Weeek-4

Please read the case study 12.2 from the attached text book(page 447-448) and answer the questions in the case study. 

The answers to the questions must include substantial support from at least two (2) scholarly journal articles on project management. For your convenience I am attaching two scholarly journal articles(total 4 attachments) and one text book for case study.  

The answers to the questions in this case study needs to be based on understanding and research from a scholarly source(attached 4 pdf’s). 

Total assignment 4 and half pages and must be in APA format.  

APA format mustNo Plagiarism

Managing Vendors
in Projects
By Ben Thorp*

In projects that involve partnering with vendors, the vendor
actually becomes a member of the project team in a sense.
Such vendors must be managed exactly as you would man-
age any resource in your team. Naturally, you don’t have di-
rect control over vendors, but then you often don’t have
such control over
internal resources
either.

You also need
to manage vendors
when you have large capital equipment projects in which the
vendor is delivering long-lead capital equipment. Because of
the large investments in these projects, it is very important
that all efforts between vendor and customer (namely your
company) be well managed.

This is by no means meant to suggest that a “command
and control” method is advocated, especially in a partnering

323

24C H A P T E R

Owner: The organization doing the
project.

* Former Vice President, Chesapeake Corporation, now retired.

Copyright © 2008 by James P. Lewis. Click here for terms of use.

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AN: 214033 ; Lewis, James P..; Mastering Project Management : Applying Advanced Concepts to Systems Thinking, Control & Evaluation,
Resource Allocation / James P. Lewis
Account: s8501869.main.eds_new

arrangement. A good partnering arrangement is only
achieved by clearly defining goals, roles, and processes, and
that is the focus of this chapter.

There are two points that need to be made. First, the ac-
countability for all projects resides totally with the owner.

Second, the most
typical form of re-
lationship between
owner and supplier
is contractual. This
c o n t r a c t u a l a r-

rangement must be well understood by the project manager
and owner alike.

The message to new project managers or sponsors is
that the owner must take control of the process, which is
shown in Figure 24–1. He must define the decision-making
process and stakeholder roles. Major stakeholders include

p r o d u c t i o n , f i-
nance, engineering,
technical, and ven-
dors. Each of these
stakeholder groups
has its own culture

and each needs to be addressed uniquely. Owners must take
control by clearly and completely defining their needs and
desires (musts and wants) and ensuring that they are in spec-
ifications, bid packages, orders, contracts, and the like. This
will require owners to take control of agenda-setting in meet-
ings so that the required output is obtained. Partnering or
teaming is a preferred method of working, but it cannot take
precedence over managing the project.

RESOURCE DOCUMENTS

There are three primary resource documents that need to be
prepared as early as possible. The first is an internal docu-
ment, which defines the level of approval, the time required

324 SECTION FOUR Control

To manage vendors does not mean
to adopt a “command and control”
approach.

Sponsor: The person in the
organization who “drives” the
project.

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325

F I G U R E 24–1

Owner Controls Process

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for approval, and the level of documentation needed for an
approval to be granted. This simple document can save hun-
dreds, even thousands, of hours of hunting down the right
person for approval and in expediting delivery because the
purchase order could not be issued in a timely manner. It can
also save rework caused by the approving individual want-
ing to see more (or less) in order to sign. Does the approver
want to see three bids, or just know that three bids have been
obtained? Or is it satisfactory to know that the supplier has
been the low bidder for the required quality on the last two
jobs and the unit prices are the same for this job?

The second document identifies resources for the ven-
dor management function, by name, either inside or outside
of the owner’s firm. Typical resources include individuals
dealing with the issues shown in Figure 24–2.

Every purchase order can have issues requiring input
from one or all of these resources. Therefore, the resource
needs to be defined and available.

The final document needed is a material coordination
plan. This plan can be started early—around permitting—but
can only be completed after all of the components are known.
It can be a detailed description or a simple spreadsheet
where each function (e.g., air permit), service (soil reports), or

326 SECTION FOUR Control

Performance specification author
Safety
Purchasing
Transportation
Legal
Tax
Risk management/insurance
Fixed asset accounting

F I G U R E 24–2

Issues That Must Be Addressed in a Project

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component (storm sewer) is listed. Columns would then be
created for who will request, purchase, ship, expedite, in-
spect, construct, and approve. Where multiple ship-to sites
are involved, another column will need to be added. See the
example in Figure 24–3.

SPECIFICATIONS

The project team will need to discuss three very different
types of specifications, namely:

Structural specifications
Life specifications
Performance specifications, including training

Historically, we have put emphasis on the structural
specifications—typically type of material and strength or

CHAPTER 24 Managing Vendors in Projects 327

F I G U R E 24–3

Sample Spreadsheet

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rigidity of the structure. Many firms have a comprehensive
specification “library” for these. Those are still very appropri-
ate. We are now adding to that certain life criteria for the
product being delivered by the vendor. In automotive, we
are talking about seven-year warranties on the drivetrain and
100,000 miles between tune-ups. There are industrial equiva-
lents, which must be converted into specifications. Figure
24–4 shows some life issues which need to be considered.

However, the most critical specification for production
machinery is performance itself. Specifications are normally
written by engineers, but performance requirements are usu-
ally best understood by operations personnel, so this is an
area that requires a team effort. Throughput models and
run-rate models are sometimes helpful. That is, given certain

input raw materials
a n d c o n d i t i o n s ,
what is the output
and what is the tol-
erance around that
output? What are

the sustained and peak output rates? What is the average
uptime? What training is required? What are the outcomes of
the training (e.g., what do operators and mechanics need to
do to run the facility?). These conditions will become part of
the bid package and eventually part of the purchase order or

328 SECTION FOUR Control

� Life of machinery
� Life of components
� Repair frequency
� Interchangability of spares
� Minimum spare inventory

F I G U R E 24–4

Life Issues for Deliverables

Contracts without remedies are
often without value.

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contract. When preparing any specification, it helps to think
about how well the contract will reflect it. The contract
should answer these questions:

What are the performance specifications?
How will they be measured? What are the criteria
and conditions?
What is the remedy when something is out of spec-
ification?

Contracts without remedies are often without value, except
to the lawyers who will use the legal system to write what
you forgot.

Specifications may also apply to intermediate steps, in-
cluding, but not limited to, issues such as those shown in Fig-
ure 24–5.

Remember, each needs a definition of how performance
will be measured and what the remedy will be if vendor per-
formance is unsatisfactory. The consequences of a missed
milestone date can often have large project consequences, even
if the final ship date is met. For example, equipment that re-
quires cavities or special mountings in a building might re-
quire certified drawings before the building drawings

CHAPTER 24 Managing Vendors in Projects 329

� Drawing submittal
� Certified drawings
� Shipment date
� Percent complete shipment
� Inspection
� Installation
� Startup
� Dates for full compliance to specification

F I G U R E 24–5

Issues That Must Be Covered

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can/should be certified. A delay in equipment drawings
could delay the whole building or the entire project. What,
then, is the appropriate remedy? This can be determined
through competitive bidding and negotiation, if it is in the
bid package.

SUPPLIER QUALITY

There has been more written on this subject than perhaps any
other subject addressed in this chapter. I will keep it short
though, and deal only with a few principles. The first princi-
ple is that good projects have good suppliers. The second

p r i n c i p l e i s t h a t
you need a system
to define what is

important to you and to do so in the most objective way pos-
sible. If this has been previously done by your corporation
and you have preferred suppliers, selected suppliers, or part-
nerships, then you can proceed to the supplier selection section
of this chapter. If not, you need to develop supplier evalua-
tion mechanisms for at least equipment, engineering, and
construction. Some of the evaluations will be for products
(hard or soft), and some will be for services. These evalua-
tions can be quite different.

