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Chapter 9 - Reducing Project Duration

Project management, Reducing Project Duration (Copy)

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183 views20 pages

Chapter 9 - Reducing Project Duration

Project management, Reducing Project Duration (Copy)

Uploaded by

imgentlegiant
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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CHAPTER NINE

Reducing
Project Duration

McGraw-Hill/Irwin
Copyright 2011 by The McGraw-Hill Companies, Inc. All
rights reserved.

Where We Are Now

92

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
93

Options for Accelerating Project Completion


Resources Not
Constrained

Resources
Constrained

Adding resources

Fast-tracking

Outsourcing project
work

Critical-chain

Scheduling overtime

Compromise quality

Reducing project scope

Establishing a core
project team
Do it twicefast and
then correctly
94

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.


95

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.

96

Project CostDuration Graph

FIGURE 9.1
97

Constructing a Project CostDuration 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.

98

Constructing a Project CostDuration 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.
99

Activity Graph

FIGURE 9.2
910

CostDuration Trade-off Example

FIGURE 9.3
911

CostDuration Trade-off Example (contd)

FIGURE 9.3 (contd)


912

CostDuration Trade-off Example (contd)

FIGURE 9.4
913

CostDuration Trade-off Example (contd)

FIGURE 9.4 (contd)


914

Summary Costs by Duration

FIGURE 9.5
915

Project CostDuration Graph

FIGURE 9.6
916

Practical Considerations
Using the Project CostDuration Graph

Crash Times
Linearity Assumption
Choice of Activities to Crash Revisited
Time Reduction Decisions and Sensitivity

917

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

918

Key Terms
Crashing

Crash point
Crash time
Direct costs

Fast-tracking
Indirect costs
Outsourcing

Project costduration graph

919

Project Priority Matrix: Whitbread Project

FIGURE 9.6
920

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