Project Crashing

Reducing Project
Duration
- Project Crashing
PROJ 600
Dr. Ziping Wang
Agenda
Why crash projects?

Distinguish between direct costs
and indirect costs.
How crash project?
Project cost-duration graph
Reasons 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:

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
Options for Accelerating

Project Completion
Resources Not
Constrained
Adding resources
Outsourcing project
work
Scheduling
overtime
Establishing a core
project team
Do it twicefast
and then correctly
Resources
Constrained
Fast-tracking
Critical-chain
Reducing project
scope
Compromise
quality
Summary: Three Principal

Methods for Crashing
To accelerate the process of a project
Improving existing resources
productivity
Changing work methods
Increasing the quantity of resources
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.
Reducing Project Duration to

Reduce Project Cost
Identifying
Identifyingdirect
direct costs
coststo
toreduce
reduceproject
projecttime
time
Gather
Gatherinformation
informationabout
aboutdirect
directand
andindirect
indirect
costs
costsof
ofspecific
specificproject
projectdurations.
durations.
Search
Searchcritical
criticalactivities
activitiesfor
forlowest
lowestdirect-cost
direct-cost
activities
to
shorten
project
duration.
activities to shorten project duration.
Compute
Computetotal
totalcosts
costsfor
forspecific
specificdurations
durationsand
and
compare
compareto
tobenefits
benefitsof
ofreducing
reducingproject
projecttime.
time.
Project Cost-Duration Graph

Total costs
60
Optimum cost-time point
50
Cost
s
40
30
Direct
costs
Indirect
costs
20
10
0
10
12
14
Project duration
16
Constructing a 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.
Constructing a Project Cost

Duration Graph (cont)
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 the shortest time to
complete the activity.
Slope represents a constant cost per unit of time.
All accelerations must occur within the normal
and crash times.
Activity cost
$800
Crash
cost
Crash cost - Normal cost
Normal time - Crash time
600
400
Rise
Cost slope
Run
Crash point
Normal
cost
$800 $400
Normal point
10 5
$80 /unit of time
200
10
Activity duration (units)
A Simplified Example
Mximum
Direct costs
Normal
Crash
Activity ID Slope crash time Time

$20
1
A
3
40
2
B
6
1
C
10
30
25
D
11
4
2
E
8
30
30
1
F
5
G
6
0
Cost
$50
80
60
50
100
40
70
Time
2
4
9
7
6
4
6
Cost
$70
160
90
150
160
70
70
Total direct cost $450
Time: 25
E
8
B
6
A
3
D
11
F
5
E
8
B
6
G
6
C
10
Time: 24
A
2x
G
6
C
10
D
11
Total DC: $470
F
5
Activities changed: A ($20)
A Simplified Example
Mximum
Direct costs
Normal
Crash
Activity ID Slope crash time Time

$20
1
A
3
40
2
B
6
1
C
10
30
25
D
11
4
2
E
8
30
30
1
F
5
G
6
0
Cost
$50
80
60
50
100
40
70
Time
2
4
9
7
6
4
6
Cost
$70
160
90
150
160
70
70
Time: 23 Total DC:$ 495

E
8
B
6
A
2x
E
8
B
6
G
6
C
10
D
10
Time: 22
F
5
Activities changed: D ($25)
A
2x
G
6
C
10
D
10
Total DC: $525
F
4x
Activities changed: F ($30)
E
7
B
6
A
2x
G
6
C
9x
D
9
Total direct cost: $610

Activities changed:
C
D
E
$30 $25
$30
F
4x
Project Dur. Direct Cost Indirect cost Total cost

25
450
400
$850
24
470
350
820
23
495
300
795
22
525
250
775
21
610
200
810
Cost
Time: 21
1000
800
600
400
200
0
Direct Cost
Indirect cost
Total cost
20
22
24
Duration (units)
26
Project CostDuration Graph
Additional Question:
Penalty
If the project must be completed in 21 days, otherwise th

penalty cost of a) $100, b) $20. How to crash the project?
Cost
Project Dur. Direct Cost Indirect cost Total cost

25
450
400
$850
24
470
350
820
23
495
300
795
22
525
250
775
21
610
200
810
1000
800
600
400
200
0
Direct Cost
Indirect cost
Total cost
20
22
24
Duration (units)
26
Practical Considerations
Using the Project CostDuration Graph
Crash Times
Linearity Assumption
Choice of Activities to Crash Revisited
Time Reduction Decisions and

Sensitivity
Nonlinear Time-Cost Trade-Offs

Cost
Cost
Crash point
Crash point
Normal point
Normal point
Time
Convex time-cost trade-off Concave time-cost trade-off
What if cost reduction is the

issue
Reduce project scope

Have owner take on more
responsibility
Outsourcing project activities or
even the entire project
Brainstorming cost savings options
Homework
See the Blackboard.

Project Crashing

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Reducing Project

Why crash projects?

Project cost-duration graph

Reasons for Reducing Project

Time Is Money: Cost-Time Tradeoffs

Cost-time solutions focus on reducing (crashing)

Reasons for imposed project duration dates:

Incentive contracts (bonuses for early completion)

Overhead and goodwill costs

Pressure to move resources to other projects

Options for Accelerating

Summary: Three Principal

Improving existing resources

Changing work methods

Increasing the quantity of resources

Explanation of Project Costs

Project Indirect Costs

Supervision, administration, consultants, and

Reducing project time directly reduces indirect

Project Direct Costs

Labor, materials, equipment, and subcontractors

Reducing Project Duration to

Project Cost-Duration Graph

Optimum cost-time point

Constructing a Project CostDuration

Constructing a Project Cost

Determining Activities to Shorten

The cost relationship is linear.

Crash cost - Normal cost

Normal time - Crash time

$80 /unit of time

Activity duration (units)

Activity ID Slope crash time Time

Total direct cost $450

Total DC: $470

Activities changed: A ($20)

Activity ID Slope crash time Time

Time: 23 Total DC:$ 495

Activities changed: D ($25)

Total DC: $525

Activities changed: F ($30)

Total direct cost: $610

Project Dur. Direct Cost Indirect cost Total cost

Project Cost-Duration Graph

Project CostDuration Graph

If the project must be completed in 21 days, otherwise th

Project Cost-Duration Graph

Project Dur. Direct Cost Indirect cost Total cost

Using the Project CostDuration Graph

Choice of Activities to Crash Revisited

Time Reduction Decisions and

Nonlinear Time-Cost Trade-Offs

What if cost reduction is the

Reduce project scope

See the Blackboard.

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