PROJECT TIME REDUCTION/ TIME-COST TRADE-OFFS

Objectives:
Describe the methods to produce project duration that minimize project cost Explain the direct and indirect project cost including a description of the basic types of schedules relative to the relationships of project duration and total project costs. Discuss reasons for the need to reduce project duration Examine the time reduction method of expediting or buying time along the critical path Explain time-cost relationships for project activity duration as well as cost slope computations and comparisons

Construction Project Cost

In construction planning process, the final plan/schedule is developed under one primary objective to optimize both time and money while maintaining QUALITY and SAFETY. Project should be completed within the least duration, at minimal cost, under safe working conditions, resulting in the highest-quality product Why is this a Difficult task? The least duration and minimal cost tend to conflict with high quality and safety.

Construction Project Cost

Why is this a complicated task? activity processes within construction projects are somewhat unique. a number of alternative resources and sequences can combine to complete a project Planning and scheduling process determines the start and finish times for each activity , and an estimated project duration based on activity time estimates

Result of normal or average, time estimates for activity durations Normal time estimates and associated resource allocation result in an efficient schedule but not necessarily the leastcost or least-time Schedule a compromise between cost and time to accomplish the project task.

Construction Project Cost

Types of schedules can be developed depending upon the intent of the planner: Normal Least Cost Least time

Construction Project Cost

Normal average time estimates and resource allocations are applied under normal working conditions
Minimizes time and cost together, but doesnt always result in a least-cost or least-time schedule.

Least-cost to minimize the total project cost, both direct and indirect costs must be minimized
Increasing the direct cost to shorten one or more activities (i.e. less than the normal duration) may reduce the project duration, and thus the indirect cost sufficiently to reduce the total project cost and provide a least-cost schedule

Construction Project Cost

Least time duration of the project can be reduced further than the least-cost schedule, but at t higher cost.
Adding more resources or changing schedule logic, both resulting in higher costs, can shorten the activities along the critical path(s) Collapsing or crashing these activities generates the least-time schedule

Construction Project Cost

Least time and Least-time schedules involve the shortening of one or more activities resulting in a reduction in project duration Total project costs can be lumped into two primary categories:
Direct costs Indirect costs

Construction Project Cost

Direct Costs costs accrued from the use of resources to accomplish project activities
Result of quantities and prices of materials, time spent by workers, and duration of use and cost of equipment E.g. assumption of a normal-size work crew to complete an activity results in a certain duration and associated direct cost of labor assigning more workers to this activity normally results in a shorter duration, but at an increased cost and possibly reduced quality Total direct cost = sum of the direct costs for all project activities

Construction Project Cost

Indirect or overhead costs result from the support of field work (job overhead) and the support of the contracting party (company overhead)
Neither is associated with particular project activities E.g. financing, insurance, taxes, office personnel, services and supplies, inspection, testing, resources not included in construction Typically incurred regardless of job productivity and tend to increase as project duration increases Any increase in project duration directly affects profitability

NEED FOR REDUCTION IN PROJECT DURATION

Reasons why time constraints arise in construction projects: The contractor makes an unrealistic, elevated prediction of one or more activity durations, thereby falsely elevating the project duration in the schedule The owner contractually requires a completion date for the project which is earlier that the scheduled finish date

NEED FOR REDUCTION IN PROJECT DURATION

Reasons why time constraints arise in construction projects: Weather delays and/or delays in the delivery of materials cause the project to get behind the schedule An early-completion bonus or late-completion penalty is written into the contract A least-cost schedule is sought in order to minimize the total project costs

NEED FOR REDUCTION IN PROJECT DURATION

Reasons why time constraints arise in construction projects: Weather delays and/or delays in the delivery of materials cause the project to get behind the schedule An early-completion bonus or late-completion penalty is written into the contract A least-cost schedule is sought in order to minimize the total project costs

NEED FOR REDUCTION IN PROJECT DURATION

Purpose of least cost scheduling:
Balance direct and indirect costs

Indirect costs tend to decrease as project duration decreases, but this may be at the expense of increased direct costs of a faster but less efficient set of resources and sequence of operations

Time Reduction without increased costs

Time reduction of activities and project duration constrained by the amount of time available for reduction - constraints or reduction limits are based on the work to be accomplished, activity precedence relationships, and relationship of the critical path to other noncritical paths

Time Reduction without increased costs

Constraints: Physical limit absolute maximum reduction of a critical activity time to get that activity to its minimum duration needed to accomplish the activity work. Regardless of additional resources
E.g. an activity involving the placement and curing of concrete has an absolute minimum time due to the time needed for concrete hardening

Time Reduction without increased costs

Constraints: Logical Limit - absolute maximum reduction of a critical activity time without making critical an adjacent noncritical path (i.e. using up all available total float) an adjacent noncritical path
Any activity along the critical path whose duration is shortened affects other parallel noncritical paths For each reduction in time period along the critical path, the toal float of all noncritical parallel paths is reduced the same amount If the critical path is reduced sufficiently, the total float of another noncritical path will be used up and that parallel path will become critical To further obtain reduction in project duration, activities along both critical paths would then need shortening

Time Reduction without increased costs

Reducing project duration or time without increasing total project costs can be accomplished generally by: 1.) developing the least-cost schedule 2.) Carefully analyzing and modifying the normal project schedule
Purpose: reduce project duration while maintaining or lowering overall project costs

Least Cost Scheduling

Least-cost schedule minimizes the total project costs by trading an increase in direct costs to shorten one or more critical project activities, resulting in a reduced project duration and an associated decrease in indirect costs Indirect project costs increase linearly as project time increases

Least Cost Scheduling What is a least cost schedule? - One with an optimum project duration such that to lengthen or shorten it would increase the total cost

Schedule compression The systematic process of arriving at the least cost solution

Schedule compression
for simple compression, when both the direct and overhead costs vary linearly with time, the planner must do the following: 1. Assign each activity a direct cost to complete the activity at the normal duration, which is called the normal cost. 2. Assign, a minimum duration (less than or equal to the normal duration) for every activity, which is called crash duration 3. Assign to each activity a direct cost (greater than the normal cost) to complete the activity at the minimum duration.

Schedule compression
in order to investigate a method of least cost scheduling, the following are the assumptions: 1. The planned duration can be any whole day value between and including the normal and crash durations 2. The direct cost of an activity is linear between the normal and crash direct cost 3. The overhead cost is linear during the entire project. It is simply the number of days times the overhead cost per day.

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Activity 4
Completely crash the following network schedules using simple compression, and find the optimum time and least cost