time-cost trade off
DESCRIPTION
Often projects main constrains are time and costTRANSCRIPT
Presented by: Group 1
Course title: BLDG 6801
Professor Khaled El-Fekhfakh
1
Time-Cost Trade-off
Mohamed Fared Zuhri Yafi 9762132
Overview
Introduction
Scheduling Techniques
Earned Value
Incentives/disincentives effect
Optimization of time-cost trade-off problems
Case study
Conclusion
2
Introduction
3
What is time cost trade-off? Determining which activities to “crash” in order to produce the maximum
overall job profit.
What is crashing?
Why is it important?.
CASE STUDY: Renovation of residential building in downtown Montreal.
Scheduling Techniques
4
Bar Chart CPM
PertMonte Carlo Method
BIM LOB LSM
Earned Value Project Management
• Integration the project scope, time and cost using HEURISTIC METHODS
Incentives/disincentives effect on time cost off
5
Offering contractors a monetary incentive for early project completion .
Types of Incentives :
Bonus /penalty : Time based used to reward and penalize contractors for early and late project completion .
Advantage: Reduce the duration of the project
Disadvantage: Increase the cost
8
Optimization of time-cost trade-off problems
73 72 71 70 69 68 67 66 65 64 63 62 61 60 59 580
200
400
600
800
1000
1200
1400
1600
1800
2000
Project Indirect Cost
Project Direct Cost
Total Cost
Time (Days)
Cost
($)
Indirect costs
increase by prolonging the duration
Direct costs
increases by reducing the duration
Optimum point
The duration of a specific project in
which the least total cost happens.
Initiation Planning Execution Monitoring Closing
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Generating algorithms• Optimum point can’t be found easily
• Many repetitions
• Need to define population size and set an algorithm.
Changing
activity duration
Critical path
changes
New project
duration
10
Ant colony optimization
Ants leave a pheromone trail between the nest and the food.
1. Other ants follow the trail.
2. Too much pheromone try a new trail
3. Different ways Chose the shorter ones
• Avoid repetition
• Avoid following unnecessary paths.
Initiation Planning Execution Monitoring Closing
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Fuzzy Sets• Adding weight to:
Time Cost Quality
Fitness function• Defines how much risk is the PM or the
owner willing to take.
Case study
Renovation of residential building in Montreal downtown on the corner of De la Montagne and
Notre-dame .
2-storey building of 200 sq.m/floor, and 125 sq.m parking space.
Building to be delivered as a space for a restaurant including a 200 sq.m ground floor,
consisting of a kitchen, dining area and two small bars. A 200 sq.m First floor divided into 100
sq.m dining area including a bar counter and a 100 sq.m terrace.
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Earned Value Implementation
The date when analysis was done was as of 31st of January 2013. Duration before delay = 1/1/2013 to 4/4/2013
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As of 31st Jan 2013
Activity Budgeted Cost Actual Cost Earned Scheduled Start Date Scheduled End Date Scheduled Duration Actual Start Date Actual End Date Actual DurationA -$ -$ -$ 01/01/2013 02/01/2013 2 01/01/2013 02/01/2013 2B -$ -$ -$ 03/01/2013 07/01/2013 3 03/01/2013 07/01/2013 3C -$ -$ -$ 03/01/2013 04/01/2013 2 03/01/2013 04/01/2013 2D 1,382.00$ 1,210.00$ 1,382.00$ 08/01/2013 09/01/2013 2 08/01/2013 09/01/2013 2E 4,145.90$ 3,890.00$ 4,145.90$ 15/01/2013 23/01/2013 7 15/01/2013 23/01/2013 7F 6,909.80$ 6,200.00$ 6,909.80$ 10/01/2013 11/01/2013 2 10/01/2013 11/01/2013 2G 3,454.90$ 3,128.00$ 3,454.90$ 10/01/2013 14/01/2013 3 10/01/2013 14/01/2013 3H 1,049.00$ 1,000.00$ 210.00$ 28/01/2013 31/01/2013 4 28/01/2013 Not Finished 1I 410.00$ 400.00$ 200.00$ 24/01/2013 25/01/2013 2 24/01/2013 Not Finished 1J 369.80$ -$ -$ 24/01/2013 25/01/2013 2 Not Started Not Finished 0
Earned Value is implemented after activity H (Demolition)
Earned Value Results
Duration after delay = 1/1/2013 to 4/9/2013 (3 business days delay).
Original Cost = $138,169.59
Overhead = 35% of Original Cost = $48,359.36
Original Duration = 68 days working days.
Overhead per day = 48359.36 / 68
= $711.17 / working day.
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Planned Value 17,721.40$ Actual Cost 15,828.00$ Earned Value 16,302.60$
Cost Variance 474.60$ Schedule Variance (1,418.80)$ Cost Performance Index 1.02998484Schedule Performance Index 0.91993861
Updated Schedule
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Crashing Cost & Maximum Crashing Time
16
Three Cases:
Case I Penalty for delay
Case II Bonus for speed & Penalty for delay
Case III Complete crashing test for optimization
17
Case I
CONTRACTUAL DEADLINE = 4/4/2013,
FEE OF $500/DAY OF DELAY.
