Chapter 9: Reducing Project Duration
Rationale
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
ISE 491 - Ch. 9 notes 1
Options for accelerating project
completion
Adding resources Fast-tracking
Outsourcing project work Critical-chain
Scheduling overtime Reducing project scope
Establishing a core Compromise quality
project team
Do it twice - fast and
correctly
ISE 491 - Ch. 9 notes 2
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
ISE 491 - Ch. 9 notes 3
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.
ISE 491 - Ch. 9 notes 4
Project cost-duration graph
FIGURE 9.1
ISE 491 - Ch. 9 notes 5
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.
ISE 491 - Ch. 9 notes 6
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 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.
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Activity graph
FIGURE 9.2
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Cost-duration trade-off example
FIGURE 9.3
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Cost-duration trade-off example (contd)
FIGURE 9.3 (contd)
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Cost-duration trade-off example (contd)
FIGURE 9.4
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Cost-duration trade-off example (contd)
FIGURE 9.4 (contd)
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Cost-duration trade-off example (contd)
FIGURE 9.4 (contd)
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Summary costs by duration
FIGURE 9.5
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Project cost-duration graph
FIGURE 9.6
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Practical considerations
Using the project cost - duration graph
Crash times
Linearity assumption
Choice of activities to crash revisited
Time reduction decisions and sensitivity
ISE 491 - Ch. 9 notes 16
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
ISE 491 - Ch. 9 notes 17