Resource Management of PROJECT

1
 Project Crashing
• Crashing
– reducing project time by expending additional resources
• Crash time
– an amount of time an activity is reduced
• Crash cost
– cost of reducing activity time
• Goal
– reduce project duration at minimum cost

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 Project Crashing
In analyzing crash options, the goal is to find the
point at which time and cost trade-offs are
optimized.

Various combinations of time-cost trade-offs for

crash options can be determined by using the
following formula:

Slope = crash cost – normal cost

normal time – crash time

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 Activity crashing

Crash cost
Crashing activity

Slope = crash cost per unit time

Activity cost

Normal Activity
Normal
cost
Normal
time

Crash time Activity time

4
 Time-Cost Relationship
 Crashing costs increase as project duration decreases
 Indirect costs increase as project duration increases
 Reduce project length as long as crashing costs are less than indirect costs

Time-Cost Tradeoff
Min total cost = Total project cost
optimal project time
Indirect cost
cost

Direct cost

time 5
 Cost consideration in project
• Project managers may have the option or requirement to crash
the project, or accelerate the completion of the project.
• This is accomplished by reducing the length of the critical path(s).
• The length of the critical path is reduced by reducing the duration
of the activities on the critical path.
• If each activity requires the expenditure of an amount of money to
reduce its duration by one unit of time, then the project manager
selects the least cost critical activity, reduces it by one time unit,
and traces that change through the remainder of the network.
• As a result of a reduction in an activity’s time, a new critical path
may be created.
• When there is more than one critical path, each of the critical
paths must be reduced.
• If the length of the project needs to be reduced further, the
process is repeated.
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 Example
Activity Normal time Crash time Slope
1-2 6 4 80
1-3 8 4 90
1-4 5 3 30
2-4 3 3 -
2-5 5 3 40
3-6 12 8 200
4-6 8 5 50
5-6 6 6 -

The contact includes a penalty clause of Rs.100 per day over 17 days. The
overhead cost per day is Rs.160.
The cost of completing eight activities in normal times is Rs.6,500.
a) Calculate the normal duration of the project, its cost and the critical path.
b) Calculate and plot on a graph the cost/time function for the project and
state.
i) The lowest cost and associated time
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ii)the shortest time and associated time.
 Project Crashing example

3
12(8)

8(4)

6(6) 6
1 6(4) 5(3)
5
2

5(3) 3(3)
8(5)

8
 Project Crashing example

3
8 8 12(8)

8(4)
6
1 5 6(6)
6(4) 2 5(3) 20 20
0 0 6 9 11 14

5(3) 3(3)
8(5)

4
9 12

Critical Path=1-3-6 Duration:20 9

 Time Cost Relationship

Duration Direct Cost Indirect Cost Total

(Days) Cost
Normal Crashing Total Overhead Penalty Total

20 6,500 - 6,500 3,200 300 3,500 10,000

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 First Crashing

3
7 7 12(8)

7(4)
6
1 5 6(6)
6(4) 2 5(3) 19 19
0 0 6 8 11 13

5(3) 3(3)
8(5)

4
9 11

Critical Path=1-3-6 Duration:19 11

 Time Cost Relationship

Duration Direct Cost Indirect Cost Total

(Days) Cost
Normal Crashing Total Overhead Penalty Total

20 6,500 - 6,500 3,200 300 3,500 10,000

19 6,500 90 6,590 3.040 200 3,240 9,830

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 Second Crashing

3
6 6 12(8)

6(4)
6
1 5 6(6)
6(4) 2 5(3) 18 18
0 0 6 7 11 12

5(3) 3(3)
8(5)

4
9 10

Critical Path=1-3-6 Duration:18 13

 Time Cost Relationship

Duration Direct Cost Indirect Cost Total

(Days) Normal Crashing Total Overhead Penalty Total Cost

20 6,500 - 6,500 3,200 300 3,500 10,000

19 6,500 90 6,590 3.040 200 3,240 9,830
18 6,500 180 6,680 2,880 100 2,980 9,660

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 Third Crashing

3
5 5 12(8)

5(4)
6
1 5 6(6)
6(4) 2 5(3) 17 17
0 0 6 6 11 11

5(3) 3(3)
8(5)

4
9 9

Critical Path=1-3-6 /1-2-5-6/1-2-4-6 Duration:17 15

 Time Cost Relationship

Duration Direct Cost Indirect Cost Total

(Days) Normal Crashing Total Overhead Penalty Total Cost

20 6,500 - 6,500 3,200 300 3,500 10,000

19 6,500 90 6,590 3.040 200 3,240 9,830
18 6,500 180 6,680 2,880 100 2,980 9,660
17 6,500 270 6,770 2,720 - 2,720 9,490

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 Fourth Crashing
Critcal Paths
1-3-6
1-2-4-6
1-2-5-6
Alternatives
1-3,1-2 90+80=170
1-3,2-5,4-6 90+40+50=180
3-6,1-2 200+80=280
3-6,4-6,2-5 200+50+40=290
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 Fourth Crashing

3
4 4 12(8)

