18-07-2019

Time-Cost Tradeoff Task durations can be flexible

• Normal duration: Highest

• Crash Duration: Lowest

Time-Cost relationship of a task Time-Cost relationship of a task

Direct
Cost
of the
task

Crash Normal Time

Time
Task Duration

Task Direct Costs Project indirect costs

• Costs associated with performance of specific activities • Overhead costs such as
- Cost of planning and design - Managerial services
- Raw material procurement - Indirect supplies
- Labour cost - Equipment rentals
- Manufacturing or processing costs - Allocation of fixed expenses
- Consultant fees, etc. - Site office maintenance
• Indirect project cost increase with duration of the project

Project Management: Amit Kumar Project Management: Amit Kumar

Bardhan, Faculty of Management Bardhan, Faculty of Management
Studies, University of Delhi. Studies, University of Delhi.

1
 18-07-2019

Linear Time-cost Tradeoff for Tasks Non-Linear Time-cost Tradeoff for Tasks (Convex)
i j
i j
Direct
Cost of Direct
the task Cost
of the
task

Crash Normal Time Crash Normal Time

Time Time
Task Duration Task Duration

Non-Linear Time-cost Tradeoff for Tasks (Concave) Discontinuous Time-cost Tradeoff for Tasks

i j i j

Direct Direct
Cost of Cost of
the task the task

Crash Normal Time Crash Normal Time

Time Time
Task Duration Task Duration

Discrete Time-cost Tradeoff for Tasks The Critical Path Method

i j • Normal Duration Estimates
• Normal Costs
Direct
Cost of • Crash Duration Estimates
the • Crash Costs
task
• Crash Cost Per Day

Time3 Time2 Time1

Normal Duration - Crash Duration
Task Duration
K
Crash Cost - Normal Cost

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 18-07-2019

Time-cost tradeoff procedure - I Time-cost tradeoff procedure - I

• Start with normal project duration • Determine the most economical set of activities to be crashed or
• Obtain the critical path(s) relaxed to reduce the duration of all critical paths
• Choose the task on critical path which os cheapest to crash • No further crashing is possible when at least one critical path cannot
be reduced
• Crash that activity till either another path becomes critical or the
activity is fully crashed • When two or more activates on any path are simultaneously crashed,
some previously crashed activity on the path may be relaxed.

Time and Cost Data

Example 1 Task Normal Crash Crash
2 Day Rs. Day Rs.
cost/day

A F A 4 100 3 200 100

D
B 7 280 5 520 120
B G 5 C 3 50 2 100 50
1 4
c E H D 5 200 3 360 80
E 2 160 2 160 *
3 F 10 230 8 350 60
G 7 200 5 480 140
H 2 100 1 200 100

Example 1 Example 1
2
Paths A B C D E F G H
A F
D
ADG 100 80 140
B G 5 AF 100 50 60
1 4
c E H
BG 120 140
3 CEG 50 140
*
Identify all the paths in the network and the
corresponding completion times CH 50 100

Project Management: Amit Kumar Bardhan, Faculty of

Management Studies, University of Delhi.

3
 18-07-2019

Example 1 Example 1
Direct Cost
Increment
• Identify the critical path among all the paths 900
800
• On the critical path, which activity should be chosen for crashing?
700
600
500 Crash D
400 by 2 days
300 P2
200
100 P1

Project
11 12 13 14 15 16 Duration

Example 1 Example 1
Paths A B C D E F G H
Possible combinations of tasks that can be chosen for crashing
ADG 100 80 140 14

AF 100 50 60 14 • A, B
BG 120 140 14 • A, G
CEG 50 140 • F, G
* 12

CH 50 100
• D, F, B
5

1 2 1 0 2 2 1

Example 1 Example 1
Possible combinations of tasks that can be chosen for crashing Possible combinations of tasks that can be chosen for crashing
• A, B [Cost: 220, Maximum crash: 1]
• A, B [Cost: 220, Maximum crash: 1] • A, G [240, 1]
• A, G [240, 1] • F, G [200, 2]
• F, G [200, 2] • D, F, B [260,0]
• D, F, B [260,0] • Crash A & G; Relax D [160, 1]

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 18-07-2019

Example 1 Example 1
Direct Cost Paths A B C D E F G H
Increment
900
800
ADG 100 80 140 13
700
AF 100 50 60 13
600
500 Crash A & G;
P3 BG 120 140 13
400 320 Relax D
300 CEG 50 140
200
160 P2 * 11
100 P1
CH 50 100 5
Project
11 12 13 14 15 16 Duration 0 2 1 1 2 1 1
Project Management: Amit Kumar Bardhan, Faculty of
Management Studies, University of Delhi.

Example 1 Example 1
Direct Cost
Increment
Possible combinations of tasks that can be chosen for crashing 900
800
• A, B [Cost: 220, Maximum crash: 0] 700
P4
• A, G [240, 0] 600 520 Crash F & G
500
• F, G [200, 1] 400 320
P3

• D, F, B [260,1] 300
200
160 P2
• Crash A & G; Relax D [160, 0] 100 P1

Project
11 12 13 14 15 16 Duration
Project Management: Amit Kumar Project Management: Amit Kumar
Bardhan, Faculty of Management Bardhan, Faculty of Management
Studies, University of Delhi. Studies, University of Delhi.

Example 1 Example 1
Paths A B C D E F G H
Possible combinations of tasks that can be chosen for crashing
ADG 100 80 140 12
• A, B [Cost: 220, Maximum crash: 0]
AF 100 50 60 12
• A, G [240, 0]
BG 120 140 12 • F, G [200, 0]
CEG 50
* 140 10 • D, F, B [260,1]
CH 50 100 5
• Crash A & G; Relax D [160, 0]
0 2 1 1 1 0 1

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Example 1 Example 1
Direct Cost Paths A B C D E F G H
Increment
900 P5
800 780 ADG 100 80 140 11
Crash D, F & B
700
AF 100 50 60 11
600 520 P4
500
P3 BG 120 140 11
400 320
300 CEG 50 140
200
160 P2 * 10
100 P1
CH 50 100 5
Project
11 12 13 14 15 16 Duration 0 0 1 0 0 0 1

Project – Cost Curve Project Cost Curve

Direct Cost
Increment
900 P5 • The direct cost of a project is a piecewise linear function (with
780
800
Crash D, F & B
progressively non-decreasing slope as the project is crashed) of
700 project duration. This feature is observed whenever the task time-
600 520 P4 cost tradeoff is linear.
500
400 320
P3
300
200
160 P2
100 P1

Project
11 12 13 14 15 16 Duration

Project Cost Curve in managerial decisions Project Total Costs

• Bounds of Project duration and cost.
• The minimum budget for a target duration.
• The minimum duration achievable with a given budget.
• The project total cost curve (including direct and indirect costs)
• The project duration and schedule to achieve the minimum project
cost.