9*Chapter 9Reducing Project Duration

9*Where We Are Now

9*Rationale for Reducing Project DurationTime Is Money: Cost-Time TradeoffsReducing 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 pressuresUnforeseen delaysIncentive contracts (bonuses for early completion)Imposed deadlines and contract commitmentsOverhead and public goodwill costsPressure to move resources to other projects

9*Options for Accelerating Project CompletionResources Not ConstrainedAdding resourcesOutsourcing project workScheduling overtimeEstablishing a core project teamDo it twicefast and then correctlyResources ConstrainedFast-trackingCritical-chainReducing project scopeCompromise quality

9*Explanation of Project CostsProject Indirect CostsCosts that cannot be associated with any particular work package or project activity.Supervision, administration, consultants, and interestCosts that vary (increase) with time.Reducing project time directly reduces indirect costs.Project Direct CostsNormal costs that can be assigned directly to a specific work package or project activity.Labor, materials, equipment, and subcontractorsCrashing activities increases direct costs.

9*Reducing Project Duration to Reduce Project CostCompute 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 timeGather information about direct and indirect costs of specific project durations.

9*Project CostDuration GraphFIGURE 9.1

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9*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.

9*Constructing a Project CostDuration Graph Determining Activities to ShortenShorten 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 limitthe 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.

9*Activity GraphFIGURE 9.2

9*CostDuration Trade-off ExampleFIGURE 9.3

9*CostDuration Trade-off Example (contd)FIGURE 9.3 (contd)

9*CostDuration Trade-off Example (contd)FIGURE 9.4

9*CostDuration Trade-off Example (contd)FIGURE 9.4 (contd)

9*Summary Costs by DurationFIGURE 9.5

9*Project CostDuration GraphFIGURE 9.6

9*Practical ConsiderationsUsing the Project CostDuration GraphCrash TimesLinearity AssumptionChoice of Activities to Crash RevisitedTime Reduction Decisions and Sensitivity

9*What if Cost, Not Time Is the Issue?Commonly Used Options for Cutting CostsReduce project scopeHave owner take on more responsibilityOutsourcing project activities or even the entire projectBrainstorming cost savings options

9*Key TermsCrashingCrash pointCrash timeDirect costsFast-trackingIndirect costsOutsourcingProject costduration graph

9*Project Priority Matrix: Whitbread ProjectFIGURE 9.6

** Overhead and public goodwill costs

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