Project Management
THE MANAGERIAL PROCESS
Clifford F. Gray Eric W. Larson
Third Edition
Chapter 9
Reducing Project Duration
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Rationale for Reducing Project Duration
Time Is Money: Cost-Time Tradeoffs
Reducing the time of a critical activity usually incurs additional direct costs.
Cost-time solutions focus on reducing (crashing) activities on the critical path to shorten overall duration of the project.
Reasons for imposed project duration dates:
Customer requirements and contract commitments Time-to-market pressures Incentive contracts (bonuses for early completion) Unforeseen delays Overhead and goodwill costs Pressure to move resources to other projects
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Options for Accelerating Project Completion
Adding Resources Outsourcing Project Work Scheduling Overtime Establishing a Core Project Team Do It TwiceFast and Correctly Fast-Tracking Critical-Chain Reducing Project Scope Compromise Quality
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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.
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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 directactivities to shorten project duration. Compute total costs for specific durations and compare to benefits of reducing project time.
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Project CostDuration Graph Cost
FIGURE 9.1
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Constructing a Project CostDuration Graph Cost
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.
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Constructing a Project CostDuration Graph Cost
Determining Activities to Shorten
Shorten the activities with the smallest increase in cost per unit of time. Assumptions:
The cost relationship is linear. Normal time assumes low-cost, efficient methods to complete the activity. Crash time represents a limit the 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.
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Activity Graph
FIGURE 9.2
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Cost CostDuration Trade-off Example Trade-
FIGURE 9.3
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Cost CostDuration Trade-off Example (contd) Trade-
FIGURE 9.3 (contd)
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Cost CostDuration Trade-off Example (contd) Trade-
FIGURE 9.4 (contd)
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Cost CostDuration Trade-off Example (contd) Trade-
FIGURE 9.4 (contd)
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Cost CostDuration Trade-off Example (contd) Trade-
FIGURE 9.4 (contd)
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Summary Costs by Duration
FIGURE 9.5
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Project CostDuration Graph Cost
FIGURE 9.6
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Practical Considerations
Using the Project CostDuration Graph Crash Times Linearity Assumption Choice of Activities to Crash Revisited Time Reduction Decisions and Sensitivity
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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
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Key Terms
Crash point Crash time Direct costs Fast-tracking Indirect costs Outsourcing Phase project delivery Project costduration graph
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