Rationale for Reducing Project Duration by mpm74462

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```									CHAPTER 9 – REDUCING PROJECT                            Rationale for Reducing Project
DURATION                                                Duration
OBJECTIVES                                              Time Is Money: Cost-Time Tradeoffs
To recognise that compression costs additional         Reducing the time of a critical activity usually incurs
money                                                  additional direct costs.
To demonstrate an understanding of the problems           Cost-time solutions focus on reducing (crashing) activities
on the critical path to shorten overall duration of the
with imposed project durations                            project.
To understand the real costs of crashing projects      Reasons for imposed project duration dates:
To understand the risks associated with                   Customer requirements and contract commitments
compressing or crashing a project                         Time-to-market pressures
To recognised when a project manager should try           Incentive contracts (bonuses for early completion)
for the optimum cost-duration                             Unforeseen delays
Overhead and goodwill costs
Pressure to move resources to other projects

Options for Accelerating Project
Completion                                              Explanation of Project Costs
Add resources                                                                                Indirect Costs:
Outsourcing                                                                                     marketing etc)
Overtime                                                                                        Don’t apply to a specific
work package
Dedicated project teams                                                                         Vary directly with time
Provide short-term interim solutions                                                         Direct Costs:
Fast track by doing activities in parallel                                                      Assigned to a w/p –
represent normal costs
Critical-Chain                                                                                  (low cost, efficient
methods for normal time)
Reducing Project Scope                                                                          Costs for an imposed
duration will be
Compromise Quality                                                                              higher(therefore reducing
time will increase costs
Sum of all w/p’s will
equate to total direct cost
for the project

Constructing a project duration
[Think about it]                                        graph
Find total direct costs for selected project
Identify five indirect costs you might                 durations.
find on a moderately complex project.                  Find total indirect costs for selected
project durations.
Why are these costs classified as
indirect?                                              Sum direct and indirect costs for these
selected project durations.
Compare additional cost alternatives for
How can a cost-duration graph be used                  benefits.
by the project manager? Explain.

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Constructing a project
Activity Graph                duration graph
Slope = (crash cost – normal cost)/ (normal
time – crash time)
See example

Cost-time trade-off example   (contd.)

(contd.)                      (contd.)

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Practical Considerations                                              Practical Considerations
Using the Cost-Duration Graph:
Best to create during preproject planning phase
Time Reduction Sensitivities:
Not desirable to create after imposition of a project duration      Reducing project time from normal towards
time                                                                optimal depends on the sensitivity of the
Least desirable to create after the project has started             network
Linearity Assumption:
Works best for most projects even though accuracy of                Sensitive networks have several critical or
compressed activity times and costs is questionable                 near-critical paths, and reducing normal
Crashing Activities                                                     time results in slack reduction which
Timing is crucial (crashing too early might result in money         increases risk of delaying the project
wasted)
Crashing might have an impact on morale of team                     Insensitive networks have one dominant
Look at risk of crashing certain activities                         critical path – have the biggest potential for
real savings

Options for Crashing Project
Activities                                                            If Cost Reduction is the Issue?
When resources aren’t constrained:                                    Commonly Used Options for
Adding Resources (up to a point beyond
which communication costs are increased,
Cutting Costs
and productivity decreases)                                          Reduce project scope
Outsourcing project work                                             Have owner take more
Scheduling overtime (restricted by the BCEA                          responsibility
to no more than 10 hours per week)
Establishing a core project team (avoids                             Outsource
Do it twice – fast and correctly

Key terms
Crash point
Crash time
Direct costs
Fast-tracking
Indirect costs
Outsourcing
Phase project delivery
Project cost–duration graph

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