Unit – 3 Procurement

Vendor selection methods, JIT, supply chains, quality, quality circles, quality
control and quality assurance, cause and effect analysis, ISO and concepts of
total quality management and six sigma, resource planning and allocation,
availability and constraints of resources, resource leveling and crashing.
 Vendor
• A vendor is an individual or organization that supplies
products, equipment, or professional services to a project
team under a formal contract or purchase agreement.

• Role of Vendors in Project Management

• Vendors play a critical role in:
• Providing specialized expertise or resources not available
within the organization.
• Supplying materials and equipment needed for project
execution.
• Ensuring quality and timely delivery of goods and services.
• Supporting risk management by sharing project
responsibilities through outsourcing.
• Reducing costs through economies of scale or specialized
services.
 Vendor Selection process
1. Define requirements 4. Conduct vendor evaluation process
• Start by creating a requirements document that explains what the organization needs. This document includes • Review the proposals using a structured evaluation method. Many companies
input from internal stakeholders who will use the product or service. use a scoring system where each criterion is assigned points based on how well
• Key questions to ask: the vendor meets it.
• What specific features or services are required? • The evaluation might include:
• What is the available budget? • Proposal review by a cross-functional team
• When do we need the product or service delivered? • Follow-up questions to clarify responses
• Are there any compliance requirements to consider? • Reference checks with existing customers
• Organizing requirements into "must-have" and "nice-to-have" categories helps focus the search and evaluation • Product demonstrations or site visits
process. • Document all evaluations to support the final decision and provide feedback to
vendors if requested. Read more about supplier evaluation.

2. Research potential suppliers

• Use multiple sources to find potential vendors:
• Industry directories and marketplaces 5. Negotiate and select vendors
• Referrals from colleagues or partners • Once top candidates are identified, begin negotiations on price, terms, and
• Trade shows and industry events conditions. This stage often reveals how flexible and accommodating a vendor
can be.
• Online searches and business publications • The final selection should be based on the overall value offered, not just the
• Create a shortlist of vendors that appear to meet your basic requirements. This step saves time by eliminating lowest price. Consider long-term factors like support, upgrade paths, and the
clearly unsuitable options before detailed evaluation. potential for partnership growth.

3. Request proposals 6. Formalize the vendor selection procedure

• Send a Request for Proposal (RFP) or Request for Quotation (RFQ) to the shortlisted vendors. This document • Complete all necessary documentation, including contracts, service level
outlines your requirements and asks vendors to explain how they would meet them. agreements, and compliance forms. Make sure all stakeholders sign off on the
• A good RFP includes: final decision.
• Company background information • The formal agreement should clearly state expectations, deliverables, timelines,
and how performance will be measured.
• Detailed requirements specification
• Evaluation criteria
• Timeline for the selection process
• Contact information for questions
• The RFP creates a level playing field where all vendors respond to the same set of questions, making comparison
easier.
 Selecting a Software Vendor for a Food
Delivery App Project
1. Vendor Identification 4. Negotiation & Contract Signing
• The project manager identifies potential software vendors to develop a food • Vendor A agrees to a 6-month delivery with post-launch
delivery mobile application. support for 3 months.
• Vendors A, B, and C are shortlisted based on online research, client references, and • Payment terms: 30% advance, 40% on milestone completion,
past experience. 30% on final delivery.
2. Request for Proposal (RFP) • Both parties sign a formal Software Development
• The company sends an RFP to all shortlisted vendors outlining: Agreement.
• Project scope: Food ordering app with admin, customer, and delivery partner 5. Monitoring & Performance Review
modules • During project execution:
• Timeline: 6 months • Weekly progress reports are shared.
• Budget range: ₹10–12 lakhs • Any scope changes are discussed in review meetings.
• Required technologies: Flutter (mobile), Firebase (backend) • After delivery, vendor performance is rated for future
• 3. Evaluation Criteria (Weighted Scoring Method) projects.