In setting up evaluation mechanisms, you need to deter-
mine whether they will be made on the content of presenta-
tions (often future expected results) or on the evaluation of
past performance. For example, will contractor safety be
judged by promised safety programs or will it be judged by
the contractor’s experience modifier rate (EMR) to his
Workers Compensation Insurance Premium?

For equipment, typical areas that can be evaluated are
shown in Figure 24–6.

For the engineering activity, typical areas that can be
evaluated include those shown in Figure 24–7.

330 SECTION FOUR Control

Good projects have good suppliers.

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To evaluate contracting work, consider the list shown in
Figure 24–8.

A uniform system of evaluation will result in at least
three positive outcomes. First, the team will have a more con-
sistent evaluation process. Second, unqualified suppliers will
be eliminated. Finally, there will be a way to objectively evalu-
ate “favorite suppliers” who are recommended by some
party, including management.

CHAPTER 24 Managing Vendors in Projects 331

� Quality
� Cost of use (price is a default)
� Delivery
� Service
� Business practices
� Ethics
� Technology/development
� Training

F I G U R E 24–6

Equipment Evaluation Areas

� Process expertise
� Design expertise
� Drawing quality (errors per drawing)
� Custom design expertise
� Modules design capability
� Long-term operation and maintenance
� Alignment with owner
� Ethics
� Design safety
� Standards & procedures
� Timeliness

F I G U R E 24–7

Engineering Areas to Evaluate

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REQUEST FOR PROPOSALS

When RFPs are issued, they should be complete and should
only go to qualified suppliers. A qualified supplier is one that
you would buy from if they provide the best response to the
RFP. There is a lot of debate over this issue. In some instances

suppliers are asked
to bid on a job even
t h o u g h t h e c o m-
pany knows that
they will never be
awarded the con-
t r a c t , s i m p l y b e-

cause they aren’t qualified. However, they are almost certain
to bid lower than anyone else. That low bid is then held up to
qualified suppliers as an incentive to bid lower. The bidder
who initially gave the lowest bid is called a “stalking horse.”
Most leading companies have concluded that the wasted ef-
fort of including stalking horses is not worth the value of the
time spent.

A request for proposal should include the items shown
in Figure 24–9.

332 SECTION FOUR Control

� Safety (EMR, etc.)
� Quality control
� Ethics
� Planning/scheduling
� Billing accuracy, backup, and timeliness
� Financial stability
� Craftsman training
� Supervisors’ skills
� Dispute resolution
� Relationship with subcontractors

F I G U R E 24–8

Contracting Evaluation Areas

The effort of including stalking
horses in your bid system is
probably not worthwhile.

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There will always be questions from bidders about
RFPs. A list of these should be compiled, and the same an-
swer given to all bidders. One method used to shorten this
process is to invite all bidders to a single meeting. An advan-
tage of this approach is that the number and quality of ques-
tions improves. One potential disadvantage is that all bidders
are known to each other.

SUPPLIER SELECTION

A well-prepared RFP can make this process relatively
straightforward. If the evaluation criteria have been stated
objectively and weighted, each bid can be scored and totaled.
If one uses a Kepner-Tregoe (1965) process (in which you list
musts, wants, and nice-to-haves), the musts should be scored
and totaled first. It is always a good idea to decide up front
what range of totals will be considered equal. For example, if
there are 10 factors of 10 points each, then one knows that an
87 is the same as an 88. Another method is to require that all
musts need to be fully met, and anyone falling below 100 is a
candidate for elimination. It is typical for the evaluation pro-
cess to sort leaders from average responses and to identify

CHAPTER 24 Managing Vendors in Projects 333

� Outline of total project
� Scope of work for the RFP
� Structural specifications
� Life specifications
� Performance specifications
� Measurement of specification
� Remedies
� Delivery of information
� Delivery of materials/services
� Shipment methods

� Installation services
� Startup services
� Payment schedule
� Recommended spares
� Insurance coverage
� Evaluation criteria
� Notification procedures
� Names of key personnel
� Confidentiality agreements

F I G U R E 24–9

Items to Include in RFPs

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clear candidates for elimination. Assuming there are several
bidders that warrant further consideration, a ranking of the
wants is in order. Experience shows that it is wise to keep
more than one bidder before entering into the next process,
which is negotiation. There are technical and commercial in-
sights that can be obtained from the negotiation process.
These can change the evaluation. Furthermore, changes can
sometimes unseat the leading bidder. For example, their de-
livery can change due to a new order, or critical personnel
can be assigned to other projects.

Negative things can happen during this process. Com-
petitive bids can show that specifications were incorrect or
missing. The delivery dates or estimated cost can be grossly
in error. If the deviation is small, amended bids can be re-
quested. If the deviation changes the scope, new RFPs may
be needed. If the deviation changes project economics, the
project may need to be changed or even canceled. Project
managers or teams might be disappointed by a canceled pro-
ject, but experienced project managers know this is a better
outcome than having to manage a bad project.

NEGOTIATION

This is the point at which an owner’s wants and musts have
to be reconciled with the bidders’ capabilities and desires.
Everyone agrees that at this phase in the project, the owner

has the advantage.
Wise use of power
w i l l c r e a t e a
win-win situation.
U n w i s e u s e o f
power is likely to

create a win-lose situation or even a lose-lose situation. The
key questions should be resolved in favor of what’s best for the pro-
ject. What’s best is usually that all project wants are met by a

334 SECTION FOUR Control

Key questions should be resolved
in favor of what’s best for the
project.

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strong supplier who is capable of dedicating the resources
needed to make the project a success. Too many times, bid-
ders accept conditions that cannot be met in order to secure
an order. When this condition becomes apparent, the project
is headed for trouble. The project mission and vision must in-
clude vendor success and eliminate “get something for noth-
ing” thinking.

There are many approaches to negotiation. One success-
ful approach is to break the negotiations into “technical” and
“commercial” parts. The specifications should be negotiated
first, because their resolution could change the price. If special
materials or construction are needed, the price may increase. If
an owner is willing to accept a standard offering, the price
may decrease. Once all of the specification issues have been re-
solved, the commercial negotiations can begin. Here, all items
that will appear in the purchase order must be discussed and
agreed to, especially performance specifications, test condi-
tions, and remedies. After negotiations are complete, there should
be no surprises for the owner or the successful bidder.

CHAPTER 24 Managing Vendors in Projects 335

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The remedy deserves some special discussion because of
the realities that occur when performance is not met. At this
point, the project can be practically over. Usually, the budget
has been spent. The same is true for the suppliers’ budget.
These forces can “seduce” both the owner’s project team and
the bidder to try a series of “low-cost” fixes that can take
weeks, and usually months. When performance specs are
missed, it is usually wise to invite upper levels of manage-
ment on both sides to the solution meeting. Ideally, the time
allowed to implement the remedy is addressed in the pur-
chase order or contract. If the bidder is unwilling or unable to
resolve the performance issue, then the owner can implement
and charge back all or a percentage of the costs to the bidder.
Some contracts have a liquidated-damages clause whereby
the cost of the equipment or service is discounted until the
owner achieves their original financial returns. Most bidders
will insist on a limitation-of-liability clause. These conditions
are all resolved through negotiation with the goal of creating
a win-win situation. One form of a win-win is to negotiate
penalty clauses for late delivery, poor performance, and so
on. In return, there are incentive clauses for perfect delivery
(early delivery can sometimes cause staging problems), good
startup, above-average performance, or outstanding safety
performance. The owner typically benefits from all of these,
and sharing an unplanned benefit is easier than many would
expect.