18
19
•Crashing Activity J has no effect•Activity I cannot be crashed
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
20
•Crashing Activity K 1 day reduces schedule by 1 day and costs $246 (<$1211.17).•New critical path (add N).•Activities K & N one Activity total crashing cost = 246+300=$546 per day. •Crash H first
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
21
•Crashing Activity H 1 day reduces schedule 3 days and costs $525.50 (<$1211.17) •Activity H can no longer be crashed•Activity X next to be crashed = $678.51• However, it is cheaper to crash Activities K&N at the cost of $546
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
22
•Crashing Activities K&N reduces schedule by 1 day and costs $546 (<$1211.17). •This brings the contractor back to the contractual deadline of 4/4/13
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
Case I Summary
23
Total cost of crashing = $1,317.5
Days Saved = 3
Total cost of delay = Penalty + Indirect Costs= 2500+2,135.1 = $4,635.1
Crashing Cost < Cost of Delay
Most of the activities are critical.
Case II
BONUS OF 10% OF ORIGINAL COST [$13,816.96]
IF COMPLETED IN MARCH 3/22/2013
EARLIER THAN CONTRACTUAL DEADLINE
FEE OF $500/DAY OF DELAY.
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25
•Crashing Activity J has no effect•Activity I cannot be crashed
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
26
•Crashing Activity K 1 day reduces schedule by 1 day and costs $246 (<$1211.17).•New critical path (add N).•Activities K & N one Activity total crashing cost = 246+300=$546 per day. •Crash H first
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
27
•Crashing Activity H 1 day reduces schedule 3 days and costs $525.50 (<$1211.17) •Activity H can no longer be crashed•Activity X next to be crashed = $678.51• However, it is cheaper to crash Activities K&N at the cost of $546
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
28
•Crashing Activities K&N reduces schedule by 1 day and costs $546 (<$1211.17) •K&N Can’t be crashed, crashing L is useless•Fee No Longer Applicable !
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
29
•Crashing Activity X 1 day reduces schedule by 1 day and costs $678.51 (<$711.17). •Activity Y in the critical path , Activity X is no longer crash-able.
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
30
•Crashing Activity W 3 days reduces the schedule by 5 days and costs $2,251.53 (>$711.17x3 working days=$2,133.51).
•Crashing not justified.•Reward absorbs [13816.96] - 2251.53 + 2133.51 = $13,698.94
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
31
•Crashing Activity T 1 day reduces schedule by 1 day and costs $1910.45 (>$711.17).
•Activities S&U critical path. Activity X no longer crash-able.•Crashing not justified.•Reward absorbs [13698.4] – 1910.45 + 711.17 = $12,499.66•To continue crashing, Activities T&U are to be crashed or S&U. S&U are cheaper.
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
32
•Crashing Activities S&T 1 day each reduces schedule by 1 day and costs $2,293.4 (>$711.17).
•Activity T no longer be crashed. Reducing Activities S&U right now will not reduce schedule.
•Crashing not justified.•Reward absorbs [12499.66] – 2293.4 + 711.17 = $10,917.83•To continue crashing Activity R.
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
33
•Crashing Activities R&U 3 days each reduces schedule by 5 days and costs $10,126.98 (>$711.17x3 business days).
•Crashing not justified.•Reward absorbs [10917.83] – 10126.98+ 711.17 = $2,923.53•Bonus deadline met
Activity
Crash Cost / Day ($)
J 180
I n/a
K 246
N 300
S 382
U 407
H 525
L 633
X 678
W 750
O 1528
T 1910
Z 2667
R 2968
P 2999
Y 4702
M n/a
Q n/a
V n/a
Case II Summary
34
Total cost of crashing = $18,578.37
Days Saved = 9
Total cost of delay = Penalty + Indirect Costs= 2500+6,400.53= $8,900.53
Bonus = $13,816.96
Total Benefit = 13816.96+8900.53-18578.37= $4,139.12
Crashing Cost < Cost of Delay + Bonus
Risk vs. Reward
Case III
CRASH ALL THE ACTIVITIES, REGARDLESS OF COST
TEST FOR OPTIMIZATION
35
36
Case III Summary
37
Total cost of crashing = $27,770.65
Days Saved = 13
Total cost of delay = Indirect Costs= $9,245.21
Total Benefit = 9,245.21-27,770.65= -$18,525.44
Crashing Cost > Cost of Delay
Most of the activities are critical.
Case III Results
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Indirect Total Day Original Cost Crashing Cost Accumalative Crashing Cost Project Cost Overhead Project Cost73 138169.59 0 138169.59 51915.41 19008572 138169.59 1051 1051 139220.59 51204.24 190424.8371 138169.59 246 1297 139466.59 50493.07 189959.6670 138169.59 546 1843 140012.59 49781.9 189794.4969 138169.59 146011.59 49070.73 195082.3268 138169.59 5999 7842 146011.59 48359.56 194371.1567 138169.59 2968.03 10810.03 148979.62 47648.39 196628.0166 138169.59 153615.78 46937.22 20055365 138169.59 4636.16 15446.19 153615.78 46226.05 199841.8364 138169.59 3375.66 18821.85 156991.44 45514.88 202506.3263 138169.59 3350.98 22172.83 160342.42 44803.71 205146.1362 138169.59 678.51 22851.34 161020.93 44092.54 205113.4761 138169.59 163272.46 43381.37 206653.8360 138169.59 163272.46 42670.2 205942.6659 138169.59 2251.53 25102.87 163272.46 41959.03 205231.4958 138169.59 2667.78 27770.65 165940.24 41247.86 207188.1
Direct
Optimum Point – With Revised Schedule
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Conclusion
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• Tedious
• Beneficial
• ‘Prevention is better than cure’
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Thank You