Criteria Weight Vendor A Vendor B Vendor C

Cost 25% 8 9 7
Technical Expertise 30% 9 7 8
Past Experience 20% 8 7 9
Delivery Time 15% 7 8 8
Support & Maintenance 10% 8 9 7
Total Weighted Score 100% 8.15 8.05 7.85
 Just-In-Time (JIT)
• Just-In-Time (JIT) is a project management and inventory • Core Principles of JIT
control strategy that ensures materials, resources, and
information are available exactly when needed, not earlier
or later. Principle Description
The goal is to reduce waste, minimize inventory costs, and
improve efficiency throughout the project lifecycle. Remove unnecessary
Waste Elimination processes, waiting times,
• Originally developed in Japan by Toyota, JIT is now widely
applied in manufacturing, construction, and IT project and excess inventory.
management. Continuous Ongoing efforts to enhance
Improvement (Kaizen) quality and efficiency.
JIT Concept in Project Management
• In project management, JIT focuses on: Work or materials are
• Efficient resource planning – Materials, equipment, and "pulled" based on actual
Pull System
labor are scheduled precisely when required. demand, not forecasted
• Reduced storage cost – Minimal on-site inventory or idle demand.
resources.
Close coordination with
• Improved cash flow – No funds blocked in unused Supplier Integration
materials. vendors for timely delivery.
• Streamlined workflow – Smooth coordination between Ensure quality control at
suppliers, contractors, and teams. Quality at Source
every stage to avoid rework.
 Example : Construction Project
Stage Traditional Approach JIT Approach
All materials delivered in bulk Materials (e.g., cement, steel)
Material Delivery
before project start delivered just before usage
Storage Large storage space needed Minimal or no storage space
Cash Flow High initial cost Evenly distributed cost
Waste High (unused or expired materials) Low (materials used immediately)
 Supply chain
1. Planning 5. Returns
• To get the best results from SCM, the process usually begins with planning to match supply with customer and • The SCM process concludes with support for the product and customer returns.
manufacturing demands. Companies must try to predict what their future needs will be and act accordingly. This • The return process is often called reverse logistics, and the company must ensure it
involves considering the raw materials needed, equipment capacity, and staffing for each manufacturing stage. has the capabilities to receive returned products and correctly assign refunds for
• Large businesses often rely on enterprise resource planning (ERP) software to help coordinate the process. them. Whether a company is conducting a product recall or a customer is simply
not satisfied with the product, the transaction with the customer must be
2. Sourcing remedied.
• Effective SCM processes rely very heavily on strong relationships with suppliers. Sourcing entails working • Returns offer valuable feedback, helping companies identify and rectify defective
with vendors to supply the materials needed throughout the manufacturing process. Sourcing requirements vary or poorly designed products. Without addressing the underlying cause of a
across different industries. In general, SCM sourcing involves ensuring that: customer return, the SCM process will have failed, and returns will likely persist
• The raw materials or components meet the manufacturing specifications needed for the production of the goods. into the future.
• The prices paid to the vendor are in line with market expectations.
• The vendor has the flexibility to deliver emergency materials due to unforeseen events.
• The vendor has a proven record of delivering goods on time and of good quality.
• SCM is especially critical when manufacturers are working with perishable goods.
• When sourcing goods, companies should be mindful of lead times and how well equipped a supplier is to meet
their needs.

3. Manufacturing
• Using machinery and labor to transform the raw materials or components the company has received from its
suppliers into something new is the heart of the supply chain management process. This final product is the
ultimate goal of the manufacturing process, though it is not the final stage of SCM.
• The manufacturing process includes sub-tasks like assembly, testing, inspection, and packaging. During the
manufacturing process, companies must be mindful of waste or other factors that may cause deviations from their
original plans. For example, if a company is using more raw materials than planned and sourced for due to
inadequate employee training, it must rectify the issue or revisit the earlier stages in SCM.

