Chapter Nine

Reducing Project Duration

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9–1

Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

9–2

Where We Are Now

Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Project Management 6e.

9–2

Learning Objectives

Understand the different reasons for crashing a project

Identify the different options for crashing an activity when resources are not constrained

Identify the different options for crashing an activity when resources are constrained

Determine the optimum cost-time point in a project network

Understand the risks associated with compressing or crashing a project

Identify different options for reducing the costs of a project

9–3

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Chapter Outline

9.1Rationale for Reducing Project Duration

9.2Options for Accelerating Project Completion

9.3Project Cost-Duration Graph

9.4Constructing a Project Cost-Duration Graph

9.5Practical Considerations

9.6What If Cost, Not Time, Is the Issue?

9–4

Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

9–5

Rationale for Reducing 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:

Time-to-market pressures

Unforeseen delays

Incentive contracts (bonuses for early completion)

Imposed deadlines and contract commitments

Overhead and public goodwill costs

Pressure to move resources to other projects

Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Project Management 6e.

9–5

9–6

Options for Accelerating Project Completion

Resources Not Constrained

Adding resources

Outsourcing project work

Scheduling overtime

Establishing a core project team

Do it twice—fast and then correctly

Resources Constrained

Improving project team efficiency

Fast-tracking

Critical-chain

Reducing project scope

Compromise quality

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Project Management 6e.

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9–7

Reducing Project Duration to Reduce Project Cost

Compute total costs for specific durations and compare to benefits of reducing project time

Search critical activities for lowest direct-cost activities to shorten project duration

Identifying direct costs to reduce project time

Gather information about direct and indirect costs of specific project durations

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Project Management 6e.

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9–8

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

Project 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.

Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Project Management 6e.

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9–9

Project Cost–Duration Graph

FIGURE 9.1

Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Project Management 6e.

9–9

9–10

Constructing a Project Cost–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

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Project Management 6e.

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9–11

Constructing a Project Cost–Duration Graph

Determining Activities to Shorten

Shorten the activities with the smallest increase in cost per unit of time

Assumptions:

The cost-time 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.

Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Project Management 6e.

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9–12

Activity Graph

FIGURE 9.2

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Project Management 6e.

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9–13

Cost–Duration Trade-off Example

FIGURE 9.3

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Project Management 6e.

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9–14

Cost–Duration Trade-off Example (cont’d)

FIGURE 9.3 (cont’d)

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Project Management 6e.

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9–15

Cost–Duration Trade-off Example (cont’d)

FIGURE 9.4

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Project Management 6e.

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9–16

Cost–Duration Trade-off Example (cont’d)

FIGURE 9.4 (cont’d)

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Project Management 6e.

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9–17

Summary Costs by Duration

FIGURE 9.5

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Project Management 6e.

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9–18

Project Cost–Duration Graph

FIGURE 9.6

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Project Management 6e.

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9–19

Practical Considerations

Using the Project Cost–Duration Graph

Crash Times

Linearity Assumption

Choice of Activities to Crash Revisited

Time Reduction Decisions and Sensitivity

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Project Management 6e.

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9–20

What if Cost, Not Time Is the Issue?

Commonly Used Options for Cutting Costs

Reducing project scope

Having owner take on more responsibility

Outsourcing project activities or even the entire project

Brainstorming cost savings options

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Project Management 6e.

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9–21

Key Terms

Crashing

Crash point

Crash time

Direct costs

Fast-tracking

Indirect costs

Outsourcing

Project cost–duration graph

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Project Management 6e.

9–21

9–22

Project Priority Matrix: Whitbread Project

FIGURE C9.1

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Project Management 6e.

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