NETWORK ANALYSIS

Part 5 - MINIMUM DURATION AND ASSOCIATED COST

Samithamby Senthilnathan
PhD (Business), M.Sc (Management), B.Sc (Business Administration)
Department of Management, FCM
Eastern University, Sri Lanka

Abstract
This section of Part 5 explores how the minimum duration of a project and its
crashed cost in relation to the crashed cost of relevant activities and other cost or
income, when the project is targeted to complete in its crashed duration. This part
illustrates how the minimum duration and its efficient (optimal) associated cost
can be determined with relevant adjustments in relation to crashed duration and
cost of an activity.

This paper is organized with Minimum Duration, and Critical Path and Cost
Estimation for Minimum Duration

Key words: Minimum duration, critical path, associated cost, fixed cost, penalty,
bonus
JEL code: C00, O22

Note:
This paper is intended to provide a basic explanation about the network analysis
in relation to managing duration and cost of a project. Further extension of this
paper depends on the support from readers who are expected to provide me
your valuable comments and suggestions to continue this task. Please send your
comments to sennathans@yahoo.com.

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5.1 MINIMUM DURATION AND CRITICAL PATH
Crashed duration is simply the minimum duration in project implementation. It is
impossible to complete a project in less than its deterministic crashed duration. Thus,
crashed duration is known as the project minimum duration, since the crashed duration is
the least possible completion duration of the project. The activities that constitute the
minimum duration are known as the critical activities; and stating them in the order of
their completion is the critical path of the minimum duration.

To determine minimum duration of a project, it is important to draw the project network

with crashed duration of activities and decide the durations (EST and LFT) of each of the
events in the network. The cost estimation also takes place based on these arrangements of
determining the minimum duration.

5.2 COST ESTIMATION FOR MINIMUM DURATION

There are two approaches in determining the cost of minimum duration of a project. In
these approaches, three tactics can be used. They are given below.

Approach 1: This indicates reducing unnecessary crashed costs from total crashed cost of
activities. This implies that the additional costs that are incurred by crashing
durations of activities unnecessarily need to be reduced from total crashed cost of a
project to determine efficient associated cost of the minimum duration of the project.
This approach basically considers total crashed cost of a project and consists of two tactics.

Tactic 1: Using the network diagram and its critical path with crashed durations of
activities in a project, the associated cost of the minimum duration of the project
can be determined by adjusting unnecessary crashed durations of the non-
critical activities and their costs against total crashed cost of the project. In this
context, cost slopes of the non-critical activities are considered for these
adjustments.

Tactic 2: The efficient associated cost of the minimum duration of a project is determined
in consideration of (a) the network drawn on the crashed duration of activities
and (b) the combinations of non-critical activities in the network and their
relative sums of cost slopes in view of adjusting for unnecessary crash of activity
durations.

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In the above two tactics, Tactic 2 always results in efficient determination of associated
cost of minimum duration of a project and Tactic 1 can be applicable only for the projects
with certain information. However, there is no clear indication about the projects, where
both the tactics can provide similar results as consistent as possible. Thus, in determining
the associated cost of minimum duration of the project, Tactic 2 plays a constructive role as
a significant approach with a series of processes. The following illustration can provide a
clear understanding with examples of employing Tactics 1 and 2.

Example 5.1
The information related to a project to be implemented by ABC Company is given in Table
5.1. Using the information, you can determine the minimum duration and its associated
cost of the project.

Table 5.1: Project information (for Example 5.1)

Normal Crashed Normal Crashed Cost Slope
Preceding
Activity Duration Duration Cost Cost (Rs. per
Activity
(days) (days) (Rs.) (Rs.) day)
A - 4 3 360 420 60
B - 8 5 300 510 70
C A 5 3 170 270 50
D A 9 7 220 300 40
E B,C 5 3 200 600 200
Total 1250 2100 ---

Applying Tactic 1
Basically, application of tactics begins with the network of a project associated with its
normal duration and normal cost.

Figure 5.1: Network for normal duration of the project

2
D 74
4 4 9 5 144
14
5 5
A C
4 5 E
5
1 3
B
0 0 9 9
8

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Figure 5.1 indicates that normal duration and normal cost of the project are 14 days and Rs.
1,250/=, respectively. Its critical path is A, C and E.

To determine the minimum duration of the project, draw the network as in Figure 5.1 and
apply the crashed duration of the activities, instead of their normal duration. These are
shown in Figure 5.2.