4. Delivery
• After finalizing sales, companies must deliver products to customers. A company with effective SCM will have
robust logistic capabilities and delivery channels to ensure timely, safe, and inexpensive delivery of its products.
• This involves having backup or diverse distribution methods in case one transportation method fails. For example,
how might a company's delivery process be impacted by record snowfall in distribution center areas?
 Supply Chains
Example (Software Project)
• It includes the flow of materials, information, and finances from suppliers to • A software company developing an app might:
manufacturers, to distributors, and finally to the project site or customer.
• Source cloud services from AWS or Azure (supplier).
• In projects — especially construction, manufacturing, software, and IT — effective
supply chain management (SCM) ensures that resources are available at the right • Purchase development tools or APIs (procurement).
time, cost, and quality. • Use data integration services and testing tools (logistics/information flow).
• Deliver the final product through digital channels to the client (distribution).
Role of Supply Chain in Project Management • Even though it’s not physical, the digital supply chain (vendors, APIs, data,
• Ensures Timely Delivery: Materials and components arrive when required to avoid licenses) must be well-managed.
delays.
• Cost Optimization: Balances purchase cost, transport, and inventory to reduce Example (Construction Project)
expenses. • For a bridge construction project:
• Risk Reduction: Mitigates risks from supplier failure or logistics disruption. • Raw materials: cement, steel, aggregates.
• Quality Assurance: Maintains consistent standards through supplier evaluation and • Suppliers: local material vendors.
audits. • Logistics: trucks, cranes, transport routes.
• Flexibility: Adapts to project changes and dynamic market conditions. • Coordination: materials must arrive in sync with project milestones.
• Monitoring: track via ERP or project management software.
• Tools for Supply Chain Management in Projects
• ERP Systems (SAP, Oracle)
• Project Management Software (MS Project, Primavera, [Link])
• Procurement Tools (Ariba, Zoho Inventory)
• Logistics Tracking (RFID, GPS tracking, supply chain dashboards)

Challenges
• Supplier delays or bankruptcies
• Transportation disruptions
• Cost overruns
• Poor communication among stakeholders
• Global issues (pandemics, political changes, fuel prices)
 Quality Circles (QCs)
• A Quality Circle (QC) is a small group of employees
who voluntarily meet at regular intervals to
identify, analyze, and solve work-related problems.
These circles help improve quality, productivity,
and teamwork within an organization.