There are a number of negotiating processes that can be
used, and most are satisfactory if the process is fair, ethical,
and well understood by all stakeholders. Getting everyone at
the same office on the same day is not in itself brutal. It may
be very time efficient. Getting everyone there to “shop the
low price” is at least unfair. Most experienced teams like to
devote a half day to a day per major bidder and to separate
close competitors by at least an evening. This is because there
are usually many items to resolve, and it takes intense focus
to get through the major issues.

336 SECTION FOUR Control

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THE PURCHASE ORDER/PURCHASE CONTRACT

There are numerous contract forms, and it takes an experi-
enced project team to know what form to use and why. There
are two general recommendations. First, the owner should
have his contract forms reviewed and modified by expert out-
side legal counsel with experience in litigating contracts. This
is a special skill that may require a slightly higher fee—once.
However, it could save millions over time. Second, the owner
should use his stationery and his contract as a starting point.

It is beyond the scope of this book to delve into contract
law. It is not beyond the scope of this book to note that the
owner has the responsibility and accountability that dictates
he be good at contract negotiation and contract implementa-
tion. An experienced project manager will know the contracts
better than the process or the equipment being purchased.

The major types of purchase contracts include those com-
ponents listed in Figure 24–10. The elements to be addressed

CHAPTER 24 Managing Vendors in Projects 337

� Acceptance Certificate
� Affidavit and Release of Liens
� Construction Agreement, Cost

Plus Fixed Fee
� Construction Agreement, Cost

Plus

Percentage Fee

� Construction Agreement, Lump

Sum
� Contractor’s Performance

Incentive Fee
� Contractor’s Safety Incentive Fee
� Corporation Consultation
� General Conditions, Cost Plus

Fixed Fee
� General Conditions, Cost Plus

Percentage Fee

� General Conditions, Lump Sum
� Individual Consultant
� Letter of Intent
� On-Site Work Addendum
� Purchase Order (Cost Reimburs-

able Construction)
� Purchase Order (Equipment

Supplier)
� Purchase Order (Firm Price

Construction)
� Renewable Construction

Agreement
� Renewable Engineering

Agreement
� Request for Contractor’s Affidavit

F I G U R E 24–10

Components of Purchase Contracts

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include those listed in Part 5. Your most critical projects
should have your best contracts personnel, who can typically
be shared across a number of projects.

INFORMATION EXCHANGE

There are two forms of information exchange, one external
and one internal. External exchange of information requires
that the owner examine the project, the location of the pro-
ject, and the types of information that will be exchanged. The
key questions are: What information is confidential? and
How confidential? On the one hand is a completely public
project, like building a park. On the other hand is a project
requiring high levels of security and in-depth security clear-
ance for all workers. In most projects there is considerable in-
formation that the owner wants to keep confidential. This
means that confidentiality agreements need to be signed with
each company receiving this information. For very sensitive
information, it is worth considering agreements for each per-
son receiving the information. These agreements should state
how confidential information will be identified and marked.
Restrictions on copying the information need to be included
in the contract and on the markings. Verbal confidential in-
formation is usually confirmed in memo or noted in meeting
minutes. All official meeting administrators need to be aware
of the policies established. The owner needs to keep a log of
all confidential information distributed, and at the end of the
project may want to reclaim all of it. The owner’s IT (infor-
mation technology) or IS (information systems) person
should be consulted for the best way to handle confidential
information that may be transmitted electronically.

Internal document distribution is usually the larger job.
This is actually a communications function and should be ap-
proached in that fashion. The most common document con-
trol device is a spreadsheet with the documents listed in the
first column and potential recipients listed in subsequent col-

338 SECTION FOUR Control

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umns. Facility files and central files are critical recipients.
Correspondence and meeting notes are critical documents.

Figure 24–11 shows a typical document distribution ma-
trix. This matrix should be reviewed with all stakeholders up
front and decisions agreed to by the project manager. Once
this is done, each document can be coded as to its type (e.g.,
bill of material) and a process can be put in place for support
personnel to make immediate distribution.

There should never be a bottleneck in communications,
especially document distribution. E-mail facilitates distribu-
tion, but it is necessary to make sure that all recipients, and
the server, have the capability to receive documents created
by all kinds of software. This is particularly true for e-mail at-
tachments. It is frustrating to receive files that cannot be
opened.

Project review meetings are a critical communication
mechanism. They are best when the meeting forum is open
and critical stakeholders are present. See Chapter 25 on con-
ducting project reviews. Typically, the project plan is the
yardstick against which various groups track and report

CHAPTER 24 Managing Vendors in Projects 339

F I G U R E 24–11

Document Distribution Matrix

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project status. These meetings should be scheduled in ad-
vance, and the agenda well planned. If the project manager
does all the talking, she learns very little. The agenda should
be structured so that the meeting is a status report and coor-
dination meeting with problems identified and well defined
but not necessarily solved in the meeting. Separate meetings
can be established for problem solving. Status of safety,
schedule, cost, and coordination are typical agenda items.
Using earned value analysis to measure project status is a
very useful approach. Minutes should be taken, issued
promptly, and reflect action items with responsibility and
timetables. Projects have a relatively short life, and action
items take on particular urgency.

EXPEDITING

It is best to start with the premise that there is always some-
thing on the critical path, and that events could change the
critical path. Therefore, expediting skills are needed. Once
critical path items are known, it can be determined if expedit-
ing will be done by the owner, the supplier, or a third party.
Early decisions and arrangements will allow this function the
lead time it needs to be successful. It is sometimes necessary
to book special trucks, trains, boats, or planes. It is sometimes
expeditious to use a port of entry familiar to the expediter. It
may also be necessary to obtain state permits to haul “over-
sized” loads. All of this takes time to plan and execute. The
worst time to engage expediting service is after a critical date
is missed.

DISPUTE RESOLUTION

Disputes can occur at many levels. This needs to be acknowl-
edged up front, and procedures put in place so that disputes
are identified and resolved in a professional manner. In no

340 SECTION FOUR Control

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event should a dispute become disruptive to the project. Dispute
resolution procedures should be included in every purchase
order and in every contract.

There are a number of procedures that can be used, but
two important principles should always be observed. First,
the problem must
b e a c c u r a t e l y
stated and docu-
m e n t e d . E x p e r i-
e n c e h a s s h o w n
that many disputes arise from an inaccurate or unclear de-
scription of the problem. Second, all parties should agree
ahead of time on the dispute resolution process and agree to
follow it.

One process will be outlined here, but as previously
stated, there are others. The first step is to establish a detailed
definition of the problem, which all parties can support. The
easy first step is frequently overlooked. The second step is to
apply the principles of the purchase order or contract to the
problem. This shows the importance of including quantifi-
able definitions of the three types of specifications in each
purchase order or contract.

The third step is to negotiate a resolution of the prob-
lem. Use of established negotiating techniques can be of
value at this step. The fourth step is to delegate the resolution
to higher levels of management on each side. As you can see,
it is helpful if the contract specifies the exact level of higher
management by title or name. Typically, this will be someone
who can approve a scope or funding change. The final step is
to take the dispute to an “independent third party.” Some
choose arbitration. Others have noted that arbitration has a
leveling or averaging impact and have specifically deleted
this from all contracts. Their reasoning is that significant ef-
fort should be put into developing good contracts and select-
ing good suppliers, which results in few disputes. In the
instance of an unresolved dispute, the legal system can be
used to achieve an equitable resolution.

CHAPTER 24 Managing Vendors in Projects 341

A dispute should never become
disruptive to the project.

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1

Resource management is an area of project management that is often over-
looked. However, it is a critical part of the process of providing value to custom-
ers. Whether your projects are for internal or external customers, the ability to
understand resource needs is critical.

