Chapter17 Projectmanagement 2
Chapter17 Projectmanagement 2
Chapter 17
There are often ...
• Competitive pressures
– Competitors, slowing demand
Project Crashing
• Crashing
– Shortening activity durations
• Typically, involves the use of additional funds to
support additional personnel or more efficient
equipment, and the relaxing of some work
specifications
– The project duration may be shortened by
increasing direct expenses, thereby realizing
savings in indirect project costs
Indirect costs
A 10 B 10 C 10
• ABC is critical path=30
A 10 B 10 C 10
• ABC is critical path=30
A9 B 10 C 10
• ABC is critical path=29
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
1 500 500
per week wks avail
A 500 1
B 800 3
C 5,000 2
D 1,100 2
Time-Cost Tradeoff Example D8
A9 B 10 C 10
• ABC is critical path=29
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
1 500 500
per week wks avail
A 500 1
B 800 3 Cheapest way to gain 1 wk
C 5,000 2 Still is to cut A
D 1,100 2
Time-Cost Tradeoff Example D8
A8 B 10 C 10
• ABC is critical path=28
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
per week wks avail 1 500 500
2 500 1,000
A 500 0
B 800 3
C 5,000 2
D 1,100 2
Time-Cost Tradeoff Example D8
A8 B 10 C 10
• ABC is critical path=28
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
per week wks avail 1 500 500
2 500 1,000
A 500 0
B 800 3 Cheapest way to gain 1 wk
C 5,000 2 is to cut B
D 1,100 2
Time-Cost Tradeoff Example D8
A8 B9 C 10
• ABC is critical path=27
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
per week wks avail 1 500 500
2 500 1,000
A 500 0 3 800 1,800
B 800 2
C 5,000 2
D 1,100 2
Time-Cost Tradeoff Example D8
A8 B9 C 10
• ABC is critical path=27
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
per week wks avail 1 500 500
2 500 1,000
A 500 0 3 800 1,800
B 800 2 Cheapest way to gain 1 wk
C 5,000 2 Still is to cut B
D 1,100 2
Time-Cost Tradeoff Example D8
A8 B8 C 10
• Critical paths=26 ADC & ABC
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
per week wks avail 1 500 500
2 500 1,000
A 500 0 3 800 1,800
4 800 2,600
B 800 1
C 5,000 2
D 1,100 2
Time-Cost Tradeoff Example D8
A8 B8 C 10
• Critical paths=26 ADC & ABC
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
per week wks avail 1 500 500
2 500 1,000
A 500 0 3 800 1,800
4 800 2,600
B 800 1 To gain 1 wk, cut B and D,
C 5,000 2 Or cut C
Cut B&D = $1,900
D 1,100 2 Cut C = $5,000
So cut B&D
Time-Cost Tradeoff Example D7
A8 B7 C 10
• Critical paths=25 ADC & ABC
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
per week wks avail 1 500 500
2 500 1,000
A 500 0 3 800 1,800
4 800 2,600
B 800 0 5 1,900 4,500
C 5,000 2
D 1,100 1
Time-Cost Tradeoff Example D7
A8 B7 C 10
• Critical paths=25 ADC & ABC
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
per week wks avail 1 500 500
2 500 1,000
A 500 0 3 800 1,800
4 800 2,600
B 800 0 5 1,900 4,500
C 5,000 2 Can’t cut B any more.
Only way is to cut C
D 1,100 1
Time-Cost Tradeoff Example D7
A8 B7 C9
• Critical paths=24 ADC & ABC
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
per week wks avail 1 500 500
2 500 1,000
A 500 0 3 800 1,800
4 800 2,600
B 800 0 5 1,900 4,500
C 5,000 1 6 5,000 9,500
D 1,100 1
Time-Cost Tradeoff Example D7
A8 B7 C9
• Critical paths=24 ADC & ABC
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
per week wks avail 1 500 500
2 500 1,000
A 500 0 3 800 1,800
4 800 2,600
B 800 0 5 1,900 4,500
C 5,000 1 6 5,000 9,500
D 1,100 1 Only way is to cut C
Time-Cost Tradeoff Example D7
A8 B7 C8
• Critical paths=23 ADC & ABC
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
per week wks avail 1 500 500
2 500 1,000
A 500 0 3 800 1,800
4 800 2,600
B 800 0 5 1,900 4,500
C 5,000 0 6 5,000 9,500
7 5,000 14,500
D 1,100 1
Time-Cost Tradeoff Example D7
A8 B7 C8
• Critical paths=23 ADC & ABC
Wks Incremental Total
Crash cost Crash Gained Crash $ Crash $
per week wks avail 1 500 500
2 500 1,000
A 500 0 3 800 1,800
4 800 2,600
B 800 0 5 1,900 4,500
C 5,000 0 6 5,000 9,500
7 5,000 14,500
D 1,100 1 No remaining possibilities to
reduce project length
Time-Cost Tradeoff Example D7
C Normal
D* D
Activity Time (Days)
Normal Time and Cost
vs. Crash Time and Cost
$7,000 –
$6,000 –
Crash cost
$5,000 – Crashed activity
Normal cost
$2,000 –
$1,000 –
Crash time Normal time
– | | | | | | |
0 2 4 6 8 10 12 14 Weeks
Example - Crashing
Using the following information, develop the optimal time cost solution.
