Project Management

09.
Reducing Project
Duration
Project Management
MB63C4
Semester 5, 2017-2018

01/12/2022 1
 Resource Allocation

Scope

Resource allocation, loading, leveling

PROJECT Expediting and crashing projects

MENGURANGI DURASI PROYEK:

Time Cost • Pertimbangan pengurangan durasi proyek
• Pilihan mempercepat penyelesaian proyek
• Grafik biaya-durasi proyek
01/12/2022 2
 Rationale for Reducing Project Duration

• Time Is Money: Cost-Time Tradeoffs

• Reducing the time of a critical activity usually incurs additional direct
costs.
• Cost-time solutions focus on reducing (crashing) activities on the
critical path to shorten overall duration of the project.
• Reasons for imposed project duration dates:
• Time-to-market pressures
• Unforeseen delays
• Incentive contracts (bonuses for early completion)
• Imposed deadlines and contract commitments
• Overhead and public goodwill costs
• Pressure to move resources to other projects

01/12/2022 9–3
 Options for Accelerating Project Completion

Resources are not constraint Resources are constraint

o Adding resources o Fast track

o Outsourcing project work o Critical chain
o Scheduling overtime o Reducing scope
o Established a core team o Compromise quality
o Do it twice fast and correctly

01/12/2022 4
 Explanation of Project Costs

INDIRECT COSTS
Project Indirect Costs
o Costs that cannot be associated with any particular work package or project activity.
o Supervision, administration, consultants, and interest
o Costs that vary (increase) with time.
o Reducing project time directly reduces indirect costs.

DIRECT COSTS
Project Direct Costs
o Normal costs that can be assigned directly to
a specific work package or project activity.
o Labor, materials, equipment, and subcontractors
o Crashing activities increases direct costs.
01/12/2022 5
 Definitions

BASIC CONCEPT
• Resource allocation permits efficient use of physical assets
• Within:
• a project,
• or across multiple projects
• Drives characteristics of:
• the identification of resources,
• and timing of their application

The general two conditions

“Normal” “Crashed”
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 The Critical Path and Shorten a Project Schedule
o To fulfil requirements
o Not to disturb main description of project
o Available to be done

• The techniques for shortening project schedules

Shortening durations Crashing Fast tracking

of critical activities/tasks activities activities

by adding more resources, or changing by obtaining the greatest amount of by doing them in parallel or
project scope schedule compression for the least overlapping them
incremental cost

Key: Scope and or resources Key: Time and or cost Key: Time
01/12/2022 7
o Shortening durations
o Crashing
o Fast tracking

01/12/2022 8
 Normal and Crashing

Normal Crash:
“normal” in the Expedite an activity,
same sense as the by applying additional resources
• Specialized or additional equipment
likely time • More people (e.g., borrowed staff, temporary)
estimate • More days (e.g., overtime, holidays, weekends)
• More hours (e.g., overtime, weekends)

Project governance
01/12/2022 9
 Ripple Effect

No Free Lunch: Crashing Creates a Ripple Effect

• Crashing buys time, but nothing comes free

• Potential cost areas
• Additional equipment/material
• Extra labor (general, specific, competence)
• Negative effects on other projects
• Reduced morale, from excessive hours/shifts
• Lower quality, from the pressure of time, inexperienced and tired staff
• “If you want it bad, you’ll get it bad . . .”

01/12/2022 10
 Basic Principles

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• Two basic principles
• 1. Generally, focus on the critical path
• Usually not helpful to shorten non-critical activities
• Exception: When a scarce resource is needed elsewhere, e.g., in another project
• 2. When shortening project duration, choose least expensive way to do it
(use slope formula to calculate ratio)

01/12/2022 11
 Project Crashing and Time-Cost Trade-Off

• Project duration can be reduced by assigning more resources to project activities.

• Doing this however increases project cost.

• Decision is based on analysis of trade-off between time and cost.

• Project crashing is a method for shortening project duration by reducing one or

more critical activities to a time less than normal activity time.
• Crashing achieved by devoting more resources to crashed activities.

