Project Crashing

Basic Concept
In last lecture, we studied on how to use
CPM and PERT to identify critical path
for a project problem
Now, the question is:
Question:
Can we cut short its
project completion
time?
If so, how!
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Project Crashing
Solution!
Yes, the project duration can be reduced
by assigning more resources to project
activities. But, doing this would somehow
increase our project cost!
How do we strike a balance?
Project crashing is a method for
shortening project duration by reducing
one or more critical activities to a time
less than normal activity time.
Non-critical activities need not be speeded
up, since their crashing is not going to
decrease the project duration further.
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Trade-off concept
Here, we adopt the Trade-off concept
We attempt to crash some critical
events by allocating more resources to
them, so that the time of one or more
critical activities is reduced to a time
that is less than the normal activity
time.
How to do that:
Question: What criteria should it be
based on when deciding to crashing
critical times?
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CPM : COST MODEL (PROJECT

CRASHING)

In CPM, time is related to cost and the object is to develop an optimum

time-cost relationship
This relationship is called time-cost trade-off
Tool to overcoming one of the CPM limitations of being unable to bring the
project schedule to a specified duration

OBJECTIVE
Many times it becomes necessary to complete the project earlier than the
normal time (latest allowable time), determined from the CPM, to meet a
specific deadline, with the least cost.
In addition to that it might be necessary to finish the project in a specific
time to:
- Finish the project in a predefined deadline date.
- Recover early delays.
- Avoid liquidated damages.
-Free key resources early for other projects.
- Avoid adverse weather conditions that might affect productivity.
- Receive an early completion-bonus.
- Improve project cash flow
CPM makes use of the cost estimate along with the time estimate and
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provides a schedule for completing the activities at the minimum total cost

CPM : COST MODEL (PROJECT

CRASHING)
Project crashing is a method for shortening project duration by
reducing one or more critical activities to a time less than
normal activity time.
Motivations :
The impetus to shorten projects may reflects efforts to avoid
late penalties or to take advantages of monetary incentives
for timely completion of a project, or to free resources for use
on other projects.
In many cases, however, the desire to shorten the length of a
project merely reflects an attempt to reduce the indirect costs
associated with running the project, such as facilities and
equipment costs, supervision and labour and personnel costs.

Example- time-cost trade-off

A simple case arises in the use of overtime work. By
scheduling weekend or evening work, the completion
time for an activity as measured in calendar days will be
reduced. However, extra wages must be paid for such
overtime work, so the cost will increase. The activity
duration can be reduced by one of the following actions:

- Applying multiple-shifts work.

- Working extended hours (over time).
- Offering incentive payments to increase the
productivity.
- Working on week ends and holidays.
- Using additional resources.
- Using materials with faster installation methods.
- Using alternate construction methods or sequence.

CPM : COST MODEL

The overall project duration can be
reduced by reducing the duration of only
the critical activities in the project
network
The duration of such activities may be
reduced in two ways:
(a) by deploying more resources for the
early
completion of such activities
(b) by relaxing the technical specifications
for
such activities (not considered here) 7

CPM : COST MODEL

In CPM, there are two time and cost
estimates for each activity
normal (time & cost) estimate the
emphasis is on cost with time being
associated with minimum cost
crash (time & cost) estimate
involves the absolute minimum time
required for the job and the cost
necessary to achieve it.
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CPM : COST MODEL

Project Cost sum of two separate costs
(a)Direct cost expenditure which are directly chargeable to and
can be indentified with the activities of the project. These
include labour cost, material cost and equipment cost etc
Direct cost (Y-axis) curve falls with increased in duration (X-axis)
and represented by a curve line
Ex(b)Indirect cost includes the expenditure related to
administrative and establishment charges and
(i) Overhead Loss - overhead, supervision, expenditure on a
central store organization, loss of revenue,
(ii) Outage Loss - lost profit (due to inability to meet demand),
penalty (due to delay) etc
Indirect cost (Y-axis) curve rises with increased in duration (Xaxis) and represented by a straight line (linear curve)
Ex9

Using the Critical Path

to Shorten a Project Schedule
Three main techniques for shortening
schedules
Shortening durations of critical
activities/tasks by adding more resources
or changing their scope
Crashing activities by obtaining the
greatest amount of schedule compression
for the least incremental cost

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Project Crashing
Projects will sometimes have deadlines
that are impossible to meet using
normal procedures
By using exceptional methods it may
be possible to finish the project in less
time than normally required
However, this usually increases the
cost of the project
Reducing a projects completion time is
called crashing

The normal time is the standard time that an estimator would

usually allow for an activity
The normal cost is the cost for completing the activity using
normal time duration
If the project will not meet the required deadline, extraordinary
measures must be taken
The crash time is the shortest possible activity time and will
require additional resources. Beyond this time, the activity can
not be shortened by any amount of increase in resources.
The crash cost is the price of completing the activity in the
earlier-than-normal time

Critical Path Method Crashing a

Project
Slope = crash cost normal cost
normal time crash time
CS = C/t
C = increase in cost
t = decrease in cost

Where: slope = cost per day of crashing a project

When slope is negative : indicate the time
required for a project is decreased, the cost is
increased

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Total Project Cost & Optimum

Duration
Total project cost sum of direct costs and indirect cost
Minimum total cost is obtained at some duration and called optimum
duration
If the project duration is increased, total cost will increased
While if project duration is decreased to the crash value, project cost
will be the highest
Crashing costs are highest when the project is shortened.
Indirect costs increase as the project duration increases.

Fig-The time-cost trade-off

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Four Steps to Project

Crashing

1. Find the normal critical path and identify the critical activities
2. Compute the crash cost per week (or other time period) for all activities in
the network using the formula
3. Select the activity on the critical path with the smallest / lowest crash cost
per week and crash this activity to the maximum extent possible or to the
point at which your desired deadline has been reached
4. Check to be sure that the critical path you were crashing is still critical. If
the critical path is still the longest path through the network, return to step
3. If not, find the new critical path and return to step 2.

When there are multiple critical paths, find the sum of crashing the
least expensive activity on each critical path

If two or more critical paths share common activities, compare the least
expensive cost of crashing a common activity shared by critical paths with the
sum for the separate critical paths

Crash cost Normal cost

Crash cost/Time period =
Normal time Crash time