Schedule Compression and Time-Cost Trade off

Chapter 5
Introduction
Construction project almost always have a finish deadlines assigned by the
owner and stipulated in the contract.

Some of these projects have strict deadlines that do not allow for any slippage.
What is network compression (crashing)?

Crashing a project means shortening the normal duration of the project schedule
without reducing the original scope of work.

Schedule Reduction /Schedule Compression /Project Acceleration

Why crashing a project?
There are many reasons for crashing a project:
1- to avoid late penalties.
2- to take advantages of monetary incentives for timely or early completion of a project.
3- to free resources for the use on other projects.
4- to beat the competition to the market.
5- to meet the imposed finish date of the contract
Construction projects may take more or less time than planned for
reasons that may be within or beyond the contractor’s control.

Reasons beyond the contractor’s control, such as force majeure,

differing site conditions, and change orders, draw time extensions from
the owner in most cases.
How can the Duration of a Project be Shortened?
Suggested Techniques:
1. Revisit or study the schedule thoroughly to find any errors or unnecessary
logic or constraints
2. Fast track the project. (start the project before the design is completely finished)
3. Work overtime-more hours per day and /or more days per week

4. Offer incentives to workers to improve productivity

5. Acquire more workers and equipment

How can the Duration of a Project be Shortened?
6. Hire a second, and possibly a third shift
7. Acquire special materials (such as accelerators for concrete) and
equipment that help speed up the work process.
8. Improve project management and supervision
9. Improve communications among parties, particularly during the
submittal process.
Schedule Reduction Vs Costs
As the schedule is compressed, costs will be impacted in a different manner.
Normal Duration: the amount of time required to finish the project under
ordinary circumstances
Normal Cost: the cost of a project that is performed within the normal
duration
Crashed Duration: the amount of time required to finish an accelerated
project
Crashed Cost: the cost of a project that is performed within the crashed
duration
Direct and Indirect Cost

Project total cost = Direct costs + Indirect costs

 Direct and Indirect Costs
I- Direct Costs
▪ Labor, particularly hourly workers, for whom a labor expenses
can be directly linked to a particular work item

▪ Materials, such as concrete, rebar, bricks, lumber, nails, paints,

steel, and installed equipment, such as elevators,
air-conditioning units, and kitchen equipment.

▪ Equipment, particularly construction equipment

(bulldozers, excavators, cranes, pumps….)

.
▪ Other costs, such as government permits and fees , and fees for lawyers and consultants hired for specific task in a project.
II- Indirect Costs
A. Project overhead (or job overhead), such as the following:
1. Project staff (project manager, project superintendent, project engineer, secretary, clerk,…..)
2. Office trailer and other temporary structures
3. Cars and trucks assigned to the project team.
4. Office equipment (copying machine, fax machine, computers…)
5. Temporary utilities (electricity, water, drinking water, telephone, cell phone, gas, portable
toilets…)

B. General overhead , such as the following:

1. Main office expenses (rent, maintenance, utilities…)
2. Main office personnel.
3. Main office equipment and vehicles.
Effect of Crashing on Direct Cost
Effect of Crashing on Indirect Cost
Effect of Crashing on Total Cost

Total
cost

Expected indirect costs

Shorten

Cumulative CRASH
cost of crashing
Shorten

Optimum
How to Crash a Schedule?
Example1:
Figure below shows a simple activity network model for a project comprising three activities A,
B, and C.
The direct cost and time data are also shown.
Activity Immediate predecessors Normal time Crash time Cost per day to crash
A --- 12 3 $100
B --- 10 4 300
C B 20 10 200

B 3
C

1 4
A
Suppose that the 30-day duration is
unacceptable for some reason and that an
additional 600 units of financial resource is
available for expediting the project.

The problem is to find the most economical

way of expediting this project within the
available 600 units
If only activity A is considered, the cost slope is 100 permits its
duration to be compressed by 6 days. This gives a duration of 6
days at a total activity direct cost of 1700 units. It is obvious
that there has been no reduction in the project duration but only
an increase in the float of activity A.

If, however, B alone is considered, an activity duration

compression of 2 days is possible giving a completion time of
8 days at an activity cost of 3800 units.

If activity C is considered, a compression

of 3 days can be obtained giving a new activity duration of 17
days at a cost of 2600 units.

Another possibility is to compress each activity by one day.

