BMGN_N470_LO4_2014-15-sem1 - Time - Part 2

7/26/2019 BMGN_N470_LO4_2014-15-sem1 - Time - Part 2

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PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie CookCopyrightCopyright 2006 The McGraw-Hill Companies. ll rights reser!e".2006 The McGraw-Hill Companies. ll rights reser!e".

THE MANAGERIAL PROCESS Clifford F. GrayEric W. Larson

Third Edition

Pr ojec tManagementPr ojec tManagement

BMGNBMGN

N470N470

Reducing Project DurationReducing Project Duration


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Rationale for Reducing Project DurationRationale for Reducing Project Duration

Time s !oney" Cost#Time Tradeoffs$Reducing the time of a critical acti%ity usually incurs

additional direct costs.

Cost-time solutions focus on reducing (crashing)activities on the critical path to shorten overall durationof the project.

$Reasons for im&osed &roject duration dates"

Customer requirements and contract commitments

Time-to-market pressures

Incentive contracts (bonuses for earl completion)

!nforeseen delas

"verhead costs

#ressure to move resources to other projects


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'&tions for (ccelerating Project Com&letion'&tions for (ccelerating Project Com&letion

(dding Resources

'utsourcing Project Wor)

*cheduling '%ertime

Esta+lishing a Core Project Team

Do t T,ice-Fast and Correctly

'&tions ,ith unconstrained resources


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'&tions for (ccelerating Project Com&letion'&tions for (ccelerating Project Com&letion

Fast#Trac)ing

Reducing Project *co&e

Com&romise uality

'&tions ,ith constrained resources


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E/&lanation of Project CostsE/&lanation of Project Costs

Project ndirect Costs$Costs that cannot +e associated ,ith any &articular

,or) &ac)age or &roject acti%ity.

$upervision% administration% consultants% and interest

$Costs that %ary 0increase1 ,ith time.&educing project time directl reduces indirect costs.

Direct Costs

$2ormal costs that can +e assigned directly to a

s&ecific ,or) &ac)age or &roject acti%ity.'abor% materials% equipment% and subcontractors

$Crashing acti%ities increases direct costs.


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Reducing Project Duration to ReduceReducing Project Duration to Reduce

Project CostProject Cost

Compute total costs for specific durations andCompute total costs for specific durations andcompare to benefits of reducing project time.compare to benefits of reducing project time.

Search critical activities for lowest direct-costSearch critical activities for lowest direct-costactivities to shorten project duration.activities to shorten project duration.

Identifying direct costs to reduce project timeIdentifying direct costs to reduce project time

ather information about direct and indirectather information about direct and indirectcosts of specific project durations.costs of specific project durations.


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Project CostProject Cost-Duration Gra&h-Duration Gra&h

!I"R# $.%


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Constructing a Project CostConstructing a Project Cost-Duration Gra&h-Duration Gra&h

Find total direct costs for selected &rojectdurations.

Find total indirect costs for selected &roject

durations.

*um direct and indirect costs for these selected

&roject durations.

Com&are additional cost alternati%es for

+enefits.


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Constructing a Project Cost-Duration Gra&hConstructing a Project Cost-Duration Gra&h

Determining (cti%ities to *horten$*horten the acti%ities ,ith the smallest increase in cost

&er unit of time.

$(ssum&tions"

The cost relationship is linear.ormal time assumes lo-cost% e*cient methods to

complete the activit.

Crash time represents a limit+the greatest timereduction possible under realistic conditions.

$lope represents a constant costper unit of time.

,ll accelerations must occur ithin the normal andcrash times.


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(cti%ity Gra&h(cti%ity Gra&h

!I"R# $.&


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CostCost-Duration Trade#off E/am&le-Duration Trade#off E/am&le

!I"R# $.'


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CostCost-Duration Trade#off E/am&le 0cont3d1-Duration Trade#off E/am&le 0cont3d1

!I"R# $.' (cont)d*


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!I"R# $.+ (cont)d*


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*ummary Costs +y Duration*ummary Costs +y Duration

!I"R# $.,


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Project CostProject Cost-Duration Gra&h-Duration Gra&h

!I"R# $.


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Practical ConsiderationsPractical Considerations

4sing the Project Cost-Duration Gra&h Crash Times

Linearity (ssum&tion

Choice of (cti%ities to Crash Re%isited

Time Reduction Decisions and *ensiti%ity


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What if Cost5 2ot Time is the ssue6What if Cost5 2ot Time is the ssue6

Commonly 4sed '&tions for Cutting Costs$Reduce &roject sco&e

$7a%e o,ner ta)e on more res&onsi+ility

$'utsourcing &roject acti%ities or e%en the entire &roject

$8rainstorming cost sa%ings o&tions

BMGN_N470_LO4_2014-15-sem1 - Time - Part 2

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