Indirect costs are $ 1000 per day.
(a) Determine which activities are on the critical path, its length, and the
length of the other path
(b) Rank the critical activities in order of lowest crashing cost, and
datermine the number of days each can be crashed.
(c) Determine the critical path after each reduction by shortening the
project.
2
f
4
d
Indirect costs: $1,000 / day 2
(that is, the entire project saves f
$1000 if it finishes one day earlier,
$2000 if it finishes two day earlier, 4
and so on.)
d
d 700 3 d 4 1 3 700
f 800 1 e 9 7 2 600
f 2 1 1 800
Crash activity c by 1 day: 2. Rank activities on CP in
cost $300 < $1,000 (CP=19 order of lowest crashing cost
days)
(cannot crash c anymore) Activity Cost per day to crash Available days
c 300 1
e 600 2
d 700 3
f 800 1
2
f
4
4
d
Crash activity e by 1 day: 2. Rank activities on CP in
cost $600 < $1,000 (CP=18 order of lowest crashing
days) cost
(may crash activity e by 1 more
day) Activity Cost per day to crash
Available days
c 300 1
e 600 2
d 700 3
f 800 1
2
f
4
• Both paths are now critical.
• Have to crash both in order to
4
shorten project.
d
Both paths are now critical. 2
Have to crash both in order to f
shorten project.
4
Remaining activities d
Path Activity Cost per day to crash Available
days
a-b-f a - -
b 500 2
f 800 1
c-d-e-f c - -
e 600 1
d 700 3
f 800 1
Crash activity f (is on both paths) by 1 day:
cost = $800 < $1,000 (CP=17 days)
Remaining activities
Crash activity f (is on Path Activity Cost per day to crash
both paths) by 1 day: Available days
a-b-f a - -
cost $800 < $1,000 b 500 2
(CP=17 days) f 800 1
c-d-e-f c - -
e 600 1
d 700 3
f 800 1
2 1
f
4
d
Both paths are still critical. 1
Have to crash both in order to f
shorten project.
4
Remaining activities d
Path Activity Cost per day to crash Available days
a-b-f a - -
b 500 2
f - -
c-d-e-f c - -
e 600 1
d 700 3
Crash activity b by 1f day: cost $500 AND
- -
Crash activity e by 1 day: cost $600
Total cost: $1,100>$1,000 (indirect costs) =>DONE!
Length after crashing
Path\crash n=0 1 2 3
a-b-f 18 18 18 17
c-d-e-f 20 19 18 17
Activity Crashed c e f
Cost 0 ($300) ($600) ($800)
Savings 0 $1,000 $1,000 $1,000
Total 0 $700 +$400 +$200 = $1,300
Observations
• General procedure:
1. Crash the project one period at a time
2. Crash the least expensive activity that is on the critical
path
3. When there are multiple critical paths, find the sum of
crashing the least expensive activity on each critical
path
• If two or more critical paths share common
activities, compare the least expensive cost of
crashing a common activity shared by critical paths
with the sum for the separate critical paths
EXERCISE
• Costs for a project are $12,000 per week for as long as the
project lasts. The project manager has supplied the cost and
time information shown. Use the information to
a) Determine an optimum crashing plan.
b) Summarize the total costs for the plan.
EXERCISE- SOLUTION
a) Determine an optimum crashing plan.
Step 1: Compute path lengths and identify the critical path:
13
2
EXERCISE- SOLUTION
a) Determine an optimum crashing plan.
Step 3: Rank activities by crashing costs on the two critical
paths: At this point, paths a-b and e-f would both have a length of 23
weeks, so both would be critical.
13 12
2 1
7
0
EXERCISE- SOLUTION
a) Determine an optimum crashing plan.
Step 4: Check to see which path(s) might be critical:
a-b and e-f would be 22 weeks in length, and c-d would still be 19 weeks.
Step 5: Rank activities on the critical paths:
Crash b on path a-b and e on e-f for a cost of $4,000 + $6,000
= $10,000, for a net savings of $12,000 − $10,000 = $2,000.
