Project Crashing -(2) (2)

8/17/2019 Project Crashing -(2) (2)

1/20

Reducing ProjectDuration

- Project CrashingPROJ 600

Dr. Ziping Wang


2/20

Agenda Why crash projects?

Distinguish et!een direct costsand indirect costs.

"o! crash project? Project cost-duration graph


3/20

Reasons #or Reducing Project

Duration $i%e &s 'oney( Cost-$i%e $radeo)s

Reducing the ti%e o# a critica* acti+ity usua**yincurs additiona* direct costs. Cost-ti%e so*utions #ocus on reducing ,crashingacti+ities on the critica* path to shorten o+era**duration o# the project.

Reasons #or i%posed project duration dates( Custo%er reuire%ents and contract co%%it%ents $i%e-to-%ar/et pressures &ncenti+e contracts ,onuses #or ear*y co%p*etion n#oreseen de*ays O+erhead and good!i** costs Pressure to %o+e resources to other projects


4/20

Options #or Acce*erating

Project Co%p*etion Resources Not

Constrained

Adding resources Outsourcing project

!or/

1chedu*ing

o+erti%e

2sta*ishing a coreproject tea%

Do it t!ice3#astand then correct*y

ResourcesConstrained

4ast-trac/ing Critica*-chain

Reducing projectscope

Co%pro%iseua*ity


5/20

1u%%ary( $hree Principa*

'ethods #or Crashing

$o accelerate the process of a project

&%pro+ing e5isting resources

productivity

Changing !or/ methods &ncreasing the quantity o# resources


6/20

25p*anation o# Project CostsProject &ndirect Costs

Costs that cannot e associated !ith any particu*ar!or/ pac/age or project acti+ity. 1uper+ision7 ad%inistration7 consu*tants7 andinterest

Costs that +ary ,increase !ith ti%e. Reducing project ti%e direct*y reduces indirectcosts.

Project Direct CostsNormal costs that can e assigned direct*y to aspeci8c !or/ pac/age or project acti+ity. 9aor7 %ateria*s7 euip%ent7 and sucontractors

Crashing acti+ities increases direct costs.


7/20

Reducing Project Duration to

Reduce Project Cost

Compute total costs for specific durations andCompute total costs for specific durations andcompare to benefits of reducing project time.compare to benefits of reducing project time.

Search critical activities for lowest direct-costSearch critical activities for lowest direct-cost

activities to shorten project duration.activities to shorten project duration.

Identifying direct costs to reduce project timeIdentifying direct costs to reduce project time

Gather information about direct and indirectGather information about direct and indirectcosts of specific project durations.costs of specific project durations.


8/20

Project Cost-Duration :raph

0;0

0

0

60

6 @ ;0 ;< ;> ;6

&ndirectcosts

Directcosts

$ota* costs

Project duration

C o

s t

s

Opti%u% cost-ti%e point


9/20

Constructing a Project Cost3Duration:raph

4ind tota* direct costs #or se*ectedproject durations.

4ind tota* indirect costs #or se*ectedproject durations.

1u% direct and indirect costs #orthese se*ected project durations.

Co%pare additiona* cost a*ternati+es#or ene8ts.


10/20

Constructing a Project Cost3Duration :raph ,cont

Deter%ining Acti+ities to 1horten1horten the acti+ities !ith the s%a**estincrease in cost per unit o# ti%e.

Assu%ptions( $he cost re*ationship is *inear.

or%a* ti%e assu%es *o!-cost7 eBcient %ethodsto co%p*ete the acti+ity.

Crash ti%e represents the shortest ti%e toco%p*ete the acti+ity.

1*ope represents a constant cost per unit of time.

A** acce*erations %ust occur !ithin the nor%a*and crash ti%es.


11/20

0

00

600

@00

;0Acti+ity duration ,units

A c t i + i t y

c o s t

or%a* point

or%a*cost

Crash pointCrashcost

Run

RiseslopeCost =

Crash time-time Normal

cost Normal-costCrash=

510400$800$

−

−

=

80$= unit o# ti%

A 1i *i8 d 2 *


12/20

Direct costs

Mimum !ormal Crash

"ctivity ID Slope crash time #ime Cost #ime Cost

" $ %&' ( %)'* + ,' - .+'

C .' +' / /'

D .. &' ) .&'

0 , .'' + .+'

1 & -' - )'

G + )' + )'

A 1i%p*i8ed 25a%p*e

1$202 40

130

425

230

130

0-

Total direct cost$450

"

$

*

+

C

'

D

0

,

1

&

G+

$i%e(


13/20

Direct costs

Mimum !ormal Crash

"ctivity ID Slope crash time #ime Cost #ime Cost

" $ %&' ( %)'* + ,' - .+'

C .' +' / /'

D .. &' ) .&'

0 , .'' + .+'

1 & -' - )'

G + )' + )'

A 1i%p*i8ed 25a%p*e

1$202 40

130

425

230

130

0-

"

(

*

+

C

'

D

'

0

,

1

&

G+

$i%e(


14/20

"

(

*

+

C

/

D

/

0

)

1

-

G

+ Acti+ities changed(

C D 2=0


15/20

Project CostFDuration :raph


16/20

Project Dur. Direct Cost Indirect cost otal cost

(& &' ''

( )' $&'

($ /& $''(( &(& (&'

(. +.' (''

$850

820

795

775

810

2roject Cost-Duration Graph

0

200

400

600

800

1000

20 22 24 26

Duration 3units4

C o s t

Direct Cost

Indirect cost

Total cost

If the proect must !e completed in 2" days# otherise tpenalty cost of a% $"00# !% $20& 'o to crash the proect

Additiona* Guestion(

Pena*ty


17/20

Practica* Considerations

sing the Project Cost3Duration :raph

Crash $i%es

9inearity Assu%ption

Choice o# Acti+ities to Crash Re+isited

$i%e Reduction Decisions and1ensiti+ity


18/20

on*inear $i%e-Cost $rade-O)s

Con+e5 ti%e-cost trade-o)

Cost

Crash point

or%a* point

Conca+e ti%e-cost trade-o)

$i%e

Cost

Crash point

or%a* point


19/20

What i# cost reduction is the

issue Reduce project scope

"a+e o!ner ta/e on %oreresponsii*ity

Outsourcing project acti+ities ore+en the entire project

Hrainstor%ing cost sa+ings options


20/20

"o%e!or/

1ee the H*ac/oard.

Documents

Project Crashing -(2) (2)