Plants Module 3 Management iTiupe-Cost Modest ec lbeahio'SulganTime Cost Model & + In practice, project managers are as much concerned with the cost to complete a project as with the time to complete the project. For this reason, time-cost models have been devised. “The main assumption in minimum cost scheduling is that there is a relationship between activity completion time and the cost of a project. It takes money to expedite an activity while it also costs money to sustain a projectCosts Associated to The Time Cost Model Activity Direct Cost: It is the Project Indirect Costs: It is the cost associated with expediting costs of sustaining a project the activity; such as costs for such as overhead, facilities hiring/transferring workers, and resource opportunity, and some leasing equipment. contractual cases penalty costs. To illustrate the basic concepts, We will assume that there is a we will use the four activity os, constant indirect cost of $10 networks we used earlier, which fers Po dev for 8 days, But is shown in the subsequent increasing by $5 per day slide thereafter.Step 1. Prepare CPM Diagram with Activity Costs Time Cost Model Procedure + Step 1: Prepare a network’ diagram. For this you need to list: 21 3,1 Normal cost (NC): lowest $9, $18 expected activity costs Normal time (NT): the time 43 associated with each normal cost Crash Time (CT): the shortest possible activity time Crash Cost (CC): the cost associated with each crash time $6, $8Step 2. Determine Cost per Unit of Time CC, CT Time Cost Model Procedure S10 Activity A Activity * Step 2: determine cost the cost per unit of time to expedite each activity 6 * we assume a linear relationship between time and cost Cost _ (CC -NC) 1 2 3 4 unit time (NT — CT)Time Cost Model Procedure This will form the table: Acnvry CC-NC_—-NT-CT S10 ~ $6 2-1 S18 — SoLvinreddiset Unde! Step 3. Compute the Critical Path Procedure 2 Y * Step 3: Compute the critical path In this network, the critical path is ABDTime Cost Model Procedure ‘Step 4. shorien the criical path at the least cOSt- we start with the normal schedule, find the critical path, and reduce the path cost by one-time unit using the lowest-cost activity. Then recompute and find the critical path and reduce it by another time unit. Repeat until the time of completion is satisfactory, or until there can be no further reduction in the project completion time. The table below shows the project eduction time one-time unit at a time abana manana 8 Poo 2 Mur Smennso — BusrAcmery exam ‘ay tre ad eos roa aoa maeane 0 aoc mass pac nace act INE ACTIVITY «= PROJECT. TOTAL DURATION DIRECT mower cost = a D 9 28 = 3 D 8 30 a 7 4 B T 33 S 5 A 6 37 5 6 B&C 5 2 7 B E 45Time Cost Model Procedure + Plot direct and indirect and total cost curves and find the minimum cost schedule + Summing the values of the direct and indirect costs for each day yields the project's total cost. As can be seen, the curve is minimum with an eight-day schedule with a total cost of $40 ($30 direct $10 indirect)Here are the precedence requirements, normal and crash activity times, and normal and crash costs oe a construction project: que Tae (WH) cose Poco I Acmvery Actives ——Nowata—Cuastt_———NwMAL. kat a - 4 2 $1000 S000 8 A 3 2 @c00 9000 c A 2 1 an) > 5 5 a tooo sGo00 e ac + : go00 goo F ¢ 3 2 00 ooo 6 BF 4 2 goo 25000 H De 4 : e00 *Bo00 ' Hs 6 5 20000 29000 ‘2. What are the eritcal path and the estimated completion time? ‘To shorten the project by three weeks, Which tasks would be shortened and What would the final total project cost be?The Network Diagram The critical path is: ABDHI 47 a) 12.16 AaThe cost per unit of time to expedite each activity Acriviry Crast Cost NorMatCost NorMat. Tis Cras Tuas Cosr rer Wank Works A $1100 $10,000 4 2 $500 2 B ‘9.000 6.000 3 2 3000 c 6,000 4,000 2 1 2000+ D 18,000 14,000 5 3 20008 E 9000 91000 ‘ 1 ° F ‘8.000 7.000 3 2 4000 G 26,000 13,000 4 2 60008 H 18,000 11000 4 1 238308 ' 29,000 20,000 6 5 gooo+ 15 week CP is A-B-D-H-I , Ais shortened by one week at $500 + 2" week CP is still the same , Ais shortened by another week at $500 + 3° week CP , Ais no longer available, D is the cheapest activity now at $2000 The total project cost is 94000 (this is the normal cost) + 500 (crash cost of week 1) + 500(crash cost of week 2) + 2000 (crash cost of week 3) =$97,000Q&A