Figure 5.2: Network for minimum duration of the project

2
D 74
3 10
5 4
7
5 5
A C
3 3 E
3
1 3
B
0 6
5

In accordance with Figure 5.2, minimum duration of the project is 10 days and its critical
path is A and D.

Using cost slopes of activities and Figure 5.2, the following steps needs to be implemented
for determining the associated cost of minimum duration.

Step 1: Determining the non-critical activities - notably in Figure 5.2, activities B, C and
E are the non-critical activities, since activities A and D are the critical activities.

Step 2: Consider cost slope of non-critical activities and their saved duration by
crashing – this information is given in Table 5.2 below.

Table 5.2: Cost slope and duration saved for non-critical activities

Duration Cost Slope

Activity
saved (Rs. per day)
B 3 70
C 2 50
E 2 200

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Step 3: Among the non-critical activities, consider the activity with the highest cost
slope. Then, its duration to be saved can be adjusted (reduced) without
affecting the minimum duration (as in Figure 5.2) of the project.

In the example, activity E has the highest cost slope comparatively and 2 days
saved. It is notable that there are three (3) paths for completing the project.
P1  A, D = 10 days,
P2  A, C, E = 9 days and
P3  B, E = 8 days.

It is also notable that the paths P2 and P3, where activity E is on, need 9 and 8 days
for completing the project, respectively. It is important to consider the highest
duration path (P2 of 9 days) between them (P2 and P3). This highest duration (9
days) needs to be compared with minimum duration of the project’s critical path
(10 days). The difference between them (10 – 9 = 1) needs to be compared with
the duration saved for activity E (2 days) and the minimum (1 day) of them (1 day
of the difference and 2 days saved of activity E) needs to be considered for adding
to the minimum crashed duration (3 days) of activity E to have its adjusted
duration of 4 days (= 1 + 3). Performing this adjustment makes P2 as one of the
critical paths of the minimum project duration of 10 days. Figure 5.3 shows the
network with this adjustment.

Figure 5.3: Network of the adjustment 1 for minimum duration

2 4
7
D
3 5
10 4
7 5
5
A C
3 3 E
3(+1)
1 3
0 B 6
5

Step 4: The cost of the adjustment made in Step 3 needs to be adjusted with the
project’s total crashed cost.

When there is a reduction (1 day) in saved duration (2 days) of activity E, the

crashed cost for the duration (1 x 200 = 200) adjusted in activity E has to be
removed from total crashed cost Rs. 2,100.00 of the project. These results in Rs.
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 1,900.00 (= 2,100 – 200) as the adjusted cost of the minimum duration as
consistently with the adjustment made in the duration of activity E.

Step 5: Consider the new network (Figure 5.3 in this example) with the adjustments
made through Steps 3 and 4, and go to Step 2. Follow steps 2 to 5 until a point
where no activity can be adjusted in crashed duration for saving cost.

Among the non-critical activities considered in Step 2, it is important to consider in

this step the activities other than the activities considered in Steps 3 and 4.

In this example, the non-critical activities considered in Step 2 are B, C and E.

Among them, activity E is only adjusted in Steps 3 and 4. Therefore, other non-
critical activities B and C need to be considered, if possible, for further adjustment
and go to Step 2. It is important to go back to Step 2 with the latest results after the
adjustments made.

In this example, for crashed duration, path P2  A, C, E was initially of 9 days. Now, after
the crashing adjustment of 1 day for activity E, path P2  A, C, E altered to 10 days of
duration for completion and the path P2  A, C, E has become another critical path for the
crashed duration of minimum project completion time. Hence, this implies that only
activity B of path P3 ( B, E) is the non-critical activity, while going back to Step 2.

According to Step 3, the crashed and saved durations of activity B are 5 and 3 days,
respectively. After the adjustment made in the crashed duration of activity E, it is notable
that the completion duration of path P3 is increased from 8 to 9 days. Therefore, it is
possible to adjust 1 day from saved duration of activity B to make completion duration of
path P3 to 10 days (as shown in Figure 5.4) as to be equal to other paths P 1 and P2, which
are the present critical paths of the project for minimum duration.

Figure 5.4: Network of adjustment 2 for minimum duration

2 D 4
7
3 7 10
5 4
5 5
A C
3 3 E
3(+1)
1 3
0 B
6
5 (+1)

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Step 4 indicates that the cost of 1 day adjustment made in Step 3 for activity B (one day
adjusted cost Rs. 70) should be deducted from Rs. 1,900.00, which is the cost after the
adjustment made activity E.

