Time Cost trade off Class Exercise 2

Summary

The script details a project management exercise focused on time-cost trade-off, specifically crash scheduling. It guides through the process of identifying critical paths and making decisions on which activities to crash to reduce project duration while minimizing costs. The instructor uses a step-by-step approach to demonstrate how to find the optimum point by comparing slopes and calculating indirect costs, ultimately aiming to achieve the minimum overall project cost.

Takeaways

• 📈 The script discusses a network diagram exercise involving crashing, which is the process of reducing the project duration by allocating more resources to critical path activities.
• 💡 The exercise starts with identifying the normal and crash durations along with the normal and crash costs of activities, including an indirect cost of $125 per day.
• 🔍 The objective is to find the optimum point for crashing by comparing slopes of the cost-time curve, which helps in determining the most cost-effective way to reduce the project duration.
• 🛠️ The critical path is initially identified as going through activities B and F, and the first step in crashing involves choosing between crashing B at a cost of $150 or F at $50, with F being the more economical option.
• ⏱️ The process involves stepwise reduction of activity durations, with each step re-evaluating the critical path and potential options for further crashing.
• 🔄 As the exercise progresses, the critical path evolves, and new combinations of activities become critical, requiring the consideration of multiple activities for crashing.
• 💰 The script emphasizes the economic decision-making involved in crashing, where the cost of crashing is weighed against the indirect cost savings from reducing the project duration.
• 📉 The indirect cost is calculated as the project duration increases, and it's important to find the balance where the total cost, including direct and indirect costs, is minimized.
• 📊 The script describes the process of plotting the cost-time curve to visualize the relationship between direct costs, indirect costs, and the project duration.
• 📚 The lecture concludes with a summary of the relationship between activity direct costs, durations, and the assumptions made for linearity in calculations for simplicity.
• 🏆 The final step in the exercise is to calculate the minimum overall cost and the corresponding project duration, which is identified as the optimum solution.

Q & A

What is the purpose of the exercise described in the script?

The purpose of the exercise is to practice the concept of crashing in project management, specifically by drawing a network diagram and applying cost and duration values to find the optimum point for reducing project duration at minimum cost.

What is the indirect cost mentioned in the script, and how is it used in the exercise?

The indirect cost mentioned in the script is $125 per day. It is used to calculate the total cost of the project when the project duration is reduced through crashing activities.

What is the critical path identified in the script, and why is it important?

The critical path is identified as going through activities B and F. It is important because it represents the longest path in the project network and determines the shortest possible completion time of the project.

What is the first activity chosen to crash in the script, and why was it selected?

The first activity chosen to crash is F at a cost of $50. It was selected because it has the lowest cost per day saved compared to other options, making it the most economical choice for initial crashing.

How does the script describe the process of finding the optimum point by comparing slopes?

The script describes finding the optimum point by comparing the slopes of the cost-time curve. The idea is to identify the point where the slope of the direct cost reduction is equal to or greater than the slope of the indirect cost increase, indicating the most cost-effective reduction in project duration.

What does the script mean by 'crashing to the maximum', and how does it apply to activity B?

'Crashing to the maximum' refers to reducing an activity's duration as much as possible within the given constraints. In the script, activity B is crashed to the maximum extent possible, reducing its duration from 3 to 5 days, to minimize the project duration.

How does the script handle the situation when multiple activities become critical after crashing activity B?

After crashing activity B, both F and D become critical. The script suggests considering the options for crashing these activities, taking into account their respective costs and the impact on the project duration.

What combinations are considered for crashing in the script, and which one is chosen as the most economical?

The script considers combinations of activities D, F, and A (DFA), D and F with C (DFC), and D and F with E (DFE). The most economical choice is DFA at a cost of $225, as it offers the best cost reduction for the project duration.

How does the script calculate the minimum duration and the corresponding indirect cost?

The script calculates the minimum duration by iteratively crashing activities and combinations of activities. The indirect cost is calculated by multiplying the project duration by the daily indirect cost rate of $125.

What is the final project duration and total cost after all the crashing steps described in the script?

The final project duration after all the crashing steps is 5 days. However, the script does not provide the final total cost directly. It suggests that the minimum total cost is achieved at an optimum duration of 8 days, considering both direct and indirect costs.

What is the significance of the graph plotted in the script, and how does it help in understanding the relationship between cost and duration?

The graph plotted in the script represents the cost-time curve, which helps in visualizing the trade-off between reducing the project duration and increasing the cost. It shows the relationship between the direct cost of crashing activities and the indirect cost of extending the project duration, aiding in identifying the optimum point for minimum total cost.