Consider this example, when a manufacturing company gets a one million
dollar sale for 1000 widgets, they should know the costs, how long it will take
to produce the widgets, what the profit margins will be, and numerous other
variables. This is because they know the costing variables, the machine produc-
tion rates, the capacity of each machine in the plant, the number of other jobs
in the queue, and they have tracked these variables over time to gain a perspec-
tive of what the numbers should be for a normal production run. However, this
is not always the case when an organization gets a one million dollar sale that
involves human resources. Most organizations that rely on their human re-
sources to produce an end product usually do not have a great tracking method,
and therefore do not have a historical perspective of the timelines and costs
involved in producing the deliverables for a new sale.

In the manufacturing example, a key variable that is usually known is what
effect a new job will have on existing jobs if it is given a higher priority. This
is not the case when dealing with work that involves people. For some reason,
there seems to be an assumption that capacity is always available and that all

1

Resource Management:
What Is It Good For?

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2 ◆ Mastering Resource Management Using Microsoft® Project and Project Server 2010

work gets done on the original timeline, even as new work is added or as priori-
ties shift.

While there is a myriad of reasons why some projects fail, it is our experi-
ence that resource management is a key factor. Failing to realize the effects of
changing priorities on existing work or on additional work will almost always
result in a failed project, whether by missing the deadline, in costing more than
estimated, or through poorer results.

This book is about human resources and how Microsoft Project helps to bet-
ter manage and understand an organization’s ability to utilize them. This book
does not assume that people and their productivity are just as easily quantified
as a machine that makes widgets. In fact, it is this very distinction of people vs.
machines that makes resource management so difficult.

When executives or other stakeholders need to know the capacity of the
workforce, they should be able to easily obtain an answer. In fact, they should
be able to ask a number of questions and get answers very quickly. For example,
they should be able to ask:

◆ What is the resource capacity?
◆ What is the capacity for a given skill set?
◆ What are our available skill sets?
◆ What is the existing utilization of our capacity?
◆ What is the utilization of our specific skill sets?
◆ How long does it normally take to do this type of project?
◆ What is the existing portfolio of our projects?
◆ How does the portfolio of projects affect our resources?
◆ What types of skill sets do we need for proposed projects?
◆ How will existing projects be affected by a new project?
◆ If we take on a new project, when can we realistically tell the customer

we can complete it?
◆ What will our resource costs be for a new project?
◆ What are the costs for our existing projects?
◆ What existing projects are on track?
◆ What projects are late or costing us more due to lack of resources?
◆ How can we resolve resource issues?
◆ Does the resource know what work they are expected to do this week?
◆ Does the resource know what work they are expected to do next week,

or next month?

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Resource Management: What Is It Good For ◆ 3

◆ Does the project manager know how much capacity and utilization a
resource has to help on their project?

Resource management is a valuable tool that can answer these questions,
and in the level of detail that you want in order to track and understand the
answers. In other words, it is possible to know what every resource in your
organization is doing every minute of the day. Although, you would have to be
willing to track at a level that would be burdensome on resources and make
reporting so voluminous as to be meaningless. However, it is possible to track
at a level that gives the detailed information desired without being burden-
some.

It isn’t that difficult to track detailed information, but it does require a level
of discipline and a desire to use the information. At this point, saying “it isn’t
that difficult” doesn’t always agree with experience. And, that statement is not
taken lightly.

Think of it this way: starting a project with any new tactic can be difficult,
but the authors contend that you are already doing this at one level or another.
Let’s start at the end. How do you know when a project is complete? There is a
deliverable or task that is completed, and then the original intent of the project
is done; however, how do you know that the work is done? Does the resource
manager or project manager ask the resource responsible regarding when the
work is done? Does the resource tell you it is done? There is some method that
you know to call the project complete when the work is done. So start there, and
build on that foundation.

When a task is assigned, how do you know how long it will take? Does the
resource give you the number of days it will take? Great, we have some infor-
mation with which to start. As we track durations over time, the ability (and
that of the resource) will get better and at some point we will know how long
it takes to do a job. That new knowledge will give us a better ability to assign
resources and understand their capacity and utilization.

There are lots of opportunities to set up Microsoft Project Server and Mi-
crosoft Project Professional to gain better information about resources so that
managers can be better schedulers. Like many programs produced by Micro-
soft, there are numerous configurations and options available. The authors do
not advocate using every option and feature on the first day, but, rather, devel-
oping the ability to set up more and more of the options, so that information is
available that provides real value.

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4 ◆ Mastering Resource Management Using Microsoft® Project and Project Server 2010

Resource management should be about making information available to
those that need it in a timely manner, so that better business decisions can be
made. Better decisions can become a competitive advantage over other busi-
nesses or can become a center of excellence within an organization. This ability
can also avert lots of frustration.

When a customer is told that their organization will receive a product or ser-
vice from you on a certain date, he or she will expect it on that date. If you can’t
deliver it on time, the customer may not have a choice but to stay with you this
time. However, if a competitor can explain to the customer how long it will take
them and give some sort of data to back it up, then the competitor will probably
get the business next time. How many times can a project be late before the
market in general takes notice and stops dealing with your organization? There
are some customers that have other commitments that are based upon yours,
and the cost to them of your being late can be huge. Resource management
alone is not the sole cause for being late, nor is it the sole answer to being on
time, but it does seem to be a substantial cause. There seems to be an assump-
tion that human capacity is unlimited in our organizations, and another sale
is always a good thing or another internal project is acceptable. Generally, this
leads to issues if relying on resource skill sets in short supply.

We have seen numerous lawsuits that have roots in poor resource manage-
ment. One involved bidding against another company for some work that in-
volved a large number of people over a period of a few years. We produced a
few reports based on experience and also showed the customer a schedule in
Microsoft Project. Our competitor promised the same deliverables at a slightly
higher cost within a significantly reduced time period. We explained to the cus-
tomer that we had no understanding of how they could do it in that time period
without a lot more resources and more cost. Our competitor also didn’t produce
a schedule or other reports for the customer. Well, the customer went with the
competitor. After a couple years, the project was cancelled because it was dras-
tically over budget and was behind on deliverables. The customer is suing our
competitor and now has wasted two years and millions of dollars and still has
nothing to show for it.

Different Perspectives of Resource Management
Let’s take a moment to view resource management from a few different per-
spectives. Resource management is not just for the benefit of a project manage-

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Resource Management: What Is It Good For ◆ 5

ment office or to be able to create a set of reports. It is to benefit all persons and
organizations involved.

The Resource

First, take the perspective of a resource. Put yourself in the place of the re-
source. You have project work to do; you always have project work to do! But,
is there a comprehensive list of that work somewhere, and, how does that
project work coordinate with all of the other things you have to do—like go-
ing to company meetings, required training, administrative duties, and other
time consuming items that aren’t accounted for on the project list? Do the
project managers and resource managers know about all the things you have
to do that aren’t on the one project? Do they know about the vacation that you
are taking next month? How do you let all the project and resource managers
know about your upcoming vacation when none of them are in your corporate
chain of command?

In addition to similar things to worry about, do you have a way to demon-
strate your workload to the project and resource managers? Do you have a way
to show your supervisor that work? It is one thing to claim that you are busy,
but it is another to demonstrate how busy you are. Also, how do you go about
updating your tasks to show what work you are doing, what you have done, and
what might be late? If you are overcapacity and supposed to be working on two
separate projects at the same time, which one is the priority?

The Resource Manager

Now, put yourself in the place of the resource manager. This is the person re-
sponsible for a group of resources. For this case, let’s say you are the resource
manager of 25 people, all of whom have different capabilities. You will want to
know:

◆ Who is available, and when?
◆ Who has what skill set?
◆ When each of them is going on vacation?
◆ Can they be assigned work by other resource or project managers, and

are they being requested for other projects?
◆ What is the capacity of each resource, and what is their utilization?

