Reducing Project Duration

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Reducing Project Duration

• Chapter 9

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(No Transcript)
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Time Is Money Cost-Time Tradeoffs

• Reducing the time of a critical activity always
  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

• When Resources are NOT constrained
• Adding Resources
• Outsourcing Project Work
• Scheduling Overtime
• Establishing a Core Project Team- (eliminates
  drain of multi-tasking on other projects or work)
• Do It TwiceFast (prototype, temporary) and
  Correctly (final solution)

• When Resources are constrained
• Fast-Tracking (rethink the network
  dependencies)
• Critical-Chain (eh)
• Reducing Project Scope
• Compromise Quality (eh)

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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
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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.

FIGURE 9.1
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Determining Activities to Shorten

• Shorten the activities with the smallest increase
  in cost per unit of time.
• Ok, so how do we get the costs per activity?
• Assumptions
• The cost relationship is linear. You can crash
  less than the limit.
• Normal time assumes low-cost, efficient methods
  to complete activity
• Crash time represents a limitthe greatest time
  reduction possible under realistic conditions.
• Slope represents a constant cost per unit of
  time. Typically its the per-day crash cost
• Any acceleration must be bounded so that activity
  duration is within the normal and crash times.

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Activity Graph
FIGURE 9.2
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CostDuration Trade-off Example

• Assume we want to reduce project duration and
  have recourses to do so
• we value each day it is shorted at 50K

Predecessors -- A A A B C,D E,F
Calculate these

• First, calculate Slope (in days) and max Crash
  time
• Next build the AoN network, with normal times
  (we can also do this in excel)
• Lastly, crash activities that are most cost
  effective to reduce overall project duration
  until cost of crashing exceeds benefits

FIGURE 9.3
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CostDuration Trade-off Example (contd)
Put duration shortened, too
FIGURE 9.3 (contd)
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CostDuration Trade-off Example (contd)
FIGURE 9.4 (contd)
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CostDuration Trade-off Example (contd)
FIGURE 9.4 (contd)
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CostDuration Trade-off Example (contd)
FIGURE 9.4 (contd)
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Summary Costs by Duration

• Indirect costs must be calculated, perhaps from
  accounting or
• client services department (ex. Contracts for
  late/early delivery)
• May not be as easy to estimate as the book claims

FIGURE 9.5
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Project CostDuration Graph
FIGURE 9.6
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Hey, Wheres the Software Demo?

• Notice theres no How to use MS Project to
  crash section in the book or slide deck.
• While the .mpp can be adjusted to account for
  crashed activities, it is rarely the case that
  all activities can be crashed.
• Even if multiple activities can be crashed,
  crashing is something you want to consider
  closely and look at manually, and justify all
  decisions.

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Group Exercise

• Consider the following project

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Group Exercise, Continued

• What is the normal duration? What is the fastest
  time in the project could be completed in
  (without re-sequencing, outsourcing or condensing
  tasks or reducing scope).
• Indirect costs are reduced by 2000 per day
  shortened. What is the crashing plan that
  reduces total direct and indirect costs? Is it
  the same crashing plan as above?
• How would you summarize your recommendations to
  get approval for the funds?