project crashing -(2) (2)
TRANSCRIPT
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Reducing ProjectDuration
- Project CrashingPROJ 600
Dr. Ziping Wang
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Agenda Why crash projects?
Distinguish et!een direct costsand indirect costs.
"o! crash project? Project cost-duration graph
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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
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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
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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
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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.
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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.
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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
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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.
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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.
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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 *
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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(
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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(
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"
(
*
+
C
/
D
/
0
)
1
-
G
+ Acti+ities changed(
C D 2=0
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Project CostFDuration :raph
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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
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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
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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
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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
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"o%e!or/
1ee the H*ac/oard.