Equilibrium of Human Labor in the Light of Supply and Demand Model from Microeconomic Theory


By Pavel Barseghyan, PhD

Dallas, USA and Yerevan, Armenia


In order to develop modern quantitative methods of project management it is important to examine the balance and equilibrium of human labor which is established between the complexity of work and the professional capacities of its performers.

In this paper a number of equilibrium conditions of human labor are derived based on two quantitative definitions of total effort. These equilibrium conditions can be applied for the solution of many problems of project management.

By analogy with the models of supply and demand of microeconomic theory the concept of partial equilibrium of human labor is introduced and a qualitative analysis of its equilibrium proceeding from the considerations of the risk of not completing the work within the prescribed time is performed.

Keywords: Equilibrium and balance of human labor, speed of work, supply and demand model, equation of equilibrium, quantitative project management, partial equilibrium, microeconomic theory.


For the rational organization of human labor and in particular for project management purposes it is necessary to clarify the concept of equilibrium of the process of work and give it a clear quantitative interpretation.

Intuitively, when speaking of the balance or equilibrium of work on projects, people mean the successfulness of the work flow and related other similar interpretations. But as the project management practice and especially the serious challenges posed by the frequent failure of projects indicate, the traditional methods that are based on the intuition and experience of people are gradually forced, at least in part, to give way to quantitative methods.

Despite the fact that these quantitative methods are still imperfect, they play a positive role in the management of projects by presenting a more structured and detailed view of the problems under study, and thereby facilitating the increase of quality of the intuitive decisions of managers.

The shortcoming of existing quantitative methods in this field is that they are not able to adequately represent the phenomena and processes related to the management of the work of people. As a result, estimates and forecasts made on the basis of these quantitative methods have unsatisfactory accuracy for the practical purposes of project management.

That is why the existing methods of quantitative project management cannot be considered as self-sufficient, and therefore they have a secondary role for the dominant qualitative methods in the field of project management. This is one of the major challenges of modern project management.  Addressing these challenges and the further progress in this area is connected with creation of the new generation of quantitative methods of project management.

It is already impossible to ignore the problem and pretend that everything is fine in the project management realm today. Even if we are not able to understand the completely and explain the general problem of mass failure of projects, we should be able to explain a comparatively narrower scale problem – causes of unacceptably low accuracy of the existing methods of project estimation.

It has long been time to recognize that the real cause of all the problems with inaccurate project estimations is the lack of adequate methods and theories of representation of phenomena and processes related to project and program management. At the same time we continue to make use of inaccurate statistical methods and mental models in the estimation of projects.

This state of affairs with the problems of quantitative project management can be considered as at least strange, which may only be explained in terms of short-term business goals.

It is not difficult to imagine the low level of quality and accuracy of the methods of the contemporary quantitative project management, if we exclude the corrective interventions of experts during the usage of the corresponding project management tools.

This applies to all current methodologies in project management, including earned value management, system dynamics and methods of risk analysis and estimation.

We have so many unexplored quantitative laws, relationships and unaccounted factors in this area that it is difficult to directly link some moderate success in project management with progress of quantitative methods in it [1].

Consequently the successful solution of the problems of project estimation and overcoming the crisis in this area is clearly linked to the development of basic quantitative techniques for a correct interpretation of existing project data and obtaining universal functional relationships between project parameters.


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About the Author

pavel-barseghyanflag-Armenia-USAPavel Barseghyan, PhD      

Dr. Pavel Barseghyan is a consultant in the field of quantitative project management, project data mining and organizational science. Has over 40 years experience in academia, the electronics industry, the EDA industry and Project Management Research and tools development. During the period of 1999-2010 he was the Vice President of Research for Numetrics Management Systems. Prior to joining Numetrics, Dr. Barseghyan worked as an R&D manager at Infinite Technology Corp. in Texas. He was also a founder and the president of an EDA start-up company, DAN Technologies, Ltd. that focused on high-level chip design planning and RTL structural floor planning technologies. Before joining ITC, Dr. Barseghyan was head of the Electronic Design and CAD department at the State Engineering University of Armenia, focusing on development of the Theory of Massively Interconnected Systems and its applications to electronic design. During the period of 1975-1990, he was also a member of the University Educational Policy Commission for Electronic Design and CAD Direction in the Higher Education Ministry of the former USSR. Earlier in his career he was a senior researcher in Yerevan Research and Development Institute of Mathematical Machines (Armenia). He is an author of nine monographs and textbooks and more than 100 scientific articles in the area of quantitative project management, mathematical theory of human work, electronic design and EDA methodologies, and tools development. More than 10 Ph.D. degrees have been awarded under his supervision. Dr. Barseghyan holds an MS in Electrical Engineering (1967) and Ph.D. (1972) and Doctor of Technical Sciences (1990) in Computer Engineering from Yerevan Polytechnic Institute (Armenia).  Pavel’s publications can be found here: http://www.scribd.com/pbarseghyan and here: http://pavelbarseghyan.wordpress.com/.  Pavel can be contacted at [email protected]