4(4)
6
1 5 6(6)
5(4) 2 5(3) 16 16
0 0 5 5 10 10

5(3) 3(3)
8(5)

4
8 8

Critical Path=1-3-6 /1-2-5-6/1-2-4-6 Duration:16 18

 Time Cost Relationship

Duration Direct Cost Indirect Cost Total

(Days) Normal Crashing Total Overhead Penalty Total Cost

20 6,500 - 6,500 3,200 300 3,500 10,000

19 6,500 90 6,590 3.040 200 3,240 9,830
18 6,500 180 6,680 2,880 100 2,980 9,660
17 6,500 270 6,770 2,720 - 2,720 9,490
16 6,500 440 6,940 2,560 - 2,560 9,500

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 Fifth Crashing
Critcal Paths
1-3-6
1-2-4-6
1-2-5-6
Alternatives
3-6,1-2 200+80=280
3-6,4-6,2-5 200+50+40=290

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 Fifth Crashing

3
4 4 11(8)

4(4)
6
1 5 6(6)
4(4) 2 5(3) 15 15
0 0 4 4 9 9

5(3) 3(3)
8(5)

4
7 7

Critical Path=1-3-6 /1-2-5-6/1-2-4-6 Duration:15 21

 Sixth Crashing

3-6,2-5,4-6 cost=Rs.290

3
4 4 10(8)

4(4)
6
1 5 6(6)
4(4) 2 4(3) 14 14
0 0 4 4 8 8

5(3) 3(3)
7(5)

4
7 7

Critical Path=1-3-6 /1-2-5-6/1-2-4-6 Duration:14 22

 Seventh Crashing

3-6,2-5,4-6 cost=Rs.290

3
4 4 9(8)

4(4)
6
1 5 6(6)
4(4) 2 3(3) 13 13
0 0 4 4 7 7

5(3) 3(3)
6(5)

4
7 7

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Critical Path=1-3-6 /1-2-5-6/1-2-4-6 Duration:13
 Time Cost Relationship

Duration Direct Cost Indirect Cost Total

(Days) Overhead Cost
Normal Crashing Total Penalty Total

20 6,500 - 6,500 3,200 300 3,500 10,000

19 6,500 90 6,590 3.040 200 3,240 9,830
18 6,500 180 6,680 2,880 100 2,980 9,660
17 6,500 270 6,770 2,720 - 2,720 9,490
16 6,500 440 6,940 2,560 - 2,560 9,500
15 6,500 720 7,220 2,400 - 2.400 9,620
14 6,500 1.010 7,510 2,240 - 2,240 9,750
13 6,500 1,300 7,800 2,080 - 2,080 9,880

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 Time-Cost Function
10,100
Normal time-cost point
10,000

P 9,900
Least time-cost point
r 9,800
o
j 9,700

e
9,600
c
t 9,500

Least cost-time point

9,400
c
o 9,300
s
9,200
t 1 2 3 15 4 5 6 7 8
13 16
1 17 18 19 20

4 Project Duration
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 Example
Activity Predecessors Duration
(In Weeks)
A - 8
B A 12
C A 4
D B 2
E B 8
F D 2
G E,F 3
H C,G 2
I E,F 2
J I,H 2

a. Draw the project network

b. Find the critical path
c. Total Float and Free Float
 Network

D(2) F(2)

J(2)
A(8) B(12) I(2)
1 2 3 7 8
5
E(8)

G(3)
C(4) H(2)

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 Critical Path

D(2) F(2)

J(2)
A(8) B(12) I(2)
1 2 3 7 8
5
E(8)

G(3)
C(4) H(2)

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 Example
Activity Normal Time Crash Time Normal Cost Crash Cost
(in weeks) (in weeks) (INR) (INR)

A 8 6 1,2000 20,000
B 12 8 24,000 56,000
C 4 4 8,000 -
D 2 2 9,000 -
E 8 5 9,000 27,000
F 2 1 12,000 24,000
G 3 2 12,000 22,000
H 2 1 8,000 14,000
I 2 2 6,000 -
J 2 1 8,000 10,000

INDIRECT COST FOR THE PROJECT IS Rs.5000 per week

Find:
a. Time Cost Trade-off
b. Optimal Crash Length
 Solution
No. Critical Path Activity No.of Direct Cost Proje Indirect Total Cost
Crashed weeks ct Cost
crashe Durati
d on
1 1-2-3-5-6-7-8 None 0 108,000.00 35 175,000.00 283,000.00
2 1-2-3-5-6-7-8 J 1 110,000.00 34 170,000.00 280,000.00
3 1-2-3-5-6-7-8 A 2 118,000,00 32 160,000.00 278,000.00
4 1-2-3-5-6-7-8 H 1 124,000.00 31 155,000.00 279,000.00
5 1-2-3-5-6-7-8 E 3 142,000.00 28 140,000.00 282,000.00
6 1-2-3-5-6-7-8 B 4 174,000.00 24 120,000.00 294,000.00
7 1-2-3-5-6-7-8 G 1 184,000.00 23 115,000.00 299,000.00