(A : takes 11 days at 1200 units
B: takes 9 days at 3500 units,
C: takes 19 days at 2200 units)
The Crashing Procedure
▪ The basic procedure for crashing a network is to crash activities along the
critical path. Thus, activities on the critical path are potential candidates for
crashing

▪ From an economic standpoint, activities should be crashed according to

crashing costs: crash those with the lowest crash costs first (having the
flattest cost slope)

▪ If the shortened activity falls on more than one path, all of the paths with
the activity will also be shortened.
In order to make a rational decision on which activities, if any, to crash and on the
extent of crashing desirable, a manager needs certain information:

1. Normal (Regular) time and crash time estimates for each activity
2. Normal (Regular) cost and crash cost estimates for each activity
3. A list of activities that are on the critical path.
At each stage of the network compression calculations, a logical analysis must be
made in accordance with the following rules:
1. List the activities on the critical path.
2. Delete those with zero potential for compression; these will include activities
whose normal ad crash durations are identical, as well as those already fully
crashed in previous stages.
3. Select the activity with the lowest crash cost since it will give the cheapest
compression.
4. Determine the amount by which this activity can be crashed and its relevant cost.
5. Determine if any network limitations to this compression exist and the reasons
for their existence
6. Carry out the compression within the limitations imposed
7. Compute the new project duration and the corresponding project cost
Example2:

Using the following information, develop the optimal time-cost solution . Normal cost of the project
$6000. Indirect costs are $1,000 per day.

Activity Immediate predecessors Normal time Crash time Cost per day to crash
a --- 6 6 ---
b a 10 8 $500
c --- 5 4 300
d c 4 1 700
e d 9 7 600
f b, e 2 1 800
 1- Determine which activities are on the critical path:
Critical path :c-d-e-f………………..length 20 days.
2- Rank the critical path activities in order of lowest
crashing cost and determine the number of days
each can be crashed.

3- Begin shortening the project and check after each

reduction to see which path is critical.
a- shorten activity c one day at $300.
2
b- shorten activity e one day at a cost of $600.
f the length of path c-d-e-f is now 18 days the
same as the length of path a-b-f.
c- the paths are now both critical.
4 d- crash f by one day at $800.
d e- At this point no further improvement is
feasible. Crashing b and e at $1,100 would
exceed the indirect project costs of $1,000 per
day .
Example3:

Using the following information, develop the optimal time-cost solution . Indirect costs are $120 per day.
1- Start with the critical (longest) path: ACEH. Choose activity C because it
costs the least to crash, $40 per day. We cut the duration of C from 8 days
to 7. This action affects three paths. This action increased the direct costs
by $40 and decreased the indirect costs by $120. The total impact on the
cost is a net savings of $80.

2- We now have two paths that tie at 24 days’ duration: ABEH

and ACEH. We can compress a shared activity (A, E, or H) or a
combination of unshared activities (B and C). We choose
activity E and compress it from 6 days to 5 at a cost of $50. The
direct costs increased by $50, and the indirect costs decreased
by $120. This results in a net decrease of $70 in the total cost
3- Now we have four paths that tie at 23 days’ duration: all but
ACFH. We can compress a shared activity (A) or a combination
of unshared activities (plenty of options exist). We choose
activity A and compress it from 5 days to 4 at a cost of $100 .
Activity A is now completely crashed. With this action, we
spent an extra $100 in direct costs and saved $120 in indirect
costs. The total cost decreased by $20 (we are still saving
money, but the rate is decreasing).

4- Now we need to compress the same four paths using the

least-cost combination. After simple mathematical inspection
of the table, we find the best combination to be C, D, and E,
with a total combined cost of $140. We compress each of these
activities by 1 day to shorten the project duration from 22 days
to 21 days. Note that path ACEH was cut by 2 days because it
contains both C and E. Now, the total cost has increased by $20
($140 increase in direct costs and $120 decrease in indirect
costs)
5- The next step is to find an alternative to activity E
because it is completely crashed. The next least-cost
combination is B, C, and D, at a total cost of $165. In this
case, the total cost has increased by $45. Now, activity C
is also completely crashed.

6- Our next choice is the combination of B and G at

a combined cost of $225, with a net increase of
$105 in the total cost. Activity B is now completely
crashed.
 7- All paths are tied at 19 days. The only
remaining option is to combine activities G
and H at a cost of $270, with an increase of
$150 in the total cost

Now the entire project is completely crashed, with a duration of 18 days. The results may
be summarized as follows:
• The normal duration is 25 days, at a total cost of $7,950.
• The least-cost is $7,780, at a duration of 22 days.
• The crash duration is 18 days, with a crash cost of $8,100.
Example 4:

Chuck’s Custom Boats (CCB) builds luxury yachts to customer order.

CCB has landed a contract with a mysterious New York lawyer (Mr.T).
Relevant data are shown below.
The complication is that Mr.T wants delivery in 32 weeks or he will impose a penalty of $375
for each week his yacht is late. Note: no activity can be crashed more than two weeks.
Crashing costs
Activity Immediate Normal Time 1st week 2nd week
predecessor (weeks)
K --- 9 $410 $415
L K 7 125 ---
N K 5 45 45
Develop a crashing schedule.
M L 4 300 350
J N 6 50 ---
Q J, M 5 200 225
P Q 8 --- ---
Y Q 7 85 90
Z P 6 90 ---
End Y, Z
Example 5:

Using the following information, develop the optimal time-cost solution . Indirect costs are $100 per day.