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6 ◆ Mastering Resource Management Using Microsoft® Project and Project Server 2010

◆ What hours and days do resources work, and what time zone are they
in?

From a functional viewpoint as the resource manager, you want to also make
sure that the resources are updating their tasks in a timely manner. How are
they updating them? Are all the resources doing it the same way? Are they
updating tasks to show which ones they will be on time with or late in complet-
ing?

The Project Manager

Switch perspectives to the view of the project manager. The focus is on resource
management, so thinking about how resources are affecting the project sched-
ule as a project manager will lead you to having the same questions as the
resource manager. You will also be thinking about how a resource’s updating af-
fects your master schedule. Assuming a waterfall schedule format, if a resource
isn’t updating at all, it can affect your schedule since you have to assume that
the work isn’t done and you can’t move on to the next task. Or, if a resource is
updating a task and states that he or she will be two weeks late, how does that
affect your schedule? What if you are expecting a task to be completed on a
certain date, but don’t know if that is the time period when a resource is on va-
cation? How are your projects and that of other project managers interrelated,
and being affected by a particular resource?

The Executive

Now, put yourself in the place of an executive in charge of the portfolio selection
process. You will want to know:

◆ How many resources with a certain skill set are needed next month?
What about next year?

◆ What schedules are sliding because you don’t understand current re-
source issues?

◆ How are resources being utilized?
◆ How much time is being spent on certain projects?
◆ How much cost is associated with those projects?
◆ Which projects have the same resource promised to them?
◆ How do you communicate the priority level of each project to every re-

source (not just to project managers or other executives)?

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Resource Management: What Is It Good For ◆ 7

◆ Which of the proposed projects can you do now and which should you
wait on due to resource constraints?

Proper resource management helps a resource, resource manager, project man-
ager, and executive answer all of those questions, and more. As long as manag-
ers assume that there is unlimited human capacity, the practice will continue
of over-promising and under-delivering to customers. Or, will surprise events
drive “all hands on deck” situations where everybody stops what they are doing
on multiple projects to concentrate their work on one project—all because the
resource situation was not managed well from the beginning!

Now, let us review what is new about Microsoft Project 2010 as it pertains to
resource management.

What’s New in Project 2010?

Standard and Professional Editions

Throughout this book we demonstrate and discuss the features and functional-
ity of Microsoft Project Professional 2010 and Microsoft Project Server 2010 as
they relate to resources and resource management. The authors do not always
indicate when an item is new, modified, enhanced, or a previous feature or func-
tion. However, the authors wanted to provide an indication of what is new in
the latest version in regard to resource management. Before discussing what is
new, we want to explain the Project 2010 editions on the market.

To clarify, there are two editions of Project 2010. This is the software that
is installed on the client machine (the project manager or resource manager’s
computer). There are the Project 2010 Standard and Professional editions. The
only edition that can connect to Project Server is the Professional edition. The
Professional edition has more functions and features. If you are in the market
for this software, you can purchase the Professional edition even if you don’t
currently have Project Server. This edition may be more useful because you
would have to upgrade to Professional if you want to use Project Server later,
and because it has some more capabilities that you may wish to use as project
needs change.

Microsoft provides documentation from a high-level view about differences
in the Standard and Professional editions. A summary chart of edition differ-
ences can be found on Microsoft’s website. The part of this chart that is most
pertinent to resource management is “At-a-Glance Resource Management.”

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8 ◆ Mastering Resource Management Using Microsoft® Project and Project Server 2010

This refers to the new Team Planner view and other capabilities of Project Pro-
fessional 2010. We cover the Team Planner in detail in Chapter 7, Assigning a
Resource. The chart appears in Figure 1–1.

Microsoft Project Versions

Now that we have clarified some differences between the Standard and Profes-
sional editions, we want to show some differences in the versions of Microsoft
Project. Again, Microsoft has provided a document to review all of this informa-
tion, which can be downloaded as a PDF file from the Microsoft website.

Figure 1–1

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Resource Management: What Is It Good For ◆ 9

We have copied the part of that chart that most directly applies to the re-
source management aspects of Microsoft Project. To help understand the sym-
bols in the chart, the key is in Figure 1–2.

Figure 1–2

When the word PRO appears (next to Team Resources and Team Planner),
it represents capabilities that are available in Professional 2010 but not Stan-
dard 2010, as shown in Figure 1–3.

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10 ◆ Mastering Resource Management Using Microsoft® Project and Project Server 2010

F
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1
–3

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Resource Management: What Is It Good For ◆ 11

New Features in Project Server 2010

Microsoft Project Server 2010 has new features and functions. Microsoft has
produced a document for this as well on its website. The key is the same as in
the Project Professional versions documentation shown in Figure 1–4.

Figure 1–4

This document covers many items. The pieces of this document that are most
pertinent to resource management are given in Figures 1–5, 1–6, 1–7, and
1–8.

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12 ◆ Mastering Resource Management Using Microsoft® Project and Project Server 2010

F
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1
–5

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Resource Management: What Is It Good For ◆ 13

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1
–6

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14 ◆ Mastering Resource Management Using Microsoft® Project and Project Server 2010

F
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1
–7

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Resource Management: What Is It Good For ◆ 15

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1
–8

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16 ◆ Mastering Resource Management Using Microsoft® Project and Project Server 2010

As can be seen by the starred items in the figures above, many new capabili-
ties have been added to Microsoft Project Server 2010. Also, as shown by the
darkened circles, there have been a lot of improvements. These modifications
have made the information flow faster and easier between the resources and
the resource manager. The new modifications have also allowed resource infor-
mation to be seen from multiple viewpoints.

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Managing Resources
in Project Scheduling

It has been estimated that of the million people who have
bought Microsoft Project, only a few percent are using the re-
source leveling feature. I would concur with that estimate. Of
the thousand people who attend my classes every year, only
a small number are doing much with resource allocation.
They have tried as-
signing people to
tasks, even leveling
them, but the situa-
tion is so complex
that many of them give up.

The problem is, this is the key to meeting a schedule. If
you don’t have adequate resources, your schedules are not
realistic, and in my opinion, a wrong schedule is worse than
no schedule because it sets up an unrealistic expectation that
causes frustration when the deadline is missed. As you may
know, developing critical path diagrams involves a hidden
assumption that you have unlimited resources. This is be-
cause each task is estimated independently of the others.

245

19C H A P T E R

If you can’t manage resources,
your schedule is unrealistic.

Copyright © 2008 by James P. Lewis. Click here for terms of use.

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Account: s8501869.main.eds_new

Then when you do your diagram, you are supposed to show
what is logically possible to do. At some point, you have two
tasks that can logically be done in parallel. However, the
same person is assigned to both of them. If that assignment is
full time on each, then you have the individual double-sched-
uled, which won’t work. The hidden assumption was that
you had two persons available, when you really only had
one. So, unless you manage the allocation of resources, you
wind up with a schedule that can’t be met.

ASSIGNING RESOURCES TO TASKS

The first problem in scheduling is estimating task durations.
This is discussed in detail in Chapter 28. We must begin with
the number of working hours (or days or weeks) that will be
required to complete a task with a certain person assigned to
it. If you can’t assign a specific person to a task at the plan-
ning stage because you don’t know who will actually do the
task when the time comes, then you will have to assign a
skill-category to the task. This means that you would assume

t h e p e r s o n a s-
signed is going to
be someone from
the required disci-

pline having a certain level of skills. Members of that disci-
pline would then have to estimate how long the task would
take a person having those skills. It isn’t perfect, but it’s the
best you can do sometimes.

