Reducing Project Duration
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9–1
Where We Are Now
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9–2
Learning Objectives
1. Understand the different reasons for crashing a
project
2. Identify the different options for crashing an activity
when resources are not constrained
3. Identify the different options for crashing an activity
when resources are constrained
4. Determine the optimum cost-time point in a project
network
5. Understand the risks associated with compressing
or crashing a project
6. Identify different options for reducing the costs of a
project
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
9–3
Chapter Outline
9.1 Rationale for Reducing Project Duration
9.2 Options for Accelerating Project Completion
9.3 Project Cost-Duration Graph
9.4 Constructing a Project Cost-Duration Graph
9.5 Practical Considerations
9.6 What If Cost, Not Time, Is the Issue?
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
9–4
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:
• Time-to-market pressures
• Unforeseen delays
• Incentive contracts (bonuses for early completion)
• Imposed deadlines and contract commitments
• Overhead and public goodwill costs
• Pressure to move resources to other projects
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9–5
Options for Accelerating Project Completion
• Resources Not • Resources
Constrained Constrained
– Adding resources – Improving project team
– Outsourcing project efficiency
work – Fast-tracking
– Scheduling overtime – Critical-chain
– Establishing a core – Reducing project
project team scope
– Do it twice—fast and – Compromise quality
then correctly
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9–6
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
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9–7
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
• Project 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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9–8
Project Cost–Duration Graph
FIGURE 9.1
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9–9
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
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9–10
Constructing a Project Cost–Duration Graph
• Determining Activities to Shorten
– Shorten the activities with the smallest increase in cost
per unit of time
– Assumptions:
• The cost-time 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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9–11
Activity Graph
FIGURE 9.2
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9–12
Cost–Duration Trade-off Example
Example 1.
Use the information contained below to compress one time unit per move using the least cost
method. Reduce the schedule until you reach the crash point of the network. For each move identify
what activity(ies) was crashed, the adjusted total cost.
If the indirect cost for is $400 for 25 unit time and reduces by 50 for the succeeding time, what is the
optimum cost-time schedule for the project
FIGURE 9.3
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9–13
Cost–Duration Trade-off Example (cont’d)
FIGURE 9.3 (cont’d)
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9–14
Cost–Duration Trade-off Example (cont’d)
FIGURE 9.4
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9–15
Cost–Duration Trade-off Example (cont’d)
FIGURE 9.4 (cont’d)
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9–16
Summary Costs by Duration
FIGURE 9.5
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9–17
Project Cost–Duration Graph
FIGURE 9.6
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9–18
Practical Considerations
• Using the Project Cost–Duration Graph
• Crash Times
• Linearity Assumption
• Choice of Activities to Crash Revisited
• Time Reduction Decisions and Sensitivity
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9–19
What if Cost, Not Time Is the Issue?
• Commonly Used Options for Cutting Costs
– Reducing project scope
– Having owner take on more responsibility
– Outsourcing project activities or even the entire
project
– Brainstorming cost savings options
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9–20
Key Terms
Crashing
Crash point
Crash time
Direct costs
Fast-tracking
Indirect costs
Outsourcing
Project cost–duration graph
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9–21
Project Priority Matrix: Whitbread Project
FIGURE C9.1
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