REMINDERS

1. Kindly turn off your camera as this may add to the network bandwidth.
2. Kindly mute your microphone if you are not going to say something to
the class.
3. Please be careful of the words or language you use in the chatroom.
Do not use offensive or any foul language.
4. Please be considerate and polite to everybody in this conference.
MEETING 6:

TIME COST TRADE-OFF

CONCEPT

 To accelerate the project, i.e., to

reduce the duration spent on an
activity.

 To accelerate, additional resources will

be needed.
SETTING PRIORITIES

 Do not shorten the duration further

and keep the cost to a minimum.

 Keep compressing the schedule, even

though the cost will continue to rise.
WHAT IS “ACCELERATING” A PROJECT?

 Accelerating a project means shortening the normal duration of the project

schedule without reducing the original scope of work (also called schedule
compression).
 It does not necessarily mean aiming for the shortest possible duration.
 Schedule crashing
WHY ACCELERATE A PROJECT?

1. Contractor’s “normal” calculated finish date in the planned schedule does not
meet the imposed finish date in the contract.
2. After starting construction and completing a certain percentage of the project,
the contractor realizes that the project is behind schedule.
3. Contractor may have a contractual monetary incentive to finish ahead of
schedule.
4. If the economy is doing well, finishing early means, to the contractor, starting
another project earlier and, thus, making more profit.
5. Accelerating a project may prove profitable to the contractor.
HOW CAN THE DURATION OF A PROJECT BE SHORTENED?

 Revisit or study the schedule thoroughly to find any errors or unnecessary logic or constraints.

 Fast-track the project -- Fast-tracking means starting construction before the design is completely
finished.
 Conduct value engineering and constructability studies.

Value engineering (VE) - “an analysis and comparison of cost versus value of building materials,
equipment, and systems.
Constructability - “the optimum use of construction knowledge and experience in planning,
design, procurement, and field operations to achieve overall project objectives”
 Utilizing Building Information Modeling (BIM).

 Work overtime  more hours per day and/or more days per week.
HOW CAN THE DURATION OF A PROJECT BE SHORTENED?

 Offer incentives to workers or crews for improving productivity.

 Acquire more workers.
 Acquire special materials and/or equipment that help speed up the
work process.
 Improve project management or supervision.
 Improve communications among parties, particularly during the
submittal process.
FACTORS TO CONSIDER WHEN CRASHING

 The amount by which an activity is crashed is, in fact, permissible.

 Taken together, the shortened activity durations will enable one to
finish the project by the due date.
 The total cost of crashing is as small as possible.
 The activity or activities must be critical and must shorten all existing
critical paths.
 DIRECT COST – cost that occurs on each activity in the project network
 INDIRECT COST – general overhead that the construction head office
must carry
 Cost of doing business
DIRECT COSTS

 Labor
 Materials
 Equipment
 Subcontractors
 Other costs, such as government permits and fees, and fees for
lawyers and consultants hired for a specific task in a project
INDIRECT COSTS

A. Project overhead (or job overhead)

 Project staff (project manager, project superintendent, project engineer, receptionist or
secretary, clerk, etc.)
 Office trailer and other temporary structures
 Cars and trucks assigned to the project team
 Office equipment (copying machine, fax machine, computers, etc.)
 Temporary utilities (electricity, water, drinking water and ice, telephones, cell phones,
gas, portable toilets, etc.)
 Other indirect project-related expenses, such as power generators and projectors used to
provide light during night working hours.
INDIRECT COSTS
B. General overhead
 Main office expenses (rent, lease, maintenance, utilities, etc.)
 Main office personnel
 Main office equipment and vehicles
 Main office services, such as lawyers and accountants (not working exclusively for a
specific project)
 Other main office expenses, such as advertising and charity contributions
C. Profit
D. Contingency fees - an additional sum of money allocated for the unknown events that will
most likely occur during the life of the project; they are directly proportional to the risk taken
in the project.
 TOTAL COST

TOTAL COST = DIRECT COST + INDIRECT COST

STEPS IN PROJECT CRASHING

1. Compute the crash cost per time period. For crash costs assumed linear over time:
(Crash cost  Normal cost)
Crash cost per period 
(Normal time  Crash time )

2. Using current activity times, find the critical path.

3. If there is only one critical path, then select the activity on this critical path that
(a) can still be crashed,
(b) has the smallest crash cost per period.
Note that a single activity may be common to more than one critical path

4. Update all activity times.

CRASH AND NORMAL TIMES AND COSTS
TIME-COST EXAMPLE D8

 ABC is critical path=30 A 10 B 10 C 10

Crash cost Crash

per week weeks available Cheapest way to gain 1
A 500 2 week is to cut A.
B 800 3
C 5,000 2
D 1,100 2
TIME-COST EXAMPLE D8

