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Project Scheduling (Continued)

This document discusses strategies for reducing project duration to lower costs, including adding resources, outsourcing work, overtime, and fast-tracking. It explains that indirect costs increase with time, so reducing duration cuts costs. Direct costs may rise with crashing activities to accelerate work. The document shows how to construct a project cost-duration graph comparing total costs at different durations to identify the lowest-cost schedule. Selection of activities to accelerate should target those with the smallest increase in cost per time saved.

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Yulia Reza Firdania
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34 views19 pages

Project Scheduling (Continued)

This document discusses strategies for reducing project duration to lower costs, including adding resources, outsourcing work, overtime, and fast-tracking. It explains that indirect costs increase with time, so reducing duration cuts costs. Direct costs may rise with crashing activities to accelerate work. The document shows how to construct a project cost-duration graph comparing total costs at different durations to identify the lowest-cost schedule. Selection of activities to accelerate should target those with the smallest increase in cost per time saved.

Uploaded by

Yulia Reza Firdania
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Project Scheduling

(Continued)
Rationale for Reducing Project Duration

Reasons for imposed project duration dates:


Customer requirements and contract commitments
Time-to-market pressures
Incentive contracts (bonuses for early completion)
Overhead and goodwill costs
Unforeseen (unpredictable) delays
Pressure to move resources to other projects
Options for Accelerating Project Completion

Adding Resources Reducing Project Scope


Outsourcing Project Compromise Quality
Work Fast-Tracking
Scheduling Overtime
Do It TwiceFast and
Correctly
Explanation of Project Costs
Project Indirect Costs
Costs that cannot be associated with any particular work package or
project activity.
Supervision, administration, consultants, and interest
Costs that vary (increase) with time.
Reducing project time directly reduces indirect costs.

Direct Costs
Normal costs that can be assigned directly to a specific work package
or project activity.
Labor, materials, equipment, and subcontractors
Crashing activities increases direct costs.
Reducing Project Duration to Reduce Project Cost

Identifying direct costs to reduce project time

Gather information about direct and indirect costs of


specific project durations.

Search critical activities for lowest direct-cost activities to


shorten project duration.

Compute total costs for specific durations and compare


to benefits of reducing project time.
Project CostDuration Graph
Constructing a Project Cost-Duration Graph

Find total direct costs for selected project


durations.
Find total indirect costs for selected project
durations.
Sum direct and indirect costs for these selected
project durations.
Compare additional cost alternatives for
benefits.
Constructing a Project Cost-Duration Graph

Determining Activities to Shorten


Shorten the activities with the smallest increase in cost
per unit of time (cost slope).
Assumptions:
The cost relationship is linear.
Normal time assumes low-cost, efficient methods to complete
the activity.
Crash time represents a limitthe greatest time reduction
possible under realistic conditions.
Slope represents a constant cost per unit of time.
All accelerations must occur within the normal and crash times.
Activity Graph

FIGURE 9.2
Cost-Duration Trade-off Example
Cost-Duration Trade-off Example (contd)
CostDuration Trade-off Example (contd)
CostDuration Trade-off Example (contd)
CostDuration Trade-off Example (contd)
Summary Costs by Duration
Project Cost-Duration Graph
Practical Considerations

Using the Project Cost-Duration Graph


Crash Times
Linearity Assumption
Choice of Activities to Crash Revisited
Time Reduction Decisions and Sensitivity
What if Cost, Not Time is the Issue?

Commonly Used Options for Cutting Costs


Reduce project scope
Have owner take on more responsibility
Outsourcing project activities or even the entire
project
Brainstorming cost savings options
Key Terms

Crash point
Crash time
Direct costs
Fast-tracking
Indirect costs
Outsourcing
Phase project delivery
Project costduration graph

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