• Objectives of Quality Circles

• Improve product and service quality
• Enhance employee involvement and motivation
• Reduce waste, rework, and defects
• Promote teamwork and communication
• Encourage continuous improvement (Kaizen)
• Develop problem-solving and leadership skills
 Process of Quality Circle
1. Quality Circle Formation: This includes forming a small group usually consisting of 6-10 members that can collectively work Manufacturing Industry
to improve the quality of their knowledge and skills.
• Company: Toyota Motor Corporation
Problem: High rejection rate of car door panels due to
2. Training: Under this step, training is provided to the team members so that they can better understand their objectives,
roles, and responsibilities and work for improvement. In addition, they are trained in various methodologies like teamwork, minor surface defects.
communication skills problem-solving techniques, etc. Quality Circle Action:
• A team of 10 production-line workers formed a Quality
3. Project Selection: It includes the identification of areas that need improvement in the organisation. For this purpose, Circle.
members conduct several brainstorming sessions and write down the ideas that can be selected based on their experiences • They analyzed the process using Fishbone (Cause & Effect)
and surveillance. Diagram.
• Found root causes: improper cleaning of metal sheets and
4. Problem Identification: In this step, team members determine the nature and extent of quality-related problems. Data is
collected and examined to identify the underlying causes of the problems. The organization uses several tools like problem- uneven paint application.
solving tools and techniques to identify causes of the problems. • Implemented solution: new cleaning procedure and paint
nozzle adjustment.
5. Formulation of Solutions: The group considers and generates potential solutions for the problems by analyzing each solution Result:
based on practicality, efficacy, and future impact. After this, the best solution among the various alternatives is selected. • Rejection rate reduced by 40%, saving costs and improving
efficiency.
6. Selection and Implementation: After determining which solution is the most effective, the team develops an
implementation strategy that includes defining steps, roles, and responsibilities. This plan is executed after monitoring the
progress, communicating the plan to various stakeholders, and making required adjustments. IT Project
• Company: A software firm developing an e-commerce app.
7. Review and Evaluation: This includes identifying the deviations by comparing the actual results with the desired targets. The Problem: Frequent customer complaints about payment
implementation of solution outcomes is reviewed, and required changes are made, if any. errors.
Quality Circle Action:
8. Documentation: In this step the entire process (problem statement, analysis, solutions, and implementation) is recorded and • Formed by developers, testers, and support team
the lessons learned from the other departments in the organisation are shared.
members.
9. Reward and Recognition: Recognition plays an important role in acknowledging the efforts of the team members. • Root cause found: timeout issue in payment API
Additionally, team members are motivated and encouraged for continuous improvement. integration.
• Solution: increase server timeout and add retry
10. Standardisation: Successful solutions are incorporated into existing processes with the aim of continuous improvement of mechanism.
quality. Result:
• Complaints dropped by 80%, improving customer
satisfaction and app reliability.
•
Quality Assurance (QA)
Quality Assurance (QA) is a systematic process used in
project management to ensure that all project
deliverables — whether a product, service, or process —
meet predefined quality standards.
Quality Assurance = Planned actions to ensure quality is
built into the process.
Example
• Scenario: Developing an online food delivery app.
• QA sets standards for coding, testing, and security.
• Conducts process audits to ensure every feature follows
guidelines.
• Reviews test cases and documentation for completeness.
• Ensures all bugs are tracked and closed before release.
• Result:
• Reliable, user-friendly, and secure software.
• Fewer post-launch issues.

8. QA Techniques
• Process Audits
• Peer Reviews
• Checklists
• Root Cause Analysis (RCA)
• Failure Mode and Effect Analysis (FMEA)
 Type of quality assurance
• Functional Quality Assurance
• Ensures the product or service functions as intended, meeting specified requirements and functional expectations.
• Process Quality Assurance
• Optimises and monitors the processes involved in product development or service delivery to ensure efficiency and
adherence to standards.
• Software Quality Assurance (SQA):
• Specific to the software development lifecycle, SQA involves processes and activities to ensure the quality of software
products.
• Regulatory Compliance Quality Assurance
• Ensures adherence to industry-specific regulations, standards, and legal requirements, avoiding legal issues and ensuring
ethical practices.
• Supplier Quality Assurance
• Evaluating and monitoring the quality of materials and components supplied by external vendors to maintain consistent
product quality.
• Product Quality Assurance
• Concentrates on the final product, ensuring it meets defined quality standards and customer expectations.

Quality assurance examples

• Running cybersecurity tests on a user portal after a breach was exposed
• Revamping a car manufacturing process to better suit new safety standards
• Changing fabric suppliers after discovering that dresses aren't reacting to dye as well as they did weeks before
• Designing a new bumper after data suggests its current design to be the cause of higher flat tire rates
 Cause effect analysis
• Cause and Effect Analysis is a problem-solving tool used in quality management
to identify, explore, and display all possible causes of a specific problem (effect).
• It helps teams find the root causes of defects, failures, or variations in a process.

