown in the
table below. The predecessors of each activity and
the duration of the activities are given. The number
of compressors (consider it as a resource) required
by each activity is also listed.
• The organization has only 6 compressors available
with them.
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• From the schedule network diagram, you can understand
the critical path is A-B-C-E-G and the total duration of the
project is 20 days.
• The problem with the critical path method is it does not
consider the availability of resources. So, now we need to
check whether there are any resource conflicts in the
schedule created by the critical path method.
• It will be easier if we present the schedule in the Gantt
chart/ bar chart format to understand the resource usage
over time periods
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• With the bar chart representation, it is easier for us
to calculate the compressors needed on each day.
• For example, we know that from day 1 to 3, only
activity A is in progress; so, we need 6 compressors
on each of these days.
• However, from day 6 to 9, activity C and activity D are
running in parallel.
• So, you need 7 compressors (5 for activity C and 2 for
activity D) on each of these days.
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Application of Resource Leveling
• As we have seen earlier, resource leveling looks at
removing all resource conflicts without worrying too
much about extending the project duration.
• Let us look at the first conflict, which happens
between activities C and D. To avoid the conflict, we
need to delay either activity C or activity D. Since
activity C is on the critical path, it is prudent to delay
activity D.
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• We have to delay the activity D until activity C
completes. This means, activity D has to be shifted to
start on Day 11. By doing this, the resources required
on days 6 to 9 comes down to only 5 compressors.
Since there is a float in activity D, everything looks
fine.
• But, when we move an activity, we have to see how
it affects the other successor activities. In this case,
since F depends on the completion of activity D, it
also has to be shifted.
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(the light blue color bars show the original schedule based on CPM)
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• Now, you can see that there is no resource conflict
from day 1 to day 14. But, there is a conflict on days
15 and 16; activity E needs 4 compressors and
activity F also needs 4 compressors.
• So, we have to delay either activity E or activity F to
avoid this conflict. Since activity F is not on the
critical path, let us delay this activity.
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• We have to delay it until the completion of activity E.
It means activity F can start only on day 20. However,
it also leads to the shifting of activity G since activity
F is its predecessor.
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• It’s good. All resource conflicts are removed. Now,
the maximum compressors required is only six
numbers on any day.
• However, in the process, the project gets delayed by
two days. The total duration of the project is 22 days
now.
• The critical path also has changed. Activity F is part of
the critical path now.
• So, the new critical path is A-B-C-E-F-G.
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Application of Resource Smoothing
• Resource smoothing looks at removing as much
resource conflicts as possible without delaying the
total project duration.
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• Activity D is shifted from day 6 to day 11. This
removes the resource peaks from day 6 to 9.
• However, there is still resource conflicts on day 15
and day 16.
• This conflict cannot be removed without delaying the
total project duration. So, resource smoothing will
stop here.
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• Out of the six days of conflict, resource smoothing
managed to remove 4 days of conflict.
• However, if the organization wants to stick to the
original schedule, they should bring additional
resources on day 15 & day 16.
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04 Resources Management and Allocation

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