Next you have to ask if the person will be assigned to
the task on a full-time or part-time basis. Let’s begin by as-
suming a full-time assignment. The person will work on the
assigned task and nothing else until it is complete. I know
this is very unrealistic in most organizations. Most people are
working on many assignments at once. Still, we’ll start with
this scenario just to show that even with the best of situa-
tions, there are still problems to resolve.

246 SECTION THREE Planning

What does full time really mean?

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The first problem is, what do we mean by full time? If
we assume we are scheduling people to work a standard
8-hour day, 40-hour week (which you really should
do—keeping overtime in reserve as a way of handling unex-
pected problems), then you could say that a task requiring 16
hours of working time would span two days. However, this
assumption would get you into trouble. If the working time
required is really 16 hours, it will take more than two days to
accomplish it, because nobody works 8 productive hours
each day.

Industrial engineers reduce the 8-hour day by 20 percent
to account for what they call personal, fatigue, and delays
(PF&D). People need to take occasional breaks (personal),
they get tired (fatigue), and their work is held up by other
people, unavailability of materials, information, or other re-
sources (delays). Thus, a standard 8-hour day yields only 6.4
hours of productive work. This means that our 16-hour task
will span 2.5 days. If the person starts first thing Monday
morning, he will finish around noon on Wednesday.

At this point, we better evaluate the assumption that
people are available even 80 percent of their time to do pro-
d u c t i v e w o r k . I
was told by a fel-
low that his com-
p a n y b e c a m e
frustrated because
t h e y m i s s e d s o
many project dead-
lines and couldn’t understand why. They seemed to have
enough resources, based on the 80 percent assumption.

As a test of their assumption, they gave each project
member a log sheet and told them to record, once an hour,
what they had been doing during the previous hour. They
did this for two weeks. To their surprise, they found that
many of their team members were working on project assign-
ments only 25 percent of the time! No wonder nothing was
getting done on time! With people working on projects only

CHAPTER 19 Managing Resources in Project Scheduling 247

Typical availability of knowledge
workers for project work is 40 to 60
percent.

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25 percent of the time, rather than 80 percent, the calendar
time required to finish a task is at least 3.2 times longer than
planned.

Since he told me this, I have surveyed several hundred
people informally, and they tell me that they experience simi-
lar situations. At best, they tell me that the availability of peo-
ple to do project work is about 50 to 60 percent.

What robs us of their time? Many factors are involved.
Just to list a few, meetings that have nothing to do with the
project, nonproject assignments, training classes, interrup-
tions from people, helping people work on other assign-
ments, working on proposals for future projects, working on
next year’s budget, and solving problems in old projects that
you thought were complete, but you’re the only person left
who knows anything about it. One factor that stands out as a
major issue is sharing a person with other projects. We will
discuss this one in more detail later on.

The lesson, of course, is that you must be realistic about
how much time a person has available to work on your pro-
ject or your schedule will be grossly inaccurate. The only way
to assure anyone is available to work 80 percent on a project
is to tie them to a desk and keep them there. In factory envi-
ronments, though, 80 percent availability is often the norm,
since the worker’s situation is essentially that he or she is not
free to wander around or be assigned other to other tasks.
For knowledge workers, however, 80 percent availability is
unrealistic.

THE EFFECTS OF MULTIPLE PROJECTS ON PRODUCTIVITY

Another reason why resources are not available more than 80
percent of the time is that they are shared with other projects.
Informal surveys of my seminar participants indicates that
most of them have team members working on two to six pro-
jects at the same time, with the norm being about four projects.

248 SECTION THREE Planning

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This means that team members are available to work on a
given project only 20 percent of the time.

If this were a linear effect, it would be bad enough, but it
is not linear. To illustrate, suppose I assigned you a task that
you could complete in six working hours if you could work
straight through until you finished it. Of course, this is a
pretty long stretch, so you would probably work three or
four hours in the morning and finish it in the afternoon.
Would it still take six hours? No. The reason is that you
would have to spend a few minutes getting reoriented to the
task after taking a break. It may be only a few minutes, but it
does reduce your
productivity.

Now suppose,
because of working
c o n d i t i o n s , t h a t
you have to work
o n t h e t a s k t w o
hours today, another two tomorrow, and two more the third
day. Now the task will take even longer than it would by
splitting it into two chunks. The reorientation time is called
setup time in manufacturing, and we learned years ago that
setup time is a total waste. Every minute of setup time elimi-
nated is a minute gained for productive work.

This shows why we have problems with multiple pro-
jects. People are constantly shifting back and forth from one
project to another. Time management studies have found
that if you get interrupted by a person (face-to-face or by
phone) while you are working on a task, you may need 15 to
20 minutes to get reoriented to it. If you get interrupted three
times in one hour, you may lose most of that hour, even
though each interruption lasts only five minutes.

Not only do you lose productivity because of setup
time, but consider the time people spend in meetings—usu-
ally a minimum of one hour per week for each project. And,
as we know, many meetings are virtually nonproductive, so

CHAPTER 19 Managing Resources in Project Scheduling 249

Setup time adds no value to a
process. Eliminate setup time and
improve productivity.

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having people work on several projects at once also increases
time wasted in meetings.

Experience has shown that there are big gains to be made
by reducing the number of projects that people are working
on. One company found that by having people work on one
project as a primary project, with a secondary project that they
could work on if they had some dead time, their productivity
nearly doubled.

It can be very hard to get senior management to buy
into this notion. They get trapped into thinking that every-
thing must be done at once, not realizing that if they would
prioritize projects and do them in priority order, they would
get everything done in the same calendar time and at higher
efficiency and higher quality.

QUEUING THEORY AND RESOURCE MANAGEMENT

Another factor that adversely affects projects is the lean-mean
paradigm that is so prevalent in organizations today. As a
brief historical perspective, you might think back to the 1980s
and remember that many companies had layer upon layer of
management. This was probably the ultimate consequence of
the belief that a manager could only directly supervise about
six people. Over time, organizations became pyramidal—one
manager had six people reporting to her, and each of them in
turn had six people reporting to them, and so on.

This might have been necessary in the early days of the
industrial revolution, when many workers had little educa-
tion and required a lot of supervision, but it had ceased to be
true by the 1980s. Nevertheless, we clung to it, because the
paradigm was that span of control should be limited to six
direct reports, and that was that.

Then people began realizing that this was no longer
true, and a wave of reductions in middle management fol-
lowed. The metaphor was that we were getting rid of excess

250 SECTION THREE Planning

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fat, and we were. The result was highly positive for business:
The bottom line showed immediate improvement, and right-
fully so. If you eliminate costs without affecting sales reve-
nues, you have automatically increased profits.

Because that first dose of cost-cutting felt so good, man-
agers were quick to
apply more of it.
W h e n y o u f i n d
s o m e t h i n g t h a t
works, it is natural
to try it again, so
they did. Now we
are in the midst of the lean-mean paradigm. Companies have
cut every expendable person they can identify.

Trouble is, some of them long ago got rid of all the fat,
so now they’re cutting muscle.

In addition, since this is a biological metaphor, we know
that you don’t want to remove all of the fat from any organ-
ism. The fat provides reserve energy for hard times. But we
have failed to realize this.

So, what does queuing theory have to do with the situ-
ation? Queuing theory deals with things like highway ca-
pacity, production
line capacity, and
so on. If you have
ever tried to get
onto a major high-
way during rush
hour, when every-
o n e e l s e i n t h e
whole world was
also trying to get
onto it, you under-
s t a n d w h a t h a p-
pens when any system is at its limits. The amount of time
you must wait to get onto the highway gets very high at

CHAPTER 19 Managing Resources in Project Scheduling 251

Insanity is defined as continuing to
do what you’ve always done and
expecting to get a different result. I
think mindlessness is continuing to
do something that has worked in
the past and expecting it to get the
same results as it always has.