Steps to Create a Cause-and-Effect Diagram

• Define the problem clearly (effect).
• Draw the fishbone diagram with the problem at the head.
• Identify main categories of potential causes.
• Brainstorm possible causes within each category.
• Investigate root causes through analysis and data collection.
• Take corrective actions to eliminate the root cause.
 Techniques
The Fishbone Diagram (Ishikawa Diagram)
• The Fishbone Diagram is a visual tool that helps teams identify, explore, and organize the potential causes of a specific
problem or "effect." It's called a fishbone because the finished diagram resembles the skeleton of a fish.
• Define the Effect (Problem): The problem is written in a box at the "head" of the fish skeleton. For example, "High Defect
Rate in Production."
• Draw the Spine: A long horizontal line (the spine) is drawn leading to the effect box.
• Identify Major Categories of Causes: Several angled lines (the main bones) are drawn branching off the spine. These lines
represent the major categories of potential causes. Common categories, especially in manufacturing, are often referred to
as the 4M's, 6M's, or 8P's:
– 4 M's: Manpower (People), Methods, Machines, Materials.
– 6 M's: Includes the 4 M's plus Measurement and Mother Nature (Environment).
– 8 P's (often used in service industries): People, Process, Provisions, Place, Patrons (Customers), Price, Promotion, Productivity & Quality.
• Brainstorm Possible Causes: For each major category, team members brainstorm specific causes and draw smaller
horizontal lines (smaller bones) off the main category line.
• Identify Root Causes: The team analyzes the diagram to investigate and narrow down the list to the most likely root
cause(s) of the problem, leading to targeted solutions.

The 5 Whys Technique

• Another powerful technique often used in conjunction with the Fishbone Diagram is the 5 Whys.
• The 5 Whys is an iterative question-asking technique used to explore the cause-and-effect relationships underlying a
particular problem. The goal is to ask "Why?" repeatedly—typically five times—until the root cause of the problem is
uncovered, rather than just the surface-level symptom.
• Example of 5 Whys
• Problem: The car will not start.
– Why? The battery is dead.
– Why? The alternator is not working.
– Why? The alternator belt broke.
– Why? The belt was old and should have been replaced.
– Why? The vehicle was not maintained according to the recommended service schedule.
• The root cause is the lack of proper maintenance.
 Total quality management(TQM)
• TQM is a management philosophy that seeks to integrate all organizational functions (marketing,
finance, design, engineering, production, customer service, etc.) to focus on meeting customer
needs and organizational objectives.

Key Characteristics of TQM

• Philosophy/Culture: TQM is a mindset or culture change across the entire organization.
• Focus: Continuous improvement (often using tools like the Plan-Do-Check-Act/PDCA cycle) and
customer satisfaction are the ultimate goals.
• Scope: Company-wide involvement, emphasizing the empowerment and training of all
employees.
• Certification: No formal external certification exists for TQM itself; it's an internal organizational
drive for excellence.
• Driven by: Quality Gurus (Deming, Juran, Crosby, Ishikawa) and concepts like Lean and Six Sigma.

Integration is the Winning Strategy

• Many leading organizations use a strategy of integrating TQM within the ISO 9001 framework:
• ISO 9001 Provides the Base: ISO 9001 forces an organization to document its processes,
establish responsibilities, conduct internal audits, and hold management reviews. This creates
the necessary discipline and structure.
• TQM Drives the Improvement: The TQM philosophy ensures that the system documented by ISO
9001 is not static. The cultural emphasis on continual improvement (Kaizen), employee
involvement, and data-driven decision-making (all TQM principles) actively drives the
organization beyond mere compliance to the ISO standard, pushing for true excellence and long-
term success.
• In short, ISO 9001 provides the required system and consistency, while TQM provides the
cultural commitment and tools for ultimate, ongoing improvement.
 Difference between ISO and TQM
ISO 9001 (Quality Management
Feature Total Quality Management (TQM)
System)
A Management Philosophy and A Standard and a set of
Nature
Culture. Requirements.
Achieve Excellence through a
Ensure Consistency and Compliance
cultural commitment to continual
Objective by establishing and maintaining a
improvement and customer
defined QMS.
delight.
Broad and transformational Specific and procedural (system
Scope
(cultural change). documentation and control).
Yes, a formal, internationally
Certification No official certification.
recognized certification.
Provides the structure and
Provides the spirit and drivers (e.g.,
discipline (e.g., documented
Connection customer focus, leadership) for the
processes, internal audits) for TQM
QMS.
principles.
 Six Sigma
The DMAIC process consists of five steps:
• 1) Define – The first step of the process is to define what you want to achieve with your project.
• 2) Measure – Then you need to decide how you will measure your goals and which statistical
analysis and data collection method you will use.
• 3) Analyze – The third step is to analyze the process and discover potential influencing variables.
• 4) Improve – You then need to make improvements based on the results of your analysis.
• 5) Control – Finally, you will need to control the outcome by evaluating whether your changes have
been successful or not.

