Time Cost trade off ABCD Example Project, Steps for Crashing

Summary

The script discusses project management techniques, focusing on crashing schedules to minimize project duration. It explains the process of identifying critical path activities, comparing unit crash costs, and selecting the most cost-effective options to reduce project time. The presenter also introduces indirect costs, illustrating how they vary with project duration and affect the total cost. The goal is to find the optimal balance between direct and indirect costs to achieve the minimum total project cost.

Takeaways

• 📈 The script discusses the concept of crashing in project management, which involves reducing the project duration by increasing the cost of certain activities.
• 🛠️ It emphasizes the importance of focusing on activities that are on the critical path when deciding which to crash, as these directly impact the project duration.
• 💰 The process involves calculating the normal duration, normal cost, crash duration, and crash cost for activities to determine the most cost-effective way to reduce the project timeline.
• 🔍 The script provides a step-by-step example of how to calculate the minimum cost of crashing the project duration from 14 days to fewer days, such as 13, 12, and so on.
• 📉 As the project duration decreases, the direct cost of crashing increases, creating a trade-off between time and cost.
• 📊 The relationship between project duration and direct cost is illustrated with a graph, showing how the minimum direct cost changes as the project duration is reduced.
• 🔄 The script mentions that in practice, the procedure for systematic crashing is not frequently used due to difficulties in quantifying costs and the limitations of linear assumptions in real-world scenarios.
• 📉 The introduction of indirect costs, such as salaries and facility expenses, which are constant per day regardless of project duration, adds another layer of complexity to cost analysis.
• 🔄 The total project cost, which includes both direct and indirect costs, may reach an optimum or minimum value at a certain project duration, representing the most cost-effective timeline.
• 📋 The script outlines steps for crashing: identifying critical path activities, comparing unit costs, selecting activities for crashing, reducing durations while avoiding creating new critical paths, and recalculating the network.
• 🔑 The takeaway highlights the importance of having accurate data to determine the project duration that results in minimum total cost, which is a challenge in practical applications.

Q & A

What is the primary objective of the project discussed in the script?

The primary objective is to determine the minimum cost of completing the project as the duration starts reducing, by finding out how much it would cost to complete the project in less than the normal duration of 14 days.

What are the new inputs introduced in the project for calculating the cost of crashing?

The new inputs introduced are crash duration, normal cost, and crash cost for the activities involved in the project.

Why is it important to focus on activities on the critical path when crashing the project?

Focusing on activities on the critical path is important because these activities directly impact the project duration. Crashing non-critical activities will not necessarily reduce the overall project duration.

What is the first step suggested in the script for crashing the project?

The first step suggested is to crash those activities which have a lower unit cost of crashing and are on the critical path.

What does the term 'crash day' refer to in the context of the script?

'Crash day' refers to the number of days by which an activity on the critical path can be reduced below its normal duration.

How does the script suggest to approach the calculation of the cost of crashing for each day reduction?

The script suggests a stepwise approach, starting from the original duration of 14 days and progressively reducing it by 1 day at a time, calculating the additional cost for each reduction.

What is the significance of the assumption that certain activities cannot be done in less than a specific number of days?

This assumption sets a limit on how much an activity can be crashed, which is important for understanding the constraints and potential costs associated with crashing the project timeline.

How does the script illustrate the relationship between project duration and direct cost?

The script illustrates that as the project duration decreases, the direct cost of crashing increases, creating a graph that shows the minimum direct cost for various project durations.

What is the purpose of introducing indirect costs in the analysis?

Indirect costs are introduced to provide a more comprehensive view of the total project costs, including general project overhead and other expenses that do not directly relate to specific activities.

How does the script describe the relationship between indirect costs and project duration?

The script describes that indirect costs remain constant on a daily basis but the total indirect cost decreases as the project duration is reduced, since the project is active for fewer days.

What is the significance of finding the optimum project duration in terms of cost?

Finding the optimum project duration is significant because it represents the point where the total project cost, including both direct and indirect costs, is at its minimum, balancing the cost of crashing against the savings from reduced indirect costs.