8 reducing project durations

Reducing Project Duration or

Project Crashing

Why Reduce 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:• 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

Reducing Project Completion Time• Reduced project completion time is “crashing”• Crashing is the same whether you have used

CPM or PERT.

Project & Activity Costs• PROJECT DIRECT COSTS: Directly assigned to work

package or activity– “Normal” costs for “normal” time

• Direct labor expenses• Materials• Equipment• Subcontractors

– Crashing activities increases direct costs

• INDIRECT EXPENSES: Cannot be associated with any work package or activity– Overhead expenses

• including supervisory expenses• administration• contractual penalties or early completion incentives

– Consulting

Crashing Activities• Activity & project duration may be influenced by resource

allocation decisions…more resources—less time needed• Sometimes, we can expedite completion of a task by assigning

more people or equipment. Thus, total direct costs tend to vary inversely with project duration. Indirect costs, however, tend to increase with overall project completion time.

TotalCosts

IndirectCosts

DirectCosts

Project duration

Expe

nse

Time-Cost Tradeoffs in CPM• Basic Assumption: Some activities can be

expedited, at a cost• Why accelerate an activity?

– Complete the task in a shorter duration, thereby reducing the duration of the critical path, thereby reducing the length of the project• Avoid late penalties• Earn early completion incentive payments

• Time Cost Problem: Determine the optimum project duration based on time-cost tradeoffs

Time & Costs: Normal vs. Crash• For the time-only CPM project schedule, we

typically assume that activity duration is fixed at its NORMAL TIME, or the duration with the lowest direct activity cost (i.e., NORMAL COST).

• However, some activities may be expedited if higher resource levels are available. The shortest activity duration is called CRASH TIME. The cost to complete an activity in that amount of time is called CRASH COST.

Constructing Project Cost vs. 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.

Constructing a Project Cost vs. 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 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.

Linear Time-Cost TradeoffIn theory, the normal or expected duration of a task can be reduced by assigning additional resources to the task

Time

Cost

Crash Point

Normal Point

Slope (bj) = Increase in cost by reducing task by one time unit

Normal timeCrash time

Normal cost

Crash cost

tjNtjc

Cjc

CjN

Selecting Activities to Crash• Cost Slope = Rise / Run• Cost Slope = CC – NC / NT – CT• = CC – NC NT – CT• where,

– CC = Crash Cost– NC = Normal Cost– NT = Normal Time– CT = Crash Time

• Calculate for each activity on Critical Path

= CC – NC = $800 - $400

NT – CT 10 – 5

= $400/5 = $80 per unit of time

Time/Cost Trade-off Analysis• You might think that total project costs will

increase when we begin to crash activities• But, total project costs consist of both

indirect (project-based) costs (PBC) and direct (activity-based) costs (ABC)– ABC (direct) go up when we crash activities in

an effort to finish the project early– But, PBC (the indirect costs) go down if we

finish the project early

Which Activities are the Best Candidates for Crashing?

• Any activity that is on the critical path• Activities with relatively long durations• Bottleneck activities (that appear on multiple

critical paths)• Activities with relatively low costs to crash• Activities that are not likely to cause quality

problems if crashed• Activities that occur relatively early in the

schedule and are labor intensive

Options for Crashing Activities• Adding Resources• Outsourcing Project Work• Overtime• Establishing Core Project Team• Temporary Fixes• Fast-Tracking• Critical Chain PM• Brainstorming• Reducing Scope• Phasing Project Deliverables

Potential Problems with Crashing • Reduced flexibility and less margin for

errorincreased risk of failure to complete project on time

• Raises potential for poor quality• Increases potential for staff burnout, stress, and

turnover (from what Your don calls Death March projects)

• Raises activity-based costs• May negatively affect other projects• May create unrealistic expectations for future projects• Hard to know true indirect costs

Time-Cost Tradeoff Heuristic1. Set each activity duration to its normal time.2. Determine the critical path(s) and project duration

based on the current activity times.3. Calculate total direct costs and indirect costs for the

current schedule.4. Chose an activity or activities that can be expedited to

reduce project duration by one time unit. Use cost slopes and critical path information to guide your choice. If no further reduction in project duration is possible, go to step 5. Otherwise, go to step 2.

5. Plot the project's direct and indirect costs for each possible duration. Select the duration that minimizes total costs.

Network Crashing ExampleActivity ID

Normal Time

Normal cost

Maximum allowable crash time

Crash cost per day

A 3 50 1 20B 6 80 2 40C 10 60 1 30D 11 50 4 25E 8 100 2 30F 5 40 1 30G 6 70 0 00

Network Crashing Example

A

3

B

6

D

11

C

10

E

8

F

5

G

6

Initial TotalDirect Cost = $450

Select activity “A”[smallest slope] and

reduce time by 1 unit (xin next panel indicates

activity crashed bymaximum

TotalDuration = 25 units


A

2x

B

6

D

11

C

10

E

8

F

5

G

6

TotalDirect Cost = $470

Activities Changed

A$20



A

2x

B

6

D

10

C

10

E

8

F

5

G

6



Activities Changed

D$25


A

2x

B

6

D

10

C

10

E

8

F

4x

G

6



Activities Changed

F$30


A

2x

B

6

D

9

C

9x

E

7

F

4x

G

6


Activities Changed

C

$30


D E

$25 $30


PROJECTDURATION

DIRECTCOSTS

INDIRECTCOSTS

TOTALCOSTS=+

2524232221

$450470495525610

$400350300250200

$850820795775810

Practical Considerations

• Using the project cost—duration graph• Crash times• Linearity assumption• Choice of activities to crash revisited• Time reduction decisions and sensitivity

Reducing the Time of a Project (crashing)Activi

tyPredecesso

r

Normal Time (wk)

Normal Cost ($)

Crash Time

Crash Cost ($)

Max. weeks of reduction

Reduce cost per

weekA -- 4 8,000 3 11,000 1 3,000B A 6 30,000 5 35,000 1 5,000C A 3 6,000 3 6,000 0 0D B 6 24,000 4 28,000 2 2,000E D 14 60,000 12 72,000 2 6,000F C 5 5,000 4 6,500 1 1500G E,F 2 6,000 2 6,000 0 0H G 2 4,000 2 4,000 0 0I G 3 4,000 2 5,000 1 1,000J H,I 4 4,000 2 6,400 2 1,200K J 2 5,000 2 5,000 0 0

Crashing Example: Suppose the Cables By project manager wants to reduce the new product project from 41 to 36 weeks.

• Crashing Costs are considered to be linear• Look to crash activities on the critical path• Crash the least expensive activities on the critical path first

(based on cost per week)– Crash activity I from 3 weeks to 2 weeks $1000– Crash activity J from 4 weeks to 2 weeks $2400– Crash activity D from 6 weeks to 4 weeks $4000– Recommend Crash Cost $7400

• Question: Will crashing 5 weeks return more in benefits than it costs?

Crashed Network Diagram

Crashing Summary

• In planning, crashing can pull your project into the delivery window

• Once started, a late project can get pulled back in to schedule compliance

• Crashing can increase the size of the “critical core,” thereby reducing flexibility

• Capability in MS Project

8 reducing project durations

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