The DMADV Method in Six Sigma

• 1) Define – Start by defining the purpose of the projects and set measurable goals.
• 2) Measure – The second step is to determine the customer requirements and define what
characteristics should be measurable, so that data can be collected and compared with the specified
requirements.
• 3) Analyze – The third step involves developing design alternatives, and identifying requirements
and these determine the optimum combination of requirements. As well as determining the life
cycle cost of the design and identifying the best available design option to meet the goals.
• 4) Design – The design phase involves developing a high-level design, and then a more detailed
model prototype to identify potential flaws before production.
• 5) Verify – The final phase is for the validation of the design. All relevant stakeholders should be
satisfied with the design, and it should be effective in the real world.
 Example: Reducing Call Center Hold Times
1. Define Phase 4. Improve Phase
The team establishes the project scope, goals, and the problem statement based on the Voice of the Customer The team brainstorms, pilots, and implements solutions to
Problem Statement: "The average call center hold time has been 6 minutes over the last quarter, leading to a 20% address the root causes identified in the Analyze phase.
increase in negative customer feedback." System Solution: Implement a single, unified knowledge base
Goal: Reduce the average customer hold time from 6 minutes to under 2 minutes within six months. for technical troubleshooting.
Key Metric (Y): Average Hold Time (in minutes). Process Solution: Grant high-performing agents (those trained
to Green Belt level) increased authority to resolve
common billing issues up to a certain dollar limit without
2. Measure Phase manager approval.
The team collects data to establish the current performance baseline and understand the process capability. Training Solution: Launch a mandatory, targeted training
Process Mapping: Create a detailed map of the entire call-handling process, from the initial call to resolution. program focused specifically on the three problem call
Data Collection: Collect and analyze data on thousands of calls, looking at: types.
Time of day/week. Pilot Study: Test the new procedures and system on a small,
Reason for the call (e.g., technical, billing, general inquiry). controlled group of agents for one month. The pilot shows
average hold time drops to 1.8 minutes.
Agent tenure and training level.
Total number of call transfers. 5. Control Phase
Baseline Calculation: Confirm the average hold time is currently 6.0 minutes with a high degree of variation. The team develops and implements a plan to sustain the
improvements long-term and prevent the process from
3. Analyze Phase reverting to the old, ineffective ways.
The team uses statistical tools to identify the Root Causes ($X$'s) that are driving the long hold times. Standard Work: Document the new, unified troubleshooting
Pareto Analysis: The analysis shows that 70% of the long hold times are caused by three specific call types (e.g., process and the updated agent authority limits in
complex billing disputes, new service activation, and modem troubleshooting). Standard Operating Procedures (SOPs).
Root Cause Analysis (e.g., 5 Whys/Fishbone Diagram): For the top causes, the team drills down: Control Charts: Implement a Statistical Process Control (SPC)
Why are billing calls taking so long? $\rightarrow$ Agents lack permission to adjust certain charges. chart to continuously monitor the Average Hold Time (Y).
If the average creeps back above 2.5 minutes, the chart
Why are troubleshooting calls taking so long? $\rightarrow$ Agents must manually search three different, signals an alarm, prompting immediate corrective action.
slow systems for known fixes. Audit/Review: Schedule monthly process audits and quarterly
Conclusion: The root causes are system fragmentation, insufficient agent authority, and outdated training for review of the unified knowledge base to ensure content
complex issues. remains current.
Result: The average hold time is successfully reduced and
sustained below the 2-minute target, leading to increased
customer satisfaction, higher agent productivity, and
significant cost savings due to fewer labor hours per call.
 Step Action item Example/Notes
Developers (backend, frontend), UX/UI
Identify project List required resources (developers, designers, designers, testing tools (Appium, Selenium),
needs tools, etc.) project management software (Jira), and
project budget.