A lot of organizations have focused
on “trimming fat” to the point that
they may die of anorexia.

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rush hour. At other times of the day, it is insignificant. Fig-
ure 19–1 shows how this works. As the capacity of a system
approaches 100 percent, the waiting time to use that system
approaches infinity!

This same idea can be applied to a resource pool. As we
load people up to their limit, the time new projects must wait
to be started approaches infinity. Yet many managers think
that the only way to be productive is to keep people working
at 100 percent (or even greater) capacity. And when people try
to say they’re overloaded, some of the very macho managers
tell them to quit complaining, they’re lucky to have jobs.

THE WONDERFUL BENEFITS OF OVERTIME

When faced with the fact that there are only so many hours
in the workday to get things done, we respond by having
people work overtime. In many organizations, professionals

252 SECTION THREE Planning

F I G U R E 19–1

Waiting Time as a Function of System Utilization

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are expected to work 50- and 60-hour weeks routinely. After
all, they’re paid the big bucks, and we want to get our
money’s worth from them.

Here, too, we are being penny-wise and pound-foolish.
Studies show that after people have worked 10 to 15 hours of
o v e r t i m e e a c h
week for several
w e e k s i n a r o w ,
their productivity
drops back to what
t h e y w o u l d n o r-
m a l l y d o i n 4 0
hours, and their er-
r o r r a t e s g o u p .
This is true for both factory workers and knowledge workers.
It is possible to work overtime for one week and gain pro-
ductive output. But people get tired after so many weeks of
this, and fatigue takes its toll on performance.

For this reason, it is very bad practice to plan a project
so that long stretches of overtime are required to meet the
original end date. Not only will productivity drop rapidly,
but if unforeseen problems occur, you can’t use overtime
to solve them, as people are already working all they can
stand.

To see the effect of overtime, consider Figure 19–2.
While this represents construction work, you can be sure that
similar effects exist for other kinds of work. For recent re-
search on the overtime-productivity relationship, see also
Brunies, 2001.

Figure 19–3 shows the impact of having too many work-
ers on a construction site. While this might seem to be re-
stricted only to construction, how about problems that people
encounter with having too many people in a department, too
few desks, too little office equipment, and so on? I believe it
is a similar effect. These are all factors that we should con-
sider in trying to accelerate projects.

CHAPTER 19 Managing Resources in Project Scheduling 253

After working several weeks of 50
to 60 hours, productivity falls to
the normal 40-hour level and
errors go up.

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254 SECTION THREE Planning

F I G U R E 19–2

Decline in Productivity with Overtime

F I G U R E 19–3

Decline in Productivity with Site Loading

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THE NEED TO SHARPEN THE SAW

Stephen Covey, in his book The 7 Habits of Highly Effective
People, says that effective people spend some time sharpening
the saw. They do not work all the time. His metaphor comes
from the fact that if you saw wood for an extended period
without stopping to sharpen the saw blade, it gets dull and
won’t cut very effectively any more. Over a period of time,
the woodcutter who keeps his saw sharpened will generally
cut more wood than the one who does not.

It has always struck me as odd that many companies
treat their capital resources better than their human re-
s o u r c e s . W h e n I
was in college, I
worked summers
in a shipping de-
partment that was
housed in an old
cotton mill. Those
old mills were not air-conditioned, and in July the tempera-
ture in North Carolina can easily be 95 outside, which results
in an inside temperature of 100 to 105 degrees. Needless to
say, you can’t move at extreme speed in that temperature, or
you’ll have a heat stroke.

In many old factories, air-conditioning was out of the
question. Costs too much, was the belief. Yet people were
moving at a snail’s pace. I always thought the increased pro-
ductivity that would have been achieved in an air-condi-
tioned building would far offset the cost. But what do I
know?

Then along came computers and computer-controlled
machinery. These may fail if they get too hot, so guess
what—they have to be housed in air-conditioned offices. On
top of that, in the 1960s, when the computers were being in-
stalled, smoking around them was banned—yet you could
puff away around your coworkers.

CHAPTER 19 Managing Resources in Project Scheduling 255

We treat our capital resources
better than we do our human
resources.

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The message here is simple: If you want to get maxi-
mum value from your most valuable resource of all—a hu-
man being—you must make it possible for him or her to
sharpen the saw once in awhile. This is not just a soft-hearted
humanitarian plea; it just makes good business sense!

APPROACHES TO RESOURCE LEVELING

Consider the bar chart schedule shown in Figure 19–4. Activ-
ity A is a critical path task. Activity B has a duration of three
weeks and has one week of float. Activity C has a duration of

256 SECTION THREE Planning

F I G U R E 19–4

Bar Chart Schedule with Resources Overloaded

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two weeks and has three weeks of float. These durations are
based on having two people available to work on A, one on
B, and one on C, full time for each task.

However, we only have three workers available. This
clearly means that the job cannot be completed as scheduled.

Note that I am assuming what would be called generic or
pooled resources in this example. Generic resources are people
who can all do the same work. This is possible in some crafts,
such as plumbing, carpentry, or electrical wiring, but would
often not be true for specialists, such as engineers, certain
machinists, and other professionals. In the case of specialists,
you must assign specific individuals to tasks. We will con-
sider that case further on.

Now suppose you were going to manually allocate re-
sources so that no one is overloaded. How would you go
about it? Well, you might begin by assigning two people to
Activity A, since it is on the critical path. We know that if this
task is not completed on time, the project will slip, so we
must begin here.

This leaves one person to do B and C. It occurs to you
that you might assign that person to work on each task
half-time. If you do that, you will have to double the dura-
tions of each task, which would work for C, since it has
enough float, but would not work for B. Doubling durations,
of course, assumes that time is a linear function of resources
assigned, which is itself a faulty assumption in many cases.

Since changing durations appears unfeasible, you might
next ask, “Since I need another person, maybe I can just get
one and be done with it.” So you ask the powers that be in
your company, and they tell you that three people is all you
can have. You still are in a bind.

Next you might try assigning that one person to either B
or C, but which one? You might think that you should assign
the person to B, because it is longer than C. It turns out that B
is the correct choice, but you have made it for the wrong rea-
son. It is best to consider the float available to each task. You

CHAPTER 19 Managing Resources in Project Scheduling 257

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did this when you assigned two people to task A, which has
no float. The most common rule for assigning resources is
called the minimum-float rule. Assign resources to those tasks
that have the least float, then the next least, and so on, until re-
sources are exhausted. Then those tasks that have float and no
resources can slip without (hopefully) impacting the deadline.

It is easy to see in Figure 19–4 that this works very
nicely. Activity C has enough float that you can slide it over
to the point at which task B is complete, and then resources
will be available to do task C. Fortunately, this happens just
at the point where C runs out of float. This is shown in Figure
19–5. Note also that because activity C has run out of float, it
is now on the critical path. This is shown by making its bar a
solid color.

You will realize that this is a very clean example. It never
happens this way in the real world! What will happen is that
task C will run out of float before B is complete, and now you
have a dilemma. If you slip C any more, it will cause the pro-
ject deadline to slip. What do you do in that case?

258 SECTION THREE Planning

F I G U R E 19–5

Bar Chart with Resource Overload Resolved

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TIME-CRITICAL VERSUS RESOURCE-CRITICAL ALLOCATION

In the above example, we assumed that you were allocating
resources manually, that is, without benefit of a computer.
Ultimately, however, this is impractical. As the number of
tasks and resources increases, the solution to overloads be-
comes very difficult, and a computer programmed to
level-load resources will be required. The most common allo-
cation rule (or heuristic, as it is sometimes called) is the mini-
mum-float rule that we applied in the previous example.

