ABSTRACT

Project management is one of the most significant parts of the construction industry. It
involves various factors and considerations in which total projects’ cost and the duration of
construction are included. With these, Time-Cost Trade-Off had become an effective tool in
building a project using an optimal schedule that leads to minimum cost. In this paper, further
explanation and illustration of the significance of time-cost trade-off in real life situations had
been presented to gives an even deeper understanding regarding the subject matter. Graphical
illustrations of the relationship between the direct and indirect cost as well as the duration of
construction were laid-off in addition to the construction of project network and utilization of the
critical path method (CPM). Scheduling and analytical computation were used to identify the
most cost-effective duration of construction.
INTRODUCTION

Construction industry has been playing a vital role in every country’s sustainable
development toward further economic advancement. It usually serves as a backbone of economic
growth with various building structures as tangible proofs. With the continuous innovation of
construction industry, a nation will be able to catch up with the ever increasing demands and
necessity of humanity when it comes to shelter and other structural needs. The construction
industry is regarded as one of the most important sources of national economic growth and
development wherein construction operations are catalyst for achieving the nation's socio-
economic development goals of providing housing, infrastructure, and jobs. With these, citizens’
healthy environment will be assured, and thus the best working conditions for performing
various tasks. At the same time, it generates a large number of job openings which will cause
potential impact to the growth of the national economy.

Construction Project Management as a part of construction industry, on the other hand,

involves tasks from conception to completion as it entails leading and planning of each stage of
the project life cycle. It is a comprehensive approach aimed at completing projects on schedule
and on budget. Construction project management is a complicated profession that entails dealing
with a variety of issues, including cost control, scheduling, procurement, and risk assessment.
Reducing both construction projects’ cost and time is critical in today’s market-driven economy.
This relationship between construction projects’ time and cost is called time- cost trade-off
decisions, which has been investigated extensively in the construction management literature.
Time-cost trade-off decisions are complex and require selection of appropriate construction
method for each project task. Time-cost trade-off, in fact, is an important management tool for
overcoming one of the critical path method limitations of being unable to bring the project
schedule to a specified duration.

I. OBJECTIVES
 to reduce the original project duration,
 to form the critical path analysis,
 to meet a specific deadline, with the least cost.
II. WHY IS IT NECESSARY TO FINISH THE PROJECT ON TIME?
  Finish the project in a predefined deadline date.
 Recover early delays.
 Avoid liquidated damages.
 Free key resources early for other projects.
 Avoid adverse weather conditions that might affect productivity.
 Receive an early completion-bonus.
 Improve project cash flow
III. ACTIVITY TIME-COST RELATIONSHIP
In general, there is a trade-off between the time and the direct cost to complete an
activity; the less expensive the resources, the larger duration they take to complete an
activity. Shortening the duration on an activity will normally increase its direct cost.
It should never be assumed that the quantity of resources deployed and the task
duration are inversely related.
A. IMPORTANT TERMS
 DIRECT COST - the cost of labor, equipment, and material.
 INDIRECT COST - he necessary costs of doing work which cannot be related
to a particular activity, and in some cases cannot be related to a specific
project.
 NORMAL DURATION - a duration which implies minimum direct cost.
 CRASHED DURATION - a minimum possible duration to complete the
activity, but at a maximum cost.
 NORMAL COST - the least direct cost required to complete an activity
 CRASH COST – a maximum cost in taking the shortest possible duration
required for completing the activity.
 COST SLOPE – The slope of the line connecting the normal point (lower
point) and the crash point (upper point).
Cost slope = Crash cost – Normal cost / Normal duration – Crash
duration
B. ILLUSTRATION
 C. EXAMPLE

subcontractor has the task of erecting 8400 square meter of metal scaffolds. The contractor can
use several crews with various costs. It is expected that the production will vary with the crew
size as given below:

ESTIMATED DAILY CREW SIZE CREW FORMATION

PRODUCTION (SQM) (MEN)
166 5 1 scaffold set, 2 labors, 2 carpenter, 1
foreman
204 6 2 scaffold set, 3 labors, 2 carpenter, 1
 foreman
203 7 2 scaffold set, 3 labors, 3 carpenter, 1
foreman

 Consider the following rates: Labor LE96/day; carpenter LE128/day; foreman LE144/day
and scaffolding LE60/day. Determine the direct cost of this activity considering different
crews formation.