High: Develop authentication system and

Prioritize tasks Rank tasks based on urgency and importance design basic UI; Medium: Integrate payment
gateway; Low: Add social media share options.
Senior backend developer on authentication
Match resources Assign team members based on skills and and API integration; junior developer on
to tasks availability frontend styling; UX designer for initial
wireframes.
Jira for task tracking with developers logging
Track and
Use tools to track resource allocation and usage hours on assigned tasks and designers
monitor usage
providing updates on design completion.

Shift resources to testing if bugs are found in

Optimize for
Adjust resources as the project needs to evolve core features; add extra developers if app
change
features expand beyond original scope.
 Resource allocation planning
• Resource Planning (The Strategy): The process of identifying,
defining, and forecasting all the resources required for a project or
organization to function and achieve its strategic objectives.
• Resource Allocation (The Execution): The act of assigning and
scheduling the available resources (identified during planning) to
specific tasks, projects, or activities in the most effective and
economical way possible.
 Resource Availability and Constraints
Resource availability refers to the quantity and capacity of resources an organization or project currently has access to and can utilize. It is the supply side of the resource
equation.
• It is defined not just by raw numbers but by three key factors:
• Quantity: The number of personnel, pieces of equipment, or funds.
• Skill/Type: Whether the available resource has the specific skills (e.g., a Python developer) or attributes (e.g., a specific piece of machinery) required for a task.
• Time: The percentage of a resource's total time that is available to be allocated to the project, factoring in vacations, training, and other project commitments.
• Example: A development team may have 10 members (Quantity), but only 3 are senior database specialists (Skill/Type), and each of those 3 is only available for 50% of
their working hours due to existing commitments (Time). Their true availability is highly limited.

Resource Constraints
Resource constraints are the limitations or restrictions on the resources needed for a project to succeed. They are the demand exceeding the supply. Dealing with them is
often considered the core challenge of project management.

Techniques for Managing Constraints

When facing limited availability and resource constraints, project managers use specific techniques to optimize the schedule:
• Prioritization: Assigning resources first to the Critical Path tasks—the sequence of activities that dictates the project's minimum completion time.
• Resource Leveling: Adjusting the project schedule by extending the overall project duration to avoid overallocating a constrained resource. This is used when resource
availability is the absolute limiting factor.
• Resource Smoothing: Adjusting the project schedule by moving non-critical tasks within their allowed float (slack) to even out the demand for resources. This keeps
the project on its original timeline while preventing peaks and valleys in workload.
• Capacity Planning: Proactively comparing the organization's total resource capacity against the total projected demand from all planned and current projects to
identify future gaps and constraints early.
• Contingency Planning: Building buffer time and contingency budget into the plan to mitigate the risk that a critical resource becomes unavailable.
• Dealing with resource constraints successfully involves clear communication with stakeholders about the necessary trade-offs between scope, time, and cost.
Constraint
Description Impact of the Constraint
Type

Fixed deadline or limited Forces scope reduction or

Time duration to complete the cost increase (e.g., hiring
work. more people).

Requires cutting
Cost A specific, limited budget scope/quality or
(Financial) that cannot be exceeded. extending time to find
cheaper labor/materials.

