Practice and Management Notes



Normal Duration and Cost

  • Normal Duration: Represents low-cost, realistic, efficient methods for completion under normal working conditions using standard resources and methods.

  • Normal Cost: Represents the cost associated with completing the activity within the Normal Duration. This cost includes:

    • Labour costs for workers needed to complete the activity in the Normal Duration.

    • Material costs for the standard materials required.

    • Equipment costs for the typical equipment needed for the activity.

Schedule Compression/Crashing

  • Reasons for Accelerating a Project:

    • "Imposed deadlines" set by the Client.

    • A specific budget set by the Client to expedite the completion date due to higher profits from using the completed project.

    • Very high overhead costs!

    • Finishing early means—to the contractor—starting another job earlier and, thus, making more profit.

    • Unforeseen delays: After starting construction and completing a certain percentage of the project, the contractor realizes that the project is behind schedule.

  • Terminology:

    • Also called Schedule Compression

    • Schedule Crashing

    • Time-Cost Trade-Off

    • Project Cost-Time Optimisation

  • Accelerating a project means shortening the normal duration of the project schedule.

Direct vs. Indirect Costs

  • Direct Costs:

    • Commonly represent labour, materials, equipment, and sometimes subcontractors.

    • Assigned directly to a work package and activity.

  • Indirect Costs:

    • Generally represent overhead costs such as supervision, administration, consultants, and interest.

    • Cannot be associated with any particular work package or activity.

Cost-Time Trade-Off Analysis

  • Plot the total direct, indirect, and overall project costs for each of these durations on a cost-time graph. What is the optimum cost-time schedule for the project? What is this cost?

Maximum Crash Time and Cost Slope

  • Maximum Crash Time: The maximum amount of time that an activity can realistically be shortened.

  • Crash Cost Per Time Unit/Cost Slope: Represents the additional cost incurred per unit of time reduction for a specific activity through crashing. It reflects the cost of employing extra resources, overtime.

  • Crash Duration: The shortest possible time an activity can realistically be completed in.

  • Crash Cost: The direct cost for completing an activity in its crash time.

  • Example Calculation:

    • Activity A

      • Normal Duration = 10

      • Normal Cost = $400

      • Crash Duration = 5

      • Crash Cost = $800

      • Maximum Crash Time = 5

      • Cost Slope = \frac{$800 - $400}{10 - 5} = $80 per unit of time

Project Crashing Steps

  1. Draw the Network and Identify the Critical Path!

  2. Determine Project Normal Duration.

  3. Determine Project Normal Cost (Direct & Indirect).

  4. Identify activities Crash Duration; Crash Cost; Maximum Crash Time; and Crash Cost/Time Unit.

  5. Start Crashing Schedule and find total direct costs; Indirect Cost and Overall project cost for selected project durations.

  • Start accelerating the project by shortening the longest / critical path!

  • Identify the least expensive activity on the critical path to accelerate!

  • Identify the cost for the current project duration!

  • Check the critical path!

  • Identify the least expensive activity on the critical path!

  • Identify the cost for the current project duration!