As one day is adjusted from 3 days saved of activity B, the additional cost of the day of Rs.
70.00 can be saved and this saving Rs.70.00 should be adjusted with (removed from) the
latest crashed cost of Rs. 1,900.00. Therefore, after the adjusted duration of activity B, the
latest associated cost of the minimum duration of the project is Rs. 1,830.00 (= 1,900 – 70).

Beyond these adjustments, no adjustment in duration can be made in any of the activities
to avoid additional cost for crashing and to maintain the minimum duration of the project.
Hence, according to Tactic 1 (in Approach 1), the associated cost of minimum duration of
the project is Rs. 1,830.00. The application of Tactic 2 for the same example (5.1) is devised
next.

Applying Tactic 2
The primary bases for this application of Tactic 2 are again
(a) the project network in Figure 5.2,
(b) its fully crashed duration of 10 days and
(c) total crashed cost of Rs. 2,100.00.

Considering (a), (b) and (c) above, the following steps need to be applied in Tactic 2.

Step 1: Identify the non-critical paths

In Figure 5.2 of Example 5.1, the critical path is P1 ( A, D) and the non-critical
paths are P2 and P3, i.e.,
P2  A, C, E = 9 days and
P3  B, E = 8 days.

Step 2: Identify the non-critical activities of the paths (P2 and P3) in Step 1, estimate
the cost slope of those activities individually and in combination, and select
the highest cost slope among them to adjust the duration of the project as not
exceeding the minimum duration of the project in Figure 5.2.

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 In this example, the non-critical activities are B, C and E on the non-critical paths P2
and P3.

The cost slopes of those activities (B, C and E) individually and in combination
without affecting the project minimum duration (10 days) are given in Table 5.3.

Table 5.3: Cost slope of non-critical activities individually and in combination

Activity/Combination Cost slope for adjustment
of activities (in Rs.)
B(1) 70.00
C(1) 50.00
E(1) 200.00
B(1), C(1) 70.00 + 50.00 = 120.00
B(2), C(1) 70.00(2) + 50.00 = 190.00
B(1), E(1) 70.00 + 200.00 = 270.00

Note that the combination of activities C and E is not considered, since that
combination (as 11 days) exceeds the project minimum duration of 10 days. In
Table 5.3, the highest cost slope activity or activity combination is B(1), E(1) of Rs.
270.00.

Step 3: Adjust the total crashed cost in consideration of the highest cost slope
activity or activity combination identified in Step 2.

The highest cost slope activity combination in Step 2 is B(1), E(1) of Rs. 270/=.
Since this highest cost slope gives highest cost saving, the adjustment should be
made through this combination to reduce the total crashed cost.

Total Crashed Cost = 2100.00

Less: Cost saved = 270.00
Associated cost of minimum duration = 1830.00

In this example, considering further combination does not help in further reduction of
cost. It is also notable that this is a continuous process from Step 1 to Step 3,
until reaching the optimum solution for minimum duration of the project.

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Approach 2 (Tactic 3): In this approach, it is possible to determine the associated cost of
minimum duration of a project in consideration of cost slopes and savable durations of
every activity and completion paths of a project. It is wise to call Example 5.1 again to
illustrate Approach 2. As Approach 1 primarily considers total crashed cost for further
adjustment of activity durations, Approach 2 is initiated with normal cost of the project to
derive the associated cost of minimum duration of a project. In order to understand
Approach 2, the following bases as prerequisites/provisions should be made.

Base 1: Have an information set on activity, cost slope and savable activity duration
Cost Slope Duration to
Activity
(Rs.) save in days
A 60.00 1
B 70.00 3
C 50.00 2
D 40.00 2
E 200.00 2

Base 2: Identify all paths in the normal duration network of the project.
P1  A, D = 13 days,
P2  A, C, E = 14 days and
P3  B, E = 13 days

Base 3: Organise the least cost schedule by using normal duration and normal cost of the
project.
Table 5.4: Least cost schedule
Paths Critical Adjusted Total
Activity Path(s) Cost Adjustment Cost (Rs.)
P1 P2 P3
Normal Duration 13 14 13 P2 --- 1250.00

After the above bases are put in order, the least cost schedule in Base 3 should be adjusted
with the following steps.

Step 1: To determine the minimum duration of the project, the critical activities
should be in consideration.

In this example, the critical activities are A, C and E and the adjustments towards
minimum duration should be made out through these activities, at this stage.

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Step 2: Consider the critical activity with the minimum cost slope and the
adjustment towards minimum duration should be made based on its savable
duration.