 ABC is critical path=29 A9 B 10 C 10

Crash cost Crash Wks Incremental Total

Gained Crash $ Crash $
per week weeks available 1 500 500

A 500 1
Cheapest way to gain 1 wk
B 800 3
still is to cut A.
C 5,000 2
D 1,100 2
 D8
TIME-COST EXAMPLE

 ABC is critical path=28 A8 B 10 C 10

Wks Incremental Total

Crash cost Crash Gained Crash $ Crash $
1 500 500
per week wks avail 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 EXAMPLE D8

 ABC is critical path=27 A8 B9 C 10

Crash cost Crash Wks Incremental Total

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 EXAMPLE D8

 Critical paths=26 ADC & ABC A8 B8 C 10

Crash cost Crash Wks Incremental Total

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 EXAMPLE D7

 Critical paths=25 ADC & ABC A8 B7 C 10

Crash cost Crash Wks Incremental Total

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 Cannot cut B any more.

D 1,100 1 Only way is to cut C.
TIME-COST EXAMPLE D7

 Critical paths=24 ADC & ABC A8 B7 C9

Crash cost Crash Wks Incremental Total

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
6 5,000 9,500
C 5,000 1
D 1,100 1 Only way is to cut C.
 D7
TIME-COST EXAMPLE

 Critical paths=23 ADC & ABC A8 B7 C8

Wks Incremental Total

Crash cost Crash Gained Crash $ Crash $
1 500 500
per week wks avail 2 500 1,000
3 800 1,800
A 500 0 4 800 2,600
B 800 0 5 1,900 4,500
6 5,000 9,500
C 5,000 0 7 5,000 14,500

D 1,100 1 No remaining possibilities to

reduce project length
TIME-COST EXAMPLE D7

 Now we know how much it

A8 B7 C8
costs us to save any number
of weeks
Wks Incremental Total
Gained Crash $ Crash $
 Customer says he will pay 1 500 500
$2,000 per week saved. 2
3
500
800
1,000
1,800
4 800 2,600
5 1,900 4,500
6 5,000 9,500
7 5,000 14,500
TIME-COST EXAMPLE D7

 Now we know how much it

costs us to save any number of A8 B7 C8
weeks
 Customer says he will pay
$2,000 per week saved. Wks Incremental Total
Gained Crash $ Crash $
1 500 500
2 500 1,000
Reduce by 5 weeks. We get $10,000 3 800 1,800
from customer, but pay $4,500 in 4 800 2,600
5 1,900 4,500
accelerating costs 6 5,000 9,500
7 5,000 14,500
Increased profits = $5,500
EXAMPLE 2
 A project consisting of 8 activities are described in the following table.
The cost for completion of these 8 activities is $5800 excluding the site
overhead. The overhead cost of general site activities is $ 160/day. We
are asked to:

1) calculate the normal completion of the project, its cost, and the
critical path;

2) calculate and plot on a graphing paper the cost/time function for the
project and state:
• the minimum cost and the associated time;
• the shortest time and the associated cost.
EXAMPLE 2

$
EXAMPLE 2
EXAMPLE 2

NORMAL COMPLETION TIME = 20 DAYS

NORMAL COMPLETION COST = 5800 + 20 x 160 = $9000
CRITICAL ACTIVITIES = B-F
EXAMPLE 2
 Speed up the project so that the project will cost the least.
 The rule is to speed up firstly the critical activity that cost the least
to do so.
 Speed up B, cost = $90 for speeding up one day.
 Activity B can be shortened by 8-4=4 days.

 The amount of time to speed up is determined based on:

(1) the reduction should reduce the project completion time the
most; and
(2) the reduction should cause as many activities to become critical
as possible.
EXAMPLE 2

Thus, THE NEW COST = 9000 – 3(160) + 3(90) = $8790

NEW COMPLETION TIME = 17 DAYS
CRITICAL ACTIVITIES = ALL EXCEPT “C”
  Speed up activities A and B, each by 1 day
EXAMPLE 2

Thus, THE NEW COST = 8790 – 1(160) + 1(80) + 1(90) = $8800

NEW COMPLETION TIME = 16 DAYS
CRITICAL ACTIVITIES = ALL EXCEPT “C”
  Speed up activities A and F, each by 1 day
EXAMPLE 2

Thus, THE NEW COST = 8800 – 1(160) + 1(80) + 1(200) = $8920

NEW COMPLETION TIME = 15 DAYS
CRITICAL ACTIVITIES = ALL EXCEPT “C”
EXAMPLE 2  Speed up activities E, F and G, each by 2 days

Thus, THE NEW COST = 8920 – 2(160) + 2(200 + 50 + 40) = $9180

NEW COMPLETION TIME = 13 DAYS
CRITICAL ACTIVITIES = ALL EXCEPT “C”
EXAMPLE 2

Cost in $

$
 13 days is the minimum completion
time for the project because no
further time reduction is available on
the critical path 1-2-5-6 (A-E-H).

 Therefore, minimum cost for completing the project is $8790 in 17 days,

and that the minimum possible completion time is 13 days costing $9180.