In addition, the computer must be programmed to do ei-
ther time-critical or resource-critical leveling. Under time-
critical conditions, once a task runs out of float, the program
will stop moving it, since to do so would slip the end date for
the project. When this condition exists, you will have to find
a way to deal with the remaining overloads. It may be that
you can work people overtime for a brief spurt to resolve the
problem, since working someone overtime is equivalent to
adding resources to the project.

CHAPTER 19 Managing Resources in Project Scheduling 259

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17

As stated in the Introduction, some of the philosophical background behind
Microsoft Project will be provided to help understand the “why” of each chapter.
The authors’ goal is to help you understand not just “check box 4, on screen 3”
but why that box should be checked. This chapter is an introduction to Micro-
soft Project Server and Microsoft Project Professional, and how they interact, to
provide a foundation for understanding the following chapters. As such, while
this chapter is an introduction of a technical, software “tool,” it is important to
understand that this tool is there to help with project management, resource
management, and portfolio management.

While Project 2010 is constructed to include as many variables and customer
types as possible, and designed to be a viable product on the market, it should
be used to best match your organization’s needs. The options and capabilities
should be used according to your business and to customer and stakeholder
needs. We will discuss how to match needs and software options in more detail
in the following chapters.

Microsoft spent considerable time and effort aligning Project Professional
and Project Server to the standards of the Project Management Institute’s Proj-
ect Management Body of Knowledge (PMBOK® Guide). This coordinated effort
helps organizations that align their business processes to the PMBOK® Guide
to more easily use Microsoft Project. Use of the guide has helped in the area of

2

Microsoft Project 2010:
Why Use It?

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AN: 1094730 ; Quiring, Collin, Foster, Tanya.; Mastering Resource Management Using Microsoft Project and Project Server 2010
Account: s8501869.main.eds_new

18 ◆ Mastering Resource Management Using Microsoft® Project and Project Server 2010

vocabulary since many terms in the PMBOK® Guide and in Microsoft Project
are the same and have the same definitions. At the same time, Project is flex-
ible enough that those organizations that do not adhere as tightly to the prin-
ciples in the PMBOK ® Guide can still use the software in their own manner. It
all comes down to which options you set, and your business procedures, on how
to best use this tool.

Since this chapter is the introduction to the tools that are used for resource
management, it is beneficial to know the philosophy that Microsoft has placed
behind their product. It sometimes helps to have an understanding of what the
tools’ goals are, and the philosophy of the developers, to better understand how
to configure settings for your needs. Therefore, we have added some of Micro-
soft’s philosophy about these tools as they relate to resource management:

In today’s competitive and changing markets, organizations are look-
ing to maximize return on investment (ROI) and drive efficiencies to
sustain the business and support future growth. Resources are argu-
ably an organization’s most valuable asset and potentially its biggest
expense. Proper management and optimal use of resources is key for
an organization to realize its business strategy. With intelligent re-
source management, an organization can develop and retain a world-
class workforce.

Adopting best-practice resource management techniques helps organizations
accomplish the following:

Gain visibility and control using an enterprise resource pool.
With a large number of employees and globally dispersed teams, it
can become difficult to keep track of who is available, what they are
capable of doing, and where they are located. Centralizing resources
and standardizing metadata about the enterprise resource pool is the
first step to gaining visibility and control.

Proactively compare capacity to demand to maximize re-
source utilization. Resource capacity often will determine whether
organizations are able to complete strategic projects in a specific
planning horizon. Capturing resource requirements early in the proj-
ect life cycle helps analysts anticipate future demand and proactively
schedule projects to maximize resource utilization.

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Microsoft Project 2010: Why Use It ◆ 19

Find the right people for the project. Projects often include
globally dispersed teams and require a diverse set of skills. Finding the
right people with availability for each project significantly increases
the chance of successfully completing the initiative and realizing ROI.
Managers need to be able to effectively tap the resource pool to find
potential candidates and then quickly see if they are available to join
the team.

Intuitively manage resource assignments and overcome
conflicts. Managers improve project success rates by effectively
managing resource assignments. This means quickly resolving over-
allocation and reacting to resource conflicts. Managers require tools
that help them assess and manage assignments through the project
life cycle and easily communicate with team members about assign-
ments. (Microsoft Enterprise Project Management, Microsoft EPM So-
lution Guide, Microsoft Corporation, 2010, p. 48)

Many customers have Project Professional without Project Server and this book
is about Microsoft Project Server and stand-alone Microsoft Project Profes-
sional which acknowledges those customers. Some books are just about how
Project Professional and Project Server interact without consideration of how
Professional is used by organizations without Project Server. Therefore, when
applicable, each chapter will first cover how Project Server and/or Project Pro-
fessional work together, and then how Project Professional works in stand-alone
mode. Normally, Project Server will have more capabilities and functions than
the stand-alone version of Project Professional, and we will highlight some dif-
ferences in each chapter.

The first step in using the Project Server capabilities is to be able to connect
to Project Professional. In order to connect, you need to have Microsoft Project
Professional 2010. The Microsoft Project 2010 Standard edition does not con-
nect to Project Server. Also, note that Project Professional 2007 can connect to
Project Server 2010 if the Server has the compatibility option selected.

Since this book is only about the resource management portions of Project
Server and not about its installation or configuration, it is assumed that you
already have a fully functional connection to an installed Project Server 2010
installed with your client copy of Project Professional 2010. However, we also
understand that this might be your starting point and you may not have

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20 ◆ Mastering Resource Management Using Microsoft® Project and Project Server 2010

connected to Project Server. Therefore, here are the steps to connect Project
Server 2010:

1. Open Project Professional.
2. Go to File, Info, Manage Accounts (Figure 2–1).

Figure 2–1

A pop-up box, Project Server Accounts, appears (Figure 2–2).

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Microsoft Project 2010: Why Use It ◆ 21

Figure 2–2

3. Click Add.
4. Enter something you will remember in the Account Name field.
5. Enter the URL in the Project Server URL field (Figure 2–3).

Figure 2–3

6. If this is the URL that you use most often, then select the Set as default
account checkbox.

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22 ◆ Mastering Resource Management Using Microsoft® Project and Project Server 2010

7. After clicking OK, you are back at the Project Server Accounts box.
8. Select Choose an Account, in case you add more instances or often go off-line.
9. Close Professional. The next time you open Professional, it will automati-

cally connect to Project Server (or give you the option to connect if you
chose the Manual option).

As a note of clarification, when this book refers to Project Server, it is really
referring to Project Web App (PWA), not the actual hardware where the Project
Server software is residing. The PWA homepage may look different for different
users based upon the security settings and organizational design of the page.
Since it is SharePoint Server based, web parts can be easily modified, added, or
removed, resulting in some instances of PWA looking different than others. As
an example, Figure 2–4 is a partial screenshot of a regular PWA homepage for
an Administrator.

Figure 2–4

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Microsoft Project 2010: Why Use It ◆ 23

Figure 2–5 is an example of that same page for a user with more limited
permissions.

Figure 2–5

The screenshots and images used in this book are based upon the “out of the
box” Project Server 2010 and Project Professional 2010 software. There are no
third-party software additions to the examples. Understanding how Project
Server and Project Professional work in a normal environment help the orga-
nization gain more value from the software. Understanding how the existing
software works is key to being able to understand when it might be beneficial
to purchase third-party software to add functionality.

It is the authors’ goal that you and your organization will benefit from Proj-
ect Professional and Project Server by gaining a better understanding of how
a feature or function works and some of the reasoning as to why it works the
way that it does. Learning resource management and Project is a bit like put-
ting together the pieces of a puzzle and in some cases it takes an awareness
of many of the pieces before a more comprehensive understanding is obtained.
The authors’ intention is to help you put those pieces together.

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