In this example, Base 1 above shows that critical activity C has the lowest cost
slope of Rs. 50.00 and its savable duration of 2 days. In this context, it is important
to make sure whether this savable duration of 2 days of activity C can be entirely
adjustable. To ensure this, the difference (1 day) between the critical path duration
(14 days) and next highest non-critical path duration (13 days) needs to be
compared with the savable duration (2 days) of activity C; and the least (1 day) in
these durations (1 day and 2 days) can only be considered for duration adjustment
on activity C.

Step 3: Make the adjustment in the least cost schedule in Base 3 as decided in Step 2
above to crash activity C by one day (as in Table 5.5 below).

Table 5.5: Adjusted least cost schedule

Paths Critical Cost Adjusted Total Cost
Activity
P1 P1 P1 Path(s) Adjustment (Rs.)
Normal
13 14 13 P2 --- 1250.00
Duration
C(1) 13 13 13 All +50(1) 1300.00

In accordance with the adjustment made in the least cost schedule (Table 5.5), it is
important to revise Bases 1 and 2, as follow.

Base 1:
Activity Cost Slope Duration to
(Rs.) save (days)
A 60.00 1 1
B 70.00 3 3
C 50.00 2 1
D 40.00 2 2
E 200.00 2 2

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 Base 2: Adjustment in the paths
P1  A, D = 13 days  13 days
P2  A, C, E = 14 days  13 days
P3  B, E = 13 days  13 days

Step 4: Make the adjustment in the least cost schedule in Base 3 as decided in Step 2
above to crash activity C by one day (as in Table 5.5 below).

Note that the adjustments made in Base 2 and least cost schedule (Base 3) reveal
that all paths (P1, P2 and P3) are critical and the project duration is 13 days.
Therefore, the activities on these critical paths need to be considered individually
or in combination, with their cost slopes, to reduce project duration to a minimum
and to determine its associated efficient (optimal) cost.

In this example, at present as in the latest Base 2 above, there is no any activity on
all three critical paths. Hence, adjustment towards the minimum duration of the
project cannot be done with crashing the duration of a single activity. This implies
that at this stage, the adjustment for the minimum duration can be done only with
the combination of critical activities and their respective cost slopes.

The latest adjustment shows various combination of critical activities on all three
(P1, P2 and P3) critical paths as (A,B), (A,E), (A,D,B), (A,C,B), (A,C,E), (A,D,E), (D,C,B)
and (D,E). Comparatively, the combinations (A,D,B), (A,C,B), (A,C,E) and (A,D,E)
have higher cost slopes than other combined cost slopes. Therefore, these
combinations are not useful to determine optimal cost of minimum project
duration. In this context, the activity combinations (A,B), (A,E), (D,C,B) and (D,E),
and their respective cost slopes in Table 5.6 can only be considered to determine
the minimum duration and optimal associated cost of the project.

Table 5.6: Cost slope of activities combined

Activity/Combination of Cost slope for adjusting per unit
activities (per day) of duration (in Rs.)
A(1), B(1) 60.00 + 70.00 = 130.00
A(1), E(1) 60.00 + 200.00 = 260.00
D(1), C(1), B(1) 40.00 + 50.00 + 70.00 = 160.00
D(1), E(1) 40.00 + 200.00 = 240.00

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 Table 5.6 shows that combination (A,B) has the lowest cost slope (Rs. 130.00) to
reduce a day on critical paths. Therefore, the adjustment for the time reduction of
the project should be carried out with the lowest cost slope combination of (A,B)
along the critical path(s).

Since activity A has provision to crash by only one day from its normal duration,
the combination (A,B) helps to reduce 1 day project duration with respect to the
activities (A and B) concerned. Accordingly, the adjustments in Bases 3, 1 and 2
must be made, respectively as shown below.

Base 3: Adjusting least cost schedule

Table 5.7: Adjusted least cost schedule

Paths Critical Adjusted Total
Activity Cost Adjustment
P1 P2 P3 Path(s) Cost (Rs.)
Normal Duration 13 14 13 P2 --- 1250.00
C(1) 13 13 13 All +50(1) = 50 1300.00
A(1), B(1) 12 12 12 All +60(1)+70(1) =130 1430.00

Base 1:
Activity Cost Slope Duration to
(Rs.) save (days)
A 60.00 1  1 0
B 70.00 3  3 2
C 50.00 2 1 1
D 40.00 2 2 2
E 200.00 2 2 2

Base 2: Adjustment in the paths

Days
P1  A, D = 13  13 12
P2  A, C, E = 14  13 12
P3  B, E = 13  13 12

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Further in Step 4, this process should be continued until reaching the possible minimum
duration of a project, i.e., no further reduction can be made with associated optimal cost. It
is also notable that Figure 5.2 confirms that this continuous process can result in minimum
project duration of 10 days.

