PROJECT CRASHING

1
 Crashing Activities

Activity & project duration may be influenced by resource

allocation decisionsmore resourcesless time needed
Sometimes, we can expedite completion of a task by assigning
more people or equipment. Thus, total direct costs tend to
vary inversely with project duration. Indirect costs, however,
tend to increase with overall project completion time.

2
 Time-Cost Tradeoffs in CPM
Basic Assumption: Some activities can be
expedited, at a cost
Why accelerate an activity?
Complete the task in a shorter duration,
thereby reducing the duration of the critical
path, thereby reducing the length of the
project
Avoid late penalties
Earn early completion incentive payments
Time Cost Problem: Determine the
optimum project duration based on time-
cost tradeoffs
 Project & Activity Costs
PROJECT DIRECT COSTS: Directly assigned to work
package or activity
Normal costs for normal time
Direct labor expenses
Materials
Equipment
Subcontractors
INDIRECT EXPENSES: Cannot be associated with
any work package or activity
Overhead expenses
including supervisory expenses
administration
contractual penalties or early completion incentives
Consulting
 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
Min total cost = Total project cost
optimal project
time

Crash cost

time 5
 Time & Costs: Normal vs. Crash
For the time-only CPM project schedule, we
typically assume that activity duration is fixed at
its NORMAL TIME, or the duration with the lowest
direct activity cost (i.e., NORMAL COST).

However, some activities may be expedited if

higher resource levels are available. The shortest
activity duration is called CRASH TIME. The cost
to complete an activity in that amount of time is
called CRASH COST.
 Linear Time-Cost Tradeoff
In theory, the normal or expected duration of a task can be reduced by
assigning additional resources to the task
Cost
Crash
Point Slope (bj) = Increase in cost by
Crash c reducing task by one time unit
cost Cj
Normal
Point

Normal
N
cost Cj

Time
Crash time tcj Normal time tN
j
CRASHING EXAMPLE

8
CRASH COST AND DURATIONS

Assume Indirect Cost as $300/day

9
 Total Project Cost Calculation
Total Direct Cost = Sum of the normal direct cost of
all the activities ( Not Just the Critical activities!)
= $12000+$1800+$16000+$1400+$3600+$13500
= $48300

Total Indirect Cost: $300X140 = $42000

Total Cost of Project Completion in normal scenario:
Initial Direct Cost+ Initial Indirect Cost
= $48300 + $42000= $90300
10
CRASH COST SLOPE CALCULATION

11
 CRASHING NEEDS TO START WITH?
SD = $60/day (least-cost slope)
Maximum of 10 days can be cut from this
schedule by reducing the duration of activity D
to the crash duration of 20 days.

12
 PROJECT DATA NOW
Now Overall duration for project completion is 130
days
Now there are Multiple critical paths (B-F-E and B-C-D-
E)
Total DIRECT cost = $48300 + {$60 X10}= $48900.
Total Indirect Cost= $ 300 X 130= $ 39000
Total Cost of Project Completion=
$48900+ $ 39000 = $87900
( Overall cost & time gone down because of crashing !)
Further improvement Possible? Lets see

13
 Available options for further crashing
1) Crash B @ $200/day ( Can be crashed for Max 5 days)
2) Crash E @ $ 120/day ( Can be crashed for Max 10 days)
3) Crash C and F @ ( $600 + $ 300) : $900/day
( Can be crashed for Max 10 days)

Obviously best option is to crash E for 10 days !

14
 Updated Project costing now
Updated project duration= 120 days
Project Crashing activity E by 10 days will cost = $120*10 =
$1200
Updated Direct cost= $48900+ $1200= $ 50100
Updated In-Direct Cost= 120X300= $36000
Revised Project cost= $50100+ $36000= $ 86100
( Overall cost & time further gone down because of crashing !)

15
 Further Improvement Possible?
Project duration = 120 days
Total project cost = $86100
There are now three critical paths:-
A
B-C-D-E
B-F-E

16
 Available options for further crashing
1) Crash A&B @ ($200+ $100) : $300/day
( Can be crashed for Max 5 days [Why?])
Please note Cost incurred in crashing A &B is equal to cost saving
in the form of Indirect Cost therefore this option enable us to
reduce project completion time without any cost !

2) Crash A,C & F@ ( $100+ $600 + $ 300) : $1000/day

( Can be crashed for Max 10 days [Why?])

Obviously best option is to crash A&B for 5 days!

17
 Updated Project costing now
Updated project duration= 115 days
Project Crashing activity A&B by 5 days will cost = $300X5 =
$1500
Updated Direct cost= $50100+ $1500= $ 51600
Updated In-Direct Cost= 115X300= $34500
Revised Project cost= $ 51600 + $34500 = $ 86100

(Overall Project completion time one down by 5 more days

without incurring any extra cost !)

Please note: If we crash further it will result in increase in

overall project cost, therefore it (115 days @ $ 86100 ) is the
optimal crashing scenario
18
 Crashing at any cost
If we want to crash further, only option left is to crash:
Activity A by 10 days to 105 days and
Activity C by 10 days to 30 days and
Activity F by 10 days to 50 days
Combined cost increase per day (A,C,F) =$1000 per day
For 10 days of reduction, additional cost = $10000
Updated direct project cost = $ 51600 + $10000=$61600
Updated Indirect Cost= $300 X115= $31500
Updated Total Project Cost= $61600+ $31500= $93100
Final Project Duration = 105 days

No further crashing possible now, therefore this is the scenario

of Crashing at any cost
19
 Summary of the entire Project
Project
Total Direct Total Indirect Total Cost
Scenario Completion Remarks
Cost ($) Cost ($) ($)
time (Days)
Normal Case 140 48300 42000 90300
Saving in both cost and
Crash D for 10 days 130 48900 39000 87900 time
Further Saving in both
Crash E for 10 days 120 50100 36000 86100 cost and time

Further Saving in time at

the same cost and beyond
Crash A&B for 5
Days
115 51600 34500 86100 this point cost started
increasing , therefore it is
optimal crashing scenario

Project Completion time

reduced further but cost
Crash A,C&F by 10 is higher. No further
days
105 61600 31500 93100 crashing possible now,
therefore this is the case
of Crashing at any Cost
20
 Class Exercise
Refer table below the activities and their interdependence for a construction project
taken up by a builder. The contract of the builder
with the client includes a penalty clause of Rs. 100 per day over 34 days. The overhead
cost per day is Rs. 1600/-.
The direct cost of completing the eight activities in normal time is Rs. 65000/-
1) Calculate the normal duration of the project, its cost and the critical path.
2) Calculate the lowest cost and associated time for project completion.
Cost of
Normal Time Shortest Time reduction per
Activity (days) (Days) days(Rs.)
1-2 12 10 800
1-3 16 12 700
1-4 10 8 300
2-4 6 6 -
2-5 10 8 300
3-6 20 16 200
4-6 16 13 300
5-6 12 12 - 21
Any Queries..

22