13 12 11
2 1 0
14
2 7
0
EXERCISE- SOLUTION
a) Determine an optimum crashing plan.
Step 6: Check to see which path(s) might be critical:
Paths a-b and e-f would be 21 weeks in length, and c-d would still be 19 weeks.
13 12 11
2 1 0
14
2 7
0
EXERCISE- SOLUTION
b) Summarize the total costs for the plan.
The following table summarizes the results, showing the length of
the project after crashing n weeks:
No crash
Crash: b
Crash: b, f
Crash: b, e
Solved Problem
Your company has just received an order from a good customer for
a specially designed electric motor. The contract states that, starting
on the thirteenth day from now, your firm will experience a penalty of
$100 per day until the job is completed. Indirect project costs amount
to $200 per day. The data on direct costs and activity precedent
relationships are given in Table 1.
$1,300 – $1,000
= = $300
4 days – 3 days
Solved Problem
B-E-G-H
C-F-H
Solved Problem
Table 2 summarizes the analysis and the resultant project duration
and total cost. The critical path is C–F–H at 19 days, which is the
longest path in the network. The cheapest activity to crash is H
which, when combined with reduced penalty costs, saves $300 per
day. Crashing this activity for two days gives
Crash activity F next. This makes all activities critical and no more
crashing should be done as the cost of crashing exceeds the
savings.
Application
Indirect project costs = $250 per day and penalty cost = $100
per day for each day the project lasts beyond day 14.
Solution:
Original costs:
Normal Total Costs = $7,500
Total Indirect Costs = $250 per day 21 days = $5,250
Penalty Cost = $100 per day 7 days = $700
Total Project Costs = $13,450
Application
Step 1: The critical path is B–D–E–G–H , and the project
duration is 21 days.
Step 2: Activity E on the critical path has the lowest cost of
crashing ($150 per day). Note that activity G cannot be
crashed.
Step 3: Reduce the time (crashing 2 days will reduce the project
duration to 19 days) and re-calculate costs:
Costs Last Trial = $7,500 + $300 (the added crash costs) = $7,800
Crash Cost Added = $200 2 days = $400
Total Indirect Costs = $250 per day 17 days = $4,250
Penalty Cost = $100 per day 3 days = $300
Total Project Cost = $12,750
Note that the cost to crash ($200 per day) is less than
the combined indirect cost and the penalty cost per
day savings ($350).
Application
(step 4) Repeat
(step 2) Activity D on the critical path has the next lowest
crashing cost ($500 per day).
(step 3) Reduce the time (crashing 1 day will reduce the project
duration to 16 days) and re-calculate costs:
Costs Last Trial = $7,800 + $400 (the added crash costs) = $8,200
Crash Cost Added = $500 1 day = $500
Total Indirect Costs = $250 per day 16 days = $4,000
Penalty Cost = $100 per day 2 days = $200
Total Project Cost = $12,900 which is greater than the last trial.
Hence we stop the crashing process.
E 17 22 S F
B, 11
J, 4
L 21 26
S F
E 0 6 F,5
L 0 6 E 6 20 E 26 30
S F L 6 20 L 26 30
S F S F
START A, 6 C, 14 G, 6 K, 4 FINISH
E 20 26
E 0 0 L 20 26 E 30 30
L 0 0 S F L 30 30
S F S F
H, 7
D, 2 E 20 27
L 20 27
E 6 8 L, 3
S F E 27 30
L 22 24 L 27 30
S F I, 3 S F
E 8 11
L 24 27
S F
1. Write Down All Possible Paths
and Lengths of Time for Each
Path Length
ABEJ 25
ABFK 26
ACGK 30
ACHL 30
ADIL 14
2. Identify All Paths to be Shortened
Path Length
ABEJ 25
ABFK 26
ACGK 30 Critical Path
ACHL 30 Critical Path
ADIL 14
3. Find Lowest-Cost Way to Shorten
Critical Path(s)
Path Length
To CRASH, either:
ABEJ 25
1. Shorten C or
ABFK 26 2. Shorten {G or K}
and {H or L}
ACGK 30
ACHL 30
ADIL 14
• Shorten C by 3
weeks
Cost = 3×$2,000 =
$6,000
Update Lengths in Table
Path Length
ABEJ 25 Are we done?
ABFK 26
What are our
ACGK 3027 next cheapest
ACHL 3027 alternatives?
ADIL 14
To Crash Further
Shorten {G or K} and {H or L}
Path Length
ABEJ 25 Total Cost to Crash
= $6,000 + $3,000
ABFK 26
= $9,000
ACGK 302726
ACHL 302726
ADIL 14
Question