This process should eventually produce the following results in each of the bases.

Base 3: Adjusting least cost schedule

Table 5.8: Adjusted least cost schedule
Paths Adjusted
Critical
Activity Cost Adjustment Total Cost
P1 P2 P3 Path(s)
(Rs.)
Normal Duration 13 14 13 P2 --- 1250.00
C(1) 13 13 13 All +50(1) = 50 1300.00
A(1), B(1) 12 12 12 All +60(1)+70(1) =130 1430.00
D(1), C(1), B(1) 11 11 11 All +40(1)+50(1) +70(1) =160 1590.00
D(1), E(1) 10 10 10 All +40(1)+200(1) =240 1830.00

Base 1:
Activity Cost Slope Duration to
(Rs.) save (days)
A 60.00 1 1 0 0 0
B 70.00 3 3 2 1 1
C 50.00 2 1 1 0 0
D 40.00 2 2 2 1 0
E 200.00 2 2 2 2 1

Base 2: Adjustment in the paths

days
P1  A, D = 13  13  12  11 10
P2  A, C, E = 14  13  12  11 10
P3  B, E = 13  13  12  11 10

In accordance with the final results of this process, it is possible to determine duration of
an activity to represent the minimum duration and optimum associated cost of the project.
For this, the crashed duration of the activity needs to be added to the savable duration of
the activity that is finally derived in Base 1 for optimal solution, as shown below.

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Base 1:
Cost Slope Duration to Crashed Adjusted
Activity
(Rs.) save (days) Duration Duration
A 60.00 1 1 0 0 0 +3 =3
B 70.00 3 3 2 1 1 +5 =6
C 50.00 2 1 1 0 0 +3 =3
D 40.00 2 2 2 1 0 +7 =7
E 200.00 2 2 2 2 1 +3 =4

Figure 5.5: Network for the minimum project duration

2 D 4
7
3 3 10
5 104
7 5
5
A C
3 3 E
4
1 3
B
0 0 6 6
6

SELF REVIEW QUESTIONS

1. What do you understand from the minimum duration in completing a project?
2. What is the objective of prioritizing the minimum completion duration of a project?
3. Explain the tactics for estimating the associated cost of minimum duration.
4. Explain the strengths and weaknesses of the tactics for estimating the associated
cost of minimum duration.
5. Briefly indicate how the associated cost of minimum duration differs from normal
cost of normal duration of a project.

TERMINOLOGY
Adjusted Cost Minimum Cost Table/Schedule
Calculation of Minimum Duration Minimum Duration
Identification of Paths Minimum Duration and Associated Cost

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Exercise
Considering the following activities in relation to a project, their normal duration and cost,
and the additional cost of reducing activity duration by a day, you are required to
determine the network diagram, critical path(s), and the associated cost of the minimum
duration of the project.

Preceding Normal Normal duration Additional cost for reducing

Activity
Activity cost in Rs. in days normal duration by one day (Rs.)
A - 10,000 5 3,000.00
B - 12,000 7 2,000.00
C - 5,000 9 800.00
D A,B,C 6,000 10 600.00
E B,C 9,000 8 2,000.00
F C 5,000 6 900.00
G D,E 4,000 4 700.00
H D 3,000 3 200.00
I F,G,H 5,000 7 2,200.00
J I 6,000 12 500.00

No activity permits to save more than one day from its normal duration. The fixed cost per
day of the project is Rs. 800.00.

Answer
Network for the normal duration

D
19 20
9 9 10
A H
5 3

B E G I J
0 0 9 9 19 19 23 23 30 30 42 42
7 8 4 7 12

C
F
9
9 9
6

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Normal duration = 42 days
Critical path:

C  D  G  I  J
9 + 10 + 4 + 7 + 12 = 42 days

Normal Cost = 65,000.00 + 42(800.00)

= 65,000.00 + 33,600.00
= Rs. 98,600.00

Network for the minimum duration

D
17
8 9
A H
3
5

B E G I J
0 0 8 17 20 26 37 37
7 8 3 6 0 11 0 20

C
F
8
8
6

Critical path:

C  D  G  I  J
8 + 9 + 3 + 6 + 11 = 37 days

Associated cost of the minimum duration

= 65,000.00 + 37(800.00) + 4800.00
= 65,000.00 + 29,600.00 + 4800.00
= Rs. 99,400.00

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