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Project Management - Reducing Project Duration

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					Project Management
THE MANAGERIAL PROCESS
Clifford F. Gray Eric W. Larson
Third Edition

Don’t Speed, Tie Down Your Cargo

Chapter 9

Reducing Project Duration

IMAGINE…
• You realize (after you complete your schedule) your estimated completion date is 2 months beyond what your boss publicly promised • Two months into the project, you are already three weeks behind the drop-dead date • Four months into the project top management tells you get it done and money is not an issue

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Reducing Project Duration
• Examine the reasons for duration reduction • Discuss different options for accelerating project completion • Classic Framework for “crashing” a project

Why Reduce Duration?
• Why not? Very few reasons for not reducing schedule • Reducing usually means additional cost, therefore there is a cost-time tradeoff • Why reduce?
– Public announcement of an imposed deadline – The project completion date is almost always set prior to schedule being done – Market-imposed delivery (time-to-market) – Incentives: $ per day, % sharing of costs. Usually includes day costs liquidated damages – Unforeseen delays – Pressure to move resources to other projects

Options for Accelerating Project Completion
• Adding Resources
– Very common – Beware of diminishing returns (space, logistics, communication) – Brook’s Law: Adding staff to a late project will make it later • Ramp up, communication

Options for Accelerating Project Completion
• Scheduling Overtime
– Very Common – Cost may be low (premium for labor, but none for salaried workers) – Fewer distraction after hours – No communication problem – Beware of burnout, turnover, declined productivity

• Outsourcing Project Work
– Very common – Hire subcontractors that have more expertise than you. – Get work done faster – Frees up other resources

• Establishing a Core Dedicated Project Team • Do It Twice—Fast and Correctly
– Quick and dirty short-term solution

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Options for Accelerating Project Completion
• Fast-Tracking
– restructuring critical activities to be parallel (ss)

What Now?
• Sometimes difficult to see how to reduce cost • Need to isolate best activities to reduce • Start by identifying costs of reducing project • Consider project cost types
– Indirect – Direct

• Critical-Chain (Ch 8 appendix)
– Focuses on “chains” of dependencies, both technically and resource based

• Reducing Project Scope
– Revalue deliverables – Get some now, more later , – May result in revenue credits

• Compromise Quality
– Usually last option

Explanation of Project Costs
• Project Indirect Costs
– Costs that cannot be associated with any particular work package p j y or project activity.
• Supervision, administration, consultants, and interest

Constructing a Project Cost—Duration Graph Cost—
1. Find total direct costs for selected project durations. 2. Find total indirect costs for selected project durations. 3. Sum direct and indirect costs for these selected project durations.

– Costs that accumulate with time.
• Reducing project time directly reduces indirect costs. • Know your indirect costs

• Direct Costs
– Normal costs that can be assigned directly to a specific work package or project activity. k j t ti it – Normal work and time, low cost, reflects efficient methods
• Labor, materials, equipment, and subcontractors

• Compare additional cost alternatives for benefits. • p.289

– Crashing activities increases direct costs.

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Constructing a Project Cost—Duration Graph Cost—
• Determining Activities to Shorten
– Really only looking at labor – Difficult to do… how far do you go? – Depends on the normal/crash times and costs – Shorten the activities with the smallest increase in cost per unit of time – Calculate crash rate (slope)
• P. 291, activity graph

Example p. 291

– 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
– Time consuming – Assumes logistically can crash throughout the duration of project

What if Cost, Not Time is the Issue?
• Commonly Used Options for Cutting Costs
– Reduce project scope – Have owner take on more responsibility
• Homeowner addition

• Crash Times
– What is a crash time / cost?

• Linearity Assumption
– Crashing can be all or nothing (10 days to 3 days)

– Outsourcing project activities or even the entire project – Brainstorming cost savings options

• Choice of Activities to Crash Revisited
– Cheapest to crash – Timing (other activities become critical) – Crashing same people can cause fatigue, resentment – Risk needs to be considered

• Time Reduction Decisions and Sensitivity
– Cost of new critical activities being delayed – Insensitive networks can realize huge savings

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