Chapter 9 Flashcards
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
If Resources Not Constrained
Adding resources Outsourcing project work Scheduling overtime Establishing a core project team Do it twice—fast and then correctly
If Critical Resources Constrained
Fast-tracking
Reducing project scope
Compromise quality
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.
Project Costs
Project Indirect Costs
Project Direct Costs
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.
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 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.
Practical Considerations
Using the Project Cost–Duration Graph Crash Times Linearity Assumption Choice of Activities to Crash Revisited Time Reduction Decisions and Sensitivity
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
Group Project : Time & Instructions
Introductions, confirm roles & review the case
5 minutes
Your group must reach agreement on the following
Which events in the case study will be completed
How each event will be completed
What the cost is for each event & final total cost
Identify and sequence each event/task to which the group has agreed
tasks and sub-tasks
Plot a timeline for each event
Identify the critical path – time and task
25 minutes
Debrief: Case Study
PM to provide a synopsis of group success
Challenges & opportunities
Materials collectors:
Return items and discard work sheets
Collect scoring sheets & hand in completed sheets
Measuring Group Success
Your name on the sheet Colleague names Overall group success Participation Task completion Comment on: One element of this activity that focused on a personal strength (yours) that helped your colleagues One element of this activity that you learned from your colleagues
Options to accelerate projects with non-constrained resources
Adding resources Outsourcing project work Scheduling Overtime Establish a Core Project Team Do it twice - Fast and correctly
Options to accelerate projects with constrained resources
Fast tracking
Critical-Chain
Reducing Project Scope
Compromise Quality