01/12/2022 12
 Cost per Day of Crashing a Project

• Compute cost/time slope for each expeditable activity

crash cost – normal cost

Slope = normal time – crash time

01/12/2022 13
Example and Illustration for Project Crashing

• Compute cost/time slope for each expeditable activity

• Slope = ( crash cost – normal cost)/ ( normal time – crash time)

• Slope is the cost of crashing the project for the potential (or
estimated) crashing time.

01/12/2022 14
An Example (Table)
Activity Predecessor Days Cost
(normal, crash) (normal, crash)
a - 3, 2 $40, 80

b a 2, 1 20, 80

c a 2, 2 20, 20

d* a 4, 1 30, 120

e** b 3, 1 10, 80

* Partial crashing allowed

** Partial crashing not allowed
01/12/2022 15
Example (cont’d):
Cost per Day to Crash (Table)
Activity $ Saved/Day (Slope)
a 40

b 60

c -

d 30

e 70 (2 days)

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 Example (cont’d): Crashing

01/12/2022 17
 CPM Cost-Duration

01/12/2022 18
 Activity Graph

Normal Crashing
Time 10 unit time 5 unit time
Cost USD 400 USD 800

crash cost – normal cost

Slope = normal time – crash time

Illustrations:
Slope = USD 400 for 5 unit time, or the average is USD
80

This slope will be aligned with the risk and or job quality
01/12/2022 19
 Crashing Activity Times
• In the Critical Path Method (CPM) approach to project scheduling,
it is assumed that the normal time to complete an activity, tj ,
which can be met at a normal cost, cj , can be crashed to a reduced
time, tj’, under maximum crashing for an increased cost, cj’.
• It is assumed that its cost per unit reduction, Kj , is linear and can
be calculated by:
Kj = (cj' - cj)/(tj - tj').
E.g.: in the example on the right,
Kj = total crash cost/total crash time
= $2000/5 = $400/week

01/12/2022 20
 Crashing Example for Riverwalk Associates
 Normal Costs and Crash Costs

Normal Crash
Activity Time Cost Time Cost
A) Study Feasibility 6 $ 80,000 5 $100,000
B) Purchase Building 4 100,000 4 100,000
C) Hire Project Leader 3 50,000 2 100,000
D) Select Advertising Staff 5 150,000 2 300,000
E) Purchase Materials 1 180,000 1 180,000
F) Hire Manufacturing Staff 4 300,000 1 480,000
G) Manufacture Prototype 2 100,000 2 100,000
H) Produce First 50 Units 6 450,000 5 800,000
I) Advertising Product 5 350,000 1 650,000
J) Assessing User Feedback 3 300,000 3 300,000
K) Distributing Product 5 550,000 5 550,000

01/12/2022 21
 Project Crashing and Time-Cost Trade-Off
General Relationship of Time and Cost
• Project crashing costs and indirect costs have an inverse relationship.
• Crashing costs are highest when the project is shortened.
• Indirect costs increase as the project duration increases.
• Optimal project time is at minimum point on the total cost curve.

Figure and illustration

The time–cost trade-off

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o Shortening durations
o Crashing
o Fast tracking

01/12/2022 23
 Expediting Approached:
Fast-tracking/Concurrency

pe diti ng :
h to E x c ur renc y
Approac in g an d o r C o n
k
Fast-trac

Different terms for similar concept

• “Fast-tracking” (construction),
• “Concurrent engineering” (manufacturing)

• Both refer to overlapping project phases

• E.g., design/build, or build/test

01/12/2022 24
 Fast-tracking/Concurrency

Basic concept
• Main requirement is in order to finish a job earlier
• Replacing them with parallel relationships that normally should be
done in sequence
• Or have to do more things in the same time
• The purpose this task is to shorten the time to completion. Since it
overlaps the processes, it might better be called telescoping—but
"Fast-Track" carries a sense of action and movement and has
become a popular term

01/12/2022 25
 Fast-tracking/Concurrency

Pros:
• Can shorten project duration
• Can reduce product
development cycles
• Can help meet clients’
demands
Cons:
• Can increase cost through redesigns,
• Excessive changes,
• Often increases project risk and
rework,
• Out-of-sequence installation, and more