A non-negotiable set of Often requires an increase

Scope/Qual
features or a mandatory in time or cost to deliver
ity
quality standard. the specified outcome.

Leads to delays, burnout,

Manpower Lack of available people,
or the need for
(People) specific skills, or capacity.
outsourcing.

Limited availability of Creates bottlenecks and

Equipment/
specialized tools, raw potential supply chain
Material
materials, or software. delays.
 Example: Construction Project
Task Description Duration (if crane available) Crane Needed?
A Lift steel beams 2 days ✅
B Pour concrete 3 days ✅
C Install windows 2 days ❌
D Paint walls 3 days ❌
Complete a building project in 10 days using one crane.

Constraint
• Only 1 crane is available, but both Task A and Task B need it After Applying
at the same time. Before Constraint
Constraint
• Tasks A and B cannot run in parallel → they must be done
sequentially. Duration = 8 days Duration = 10 days
• This increases project duration from 8 days → 10 days. Tasks overlap
Tasks done one after
another
Schedule delay due to
Outcome Efficient resource use
limitation
 Resource Leveling (Managing Resources)
• Resource Leveling is a technique used to solve the problem of overallocation or highly variable resource utilization,
particularly when resource availability is the primary constraint.
• Goal and Method
• Goal: To balance the demand for resources with the available supply and minimize resource allocation peaks and valleys (e.g.,
prevent a single technician from being scheduled for 120% of their time one week and 40% the next).
• Method: Tasks are rescheduled by shifting activities that have float (slack). Non-critical path tasks are delayed or extended
until the resource is available.
• Primary Effect: It typically results in a longer project duration because tasks are often delayed to wait for an available
resource.
• Constraint Focus: Resource Constraint.
• Example: A critical equipment maintenance task requires an expert technician who is fully booked until Wednesday. Resource
leveling delays the start of a non-critical software update task from Monday to Wednesday, ensuring the technician's
workload is 100% both days instead of 150% on Monday and 50% on Wednesday.

• Example:
• If two tasks (Task A and Task B) both need the same engineer at the same time, you delay one task so the engineer can
complete both sequentially.
Task Duration Resource Original Start Leveled Start
A 2 days Engineer 1 Day 1 Day 1
Day 3
B 3 days Engineer 1 Day 1
(delayed)
 Project Crashing (Managing Time)
• Project Crashing is a technique used to shorten the project schedule duration in response to a time constraint or a missed
deadline.
• Goal and Method
• Goal: To compress the project schedule to meet a mandatory or desired earlier completion date.
• Method: It involves applying additional resources or cost to critical path activities to accelerate them. This usually means
paying a premium for overtime, hiring more staff, or utilizing expensive, specialized equipment.
• Primary Effect: It always results in an increased project cost but a shorter project duration.
• Constraint Focus: Time Constraint.
• Example: The project sponsor demands the delivery date be moved up by two weeks. The project manager identifies a 4-
week critical testing task and decides to crash it by having two separate teams work in shifts (overtime) and paying for
expedited external verification, reducing the task duration to 2 weeks, but significantly increasing labor costs.

• Example:
• Task A normally takes 4 days and costs ₹8,000.
If you add one more worker (extra cost ₹2,000), it can be completed in 2 days.
This is called crashing.

Task Normal Time Normal Cost Crash Time Crash Cost

A 4 days ₹8,000 2 days ₹10,000
 Difference
Feature Resource Leveling Project Crashing
Optimize resource utilization and
Primary Goal Reduce project duration (time).
smooth workload.
Using task float (slack) to delay non- Injecting additional cost/resources
Main Lever
critical work. into critical work.
Typical Outcome Longer project duration. Higher project cost.
Overallocation and Resource
Constraint Addressed Deadlines and Time constraints.
constraints.
Critical Path activities with a good
Activities Targeted Non-critical path activities with float.
cost-to-time-reduction ratio.