CREW SIZE DURATION CREW FORMATION

(MEN) (DAYS)
5 50.6 (use 51) 51 x (1x60 + 2x96 + 2x128 + 1x144) = 33252
6 41.2 (use 42) 42 x (2x60 + 3x96 + 2x128 + 1x144) = 33936
7 36.5 (use 37) 37 x (2x60 + 3x96 + 3x128 + 1x144) = 34632

 Cost slope 1 (between points 1 and 2) = (33936 – 33252) / (51 – 42) = 76.22 LE/day
 Cost slope 2 (between points 2 and 3) = (34632 – 33936) / (42 – 37) = 139.2 LE/day
 \

IV. PROJECT TIME-COST RELATIONSHIP

As the direct cost for the project equals the sum of the direct costs of its activities,
then the project direct cost will increase by decreasing its duration. On the other hand,
the indirect cost will decrease by decreasing the project duration, as the indirect cost
are almost a linear function with the project duration.

V. SHORTENING PROJECT DURATION

A. PROCEDURE
The procedure for shortening project duration can be summarized in the following
steps:
1. Draw the project network.
 2. Perform CPM calculations and identify the critical path, use normal durations and
costs for all activities.
3. Compute the cost slope for each activity from the following equation: cost slope =
crash cost – normal cost / normal duration – crash duration
4. Start by shortening the activity duration on the critical path which has the least cost
slope and not been shortened to its crash duration.
5. Reduce the duration of the critical activities with least cost slope until its crash
duration is reached or until the critical path changes.
6. When multiple critical paths are involved, the activity(ies) to shorten is determined
by comparing the cost slope of the activity which lies on all critical paths (if any),
with the sum of cost slope for a group of activities, each one of them lies on one of
the critical paths.
7. Having shortened a critical path, you should adjust activities timings, and floats.
8. The cost increase due to activity shortening is calculated as the cost slope
multiplied by the time of time units shortened.
9. Continue until no further shortening is possible, and then the crash point is reached.
10. The results may be represented graphically by plotting project completion time
against cumulative cost increase. This is the project direct-cost / time relationship. By
adding the project indirect cost to this curve to obtain the project time / cost curve.
This curve gives the optimum duration and the corresponding minimum cost.

B. EXAMPLE
Assume the following project data given in Table 8.1. It is required to crash the
project duration from its original duration to a final duration of 110 days. Assume
daily indirect cost of LE 100.

ACTIVITY PRECEDED NORMAL CRASH

BY DURATIO COST DURATION COST
N (DAY) (LE) (DAY) (LE)
A - 120 2000 100 14000
B - 20 1800 15 2800
C B 40 6000 30 22000
D C 30 1400 20 2000
E D, F 50 3600 40 4800
F B 60 13500 45 18000

Solution
The cost slope of each activity is calculated. Both the crashability and the cost
slope are shown beneath each activity in the precedence diagram. The critical path is
B-C-D-E and the project duration in 140 days. Project total normal direct cost = sum

of normal direct costs of all activities = LE 48300.

1. The activity on the critical path with the lowest cost slope is of activity “D”, this
activity can be crashed by 10 days. Then adjust timing of the activities.
  A new critical path will be formed, B-F-E.
 New Project duration is 130 days.
 The project direct cost is increased by 10 x 60 = LE 600.
 Project direct cost = 48300 + 600 = LE 48900

2. At this step activity “E” will be crashed, as this activity lies on both critical paths.
Activity “E” will be shortened by 10 days.
 Accordingly, all activities will b turn to critical activities.
 New Project duration is 120 days.
 The project direct cost is increased by 10 x 120 = LE 1200.
 Project direct cost = 48900 + 1200 = LE 50100
3. In this step, it is difficult to decrease one activity’s duration and achieve
decreasing in the project duration. So, either to crash an activity on all critical
paths (if any), otherwise, choose several activities on different critical paths. As
shown, activities “A” and “B” can be crashed together which have the least cost

slope (100 + 200). Then, crash activities “A” and “B” by 5 days.

 New Project duration is 115 days.

 The project direct cost is increased by 5 x (100 + 200) = LE 1500.
 Project direct cost = 50100 + 1500 = LE 51600
4. In this final step, it is required to decrease the duration of an activity from each
path. The duration of activity ”A” will be crashed to 110 days, “C” to 35 days,
and “F” to 55 days. Thus, achieving decreasing project duration to 110 days.
Also, increase in the project direct cost by 5 x (100 + 600 + 300) = LE 5000
DURATION DIRECT COST INDIRECT COST TOTAL COST (LE)
(DAYS) (LE) (LE)
140 48300 14000 62300
130 48900 13000 61900
120 50100 12000 62100
115 51600 11500 63100
110 56600 11000 67600
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