Need strategy

01/12/2022 26
 Constrained Resource Scheduling
• Two fundamental approaches to constrained allocation problems:
• Heuristic Methods
• Optimization Models

Heuristic approaches employ rules of thumb that have been found to work
reasonably well in similar situations (similarity in similar situations)

Optimization approaches seek the best solutions but are far more limited in
their ability to handle complex situations and large problems

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 Examples of Simple Heuristics
1. ASAP
2. As late as possible (do not engage in anything unless you have to)
3. SPT (shortest processing time – good to reduce congestion)
4. Most resources first (most requested resources first)
5. Minimum slack first (critical jobs go first to avoid lead time delays)
6. Most critical followers (most critical jobs that go after you, many jobs
depend on that resource)
7. Most successors
8. Arbitrary
9. Combination of the above (compound rules).

01/12/2022 28
 Examples of Complex Heuristics
• Simulated annealing
• Tabu search
• Genetic algorithms
• Greedy search with branch and bound

In the graduate course Advanced Production Planning &

Scheduling, focuses on scheduling heuristics.

It is good to know that they exist.

01/12/2022 29
 Multi-project Scheduling and Resource Allocation

• The most common approach to scheduling and allocating resources to

multiple projects is to treat the several projects as if they were each
elements of a single large project
• Another way of attacking the problem is to consider all projects as
completely independent
• To describe such a system properly, standards are needed by which to
measure scheduling effectiveness

01/12/2022 30
 Multi-project Scheduling and Resource Allocation
• Much more difficult.
• May rely on an index called
TRPT: (Total Remaining Processing Time)
• Based on the critical ratio.

• Among all the projects under your control, look at all the jobs of all
the projects.
• Find out which are most critical.

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“Cost, Schedule, or Performance: Pick Any Two . .”

• Assuming fixed performance specifications, tradeoff areas must be in

time or cost
• Time-limited or resource-limited
• If all three dimensions are fixed, the system is “overdetermined”
• Normally, no tradeoffs are possible
• But, something has to give . . .

01/12/2022 32
 Reducing Project Duration
to Reduce Project Cost

Identifying
Identifyingdirect
directcosts
coststo
toreduce
reduceproject
projecttime
time
Gather
Gatherinformation
informationabout
aboutdirect
directand
andindirect
indirectcosts
costsof
ofspecific
specific
project
projectdurations.
durations.
Search
Searchcritical
criticalactivities
activitiesfor
forlowest
lowestdirect-cost
direct-costactivities
activitiesto
toshorten
shorten
project
projectduration.
duration.
Compute
Computetotal
totalcosts
costsfor
forspecific
specificdurations
durationsand
andcompare
compareto
tobenefits
benefits
of
ofreducing
reducingproject
projecttime.
time.

01/12/2022 9–33
 Project Cost–Duration Graph

01/12/2022 34
 Constructing a Project Cost–Duration Graph

• Find total direct costs for selected project durations.

• Find total indirect costs for selected project durations.
• Sum direct and indirect costs for these selected project durations.
• Compare additional cost alternatives for benefits.

01/12/2022 9–35
 Constructing a Project Cost–Duration Graph

• Determining Activities to Shorten

• Shorten the activities with the smallest increase in cost per unit of time.
• Assumptions:
• The cost relationship is linear.
• Normal time assumes low-cost, efficient methods to complete the activity.
• Crash time represents a limit—the greatest time reduction possible under realistic
conditions.
• Slope represents a constant cost per unit of time.
• All accelerations must occur within the normal and crash times.

9–36
LATIHAN
Activity Normal time Crashing Normal costs Crashing
(minggu) time(minggu) ($) cost($)

1->2 =A 12 7 3.000 5.000

2->3= B 8 5 2.000 3.500
2->4=C 4 3 4.000 7.000
3->4=D 0 0 0 0
4->5=E 4 1 500 1.100
4->6=F 12 9 50.000 71.000
5->6=G 4 1 500 1.100
6->7=H 4 3 15.000 22.000

Tentukan biaya tambahan jika proyek ingin selesai dalam waktu 30 minggu

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