Chapter9-ReducingProjectDuration.pptx
Chapter Nine
Reducing Project Duration
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–6
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–7
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.
9–8
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–10
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.
9–11
9–12
Activity Graph
FIGURE 9.2
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–12
9–13
Cost–Duration Trade-off Example
FIGURE 9.3
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–13
9–14
Cost–Duration Trade-off Example (cont’d)
FIGURE 9.3 (cont’d)
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–14
9–15
Cost–Duration Trade-off Example (cont’d)
FIGURE 9.4
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–15
9–16
Cost–Duration Trade-off Example (cont’d)
FIGURE 9.4 (cont’d)
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–16
9–17
Summary Costs by Duration
FIGURE 9.5
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–17
9–18
Project Cost–Duration Graph
FIGURE 9.6
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–18
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–19
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
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–20
9–21
Key Terms
Crashing
Crash point
Crash time
Direct costs
Fast-tracking
Indirect costs
Outsourcing
Project cost–duration graph
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–21
9–22
Project Priority Matrix: Whitbread Project
FIGURE C9.1
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Project Management 6e.
9–22
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