Project Management
THE MANAGERIAL PROCESS
Don’t Speed, Tie Down Your Cargo
Clifford F. Gray
Eric W. Larson
Third Edition
Chapter 9
Reducing Project Duration
IMAGINE…
• You realize (after you complete your schedule) your
estimated completion date is 2 months beyond what
your boss publicly promised
• Two months into the project, you are already three
weeks behind the drop-dead date
• Four months into the project top management tells you
get it done and money is not an issue
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Reducing Project Duration
• Examine the reasons for duration reduction
• Discuss different options for accelerating project
completion
• Classic Framework for “crashing” a project
Why Reduce Duration?
• Why not? Very few reasons for not reducing schedule
• Reducing usually means additional cost, therefore there
is a cost-time tradeoff
• Why reduce?
– Public announcement of an imposed deadline
– The project completion date is almost always set prior to
schedule being done
– Market-imposed delivery (time-to-market)
– Incentives: $ per day,
day % sharing of costs.
costs Usually includes
liquidated damages
– Unforeseen delays
– Pressure to move resources to other projects
Options for Accelerating Project Completion
Options for Accelerating Project Completion
• Adding Resources
• Scheduling Overtime
– Very common
– Very Common
– Beware of diminishing returns (space, logistics, communication)
– Cost may be low (premium for labor, but none for salaried
workers)
– Brook’s Law: Adding staff to a late project will make it later
• Ramp up, communication
• Outsourcing Project Work
– Very common
– Fewer distraction after hours
– No communication problem
– Beware of burnout, turnover, declined productivity
– Hire subcontractors that have more expertise than you.
• Establishing a Core Dedicated Project Team
– Get work done faster
• Do It Twice—Fast and Correctly
– Frees up other resources
– Quick and dirty short-term solution
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Options for Accelerating Project Completion
• Fast-Tracking
– restructuring critical activities to be parallel (ss)
• Critical-Chain (Ch 8 appendix)
– Focuses on “chains” of dependencies, both technically and
resource based
• Reducing Project Scope
– Revalue deliverables
What Now?
• Sometimes difficult to see how to reduce cost
• Need to isolate best activities to reduce
• Start by identifying costs of reducing project
• Consider project cost types
– Indirect
– Direct
– Get some now,, more later
– May result in revenue credits
• Compromise Quality
– Usually last option
Explanation of Project Costs
• Project Indirect Costs
– Costs that cannot be associated with any particular work package
project
j
activity.
y
or p
• Supervision, administration, consultants, and interest
– Costs that accumulate with time.
Constructing a Project Cost—
Cost—Duration Graph
1. Find total direct costs for selected project durations.
2. Find total indirect costs for selected project durations.
3. Sum direct and indirect costs for these selected project
durations.
• Reducing project time directly reduces indirect costs.
• Know your indirect costs
• Direct Costs
– Normal costs that can be assigned directly to a specific work
package
k
or project
j t activity.
ti it
– Normal work and time, low cost, reflects efficient methods
• Compare additional cost alternatives for benefits.
• p.289
• Labor, materials, equipment, and subcontractors
– Crashing activities increases direct costs.
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Constructing a Project Cost—
Cost—Duration Graph
Example p. 291
• Determining Activities to Shorten
– Really only looking at labor
– Difficult to do… how far do you go?
– Depends on the normal/crash times and costs
– Shorten the activities with the smallest increase in cost per unit of time
– Calculate crash rate (slope)
• P. 291, activity graph
– 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.
Practical Considerations
• Using the Project Cost—Duration Graph
– Time consuming
– Assumes logistically can crash throughout the duration of project
• Crash Times
– What is a crash time / cost?
• Linearity Assumption
– Crashing can be all or nothing (10 days to 3 days)
• Choice of Activities to Crash Revisited
What if Cost, Not Time is the Issue?
• Commonly Used Options for Cutting Costs
– Reduce project scope
– Have owner take on more responsibility
• Homeowner addition
– Outsourcing project activities or even the entire project
– Brainstorming cost savings options
– Cheapest to crash
– Timing (other activities become critical)
– Crashing same people can cause fatigue, resentment
– Risk needs to be considered
• Time Reduction Decisions and Sensitivity
– Cost of new critical activities being delayed
– Insensitive networks can realize huge savings
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