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CHAPTER 9:
UNIVERSITY OF FINANCE - MARKETING
FACULTY OF BUSINESS ADMINISTRATION REDUCING PROJECT DURATION

CHAPTER 9:
REDUCING PROJECT DURATION

Course ID number: 1931101013902

QUẢN TRỊ DỰ ÁN

In skating over thin ice our safety is in our speed.

Lecturer: Dr. PHAM HAI CHIEN —Ralph Waldo Emerson—
January, 2021
Faculty of Business Administration
CHAPTER 9: REDUCING PROJECT DURATION 2

LEARNING OBJECTIVES CHAPTER OUTLINE

1. Understand the different reasons for crashing a project.
2. Identify the different options for crashing an activity
when resources are not constrained.
3. Identify the different options for crashing an activity
when resources are constrained.
1. Rationale for Reducing Project Duration
2. Options for Accelerating Project Completion
3. Project Cost–Duration Graph
4. Constructing a Project Cost–Duration Graph

4. Determine the optimum cost-time point in a project 5. Practical Considerations

network. 6. What If Cost, Not Time, Is the Issue?
5. Understand the risks associated with compressing or 7. Summary
crashing a project.
6. Identify different options for reducing the costs of a
project.
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2. OPTIONS FOR
1. RATIONALE FOR REDUCING PROJECT DURATION
ACCELERATING PROJECT COMPLETION

1. Time to market 1. Options When Resources Are Not Constrained

 Adding Resources
2. Speedy project management for adapting to new
 Outsourcing Project Work
challenges (global recession and energy crisis, etc.)
 Scheduling Overtime
3. Unforeseen delays  Establish a Core Project Team
 Do It Twice—Fast and Correctly
4. Incentive contracts can make reduction of project time
rewarding 2. Options When Resources Are Constrained
 Improve the Efficiency of the Project Team
5. Imposed deadlines for project completion  Fast-Tracking
6. Opportunity costs of not releasing key equipment or  Critical-Chain
people to support new projects  Reducing Project Scope
 Compromise Quality
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4. CONSTRUCTING
3. PROJECT COST–DURATION GRAPH
A PROJECT COST–DURATION GRAPH

1. Direct costs: represent Three major steps to construct a project cost–duration graph:
labor, materials, 1. Find total direct costs for selected project durations.
equipment, and 2. Find total indirect costs for selected project durations.
subcontractors. 3. Sum direct and indirect costs for these selected durations.
Assumptions:
2. Indirect costs: represent
1. The cost-time relationship is linear.
overhead costs such as
2. Normal time assumes low-cost, efficient methods to complete
supervision,
the activity.
administration,
3. Crash time represents a limit—the greatest time reduction
consultants, and interest. possible under realistic conditions.
3. The total cost: sum of 4. Slope represents cost per unit of time.
indirect and direct costs. 5. All accelerations must occur within the normal and crash times.
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4. CONSTRUCTING 4. CONSTRUCTING
A PROJECT COST–DURATION GRAPH A PROJECT COST–DURATION GRAPH

Cost–Duration Trade-off Example

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4. CONSTRUCTING 4. CONSTRUCTING
A PROJECT COST–DURATION GRAPH A PROJECT COST–DURATION GRAPH

Cost–Duration Trade-off Example Cost–Duration Trade-off Example (cont.)

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4. CONSTRUCTING 4. CONSTRUCTING
A PROJECT COST–DURATION GRAPH A PROJECT COST–DURATION GRAPH

Cost–Duration Trade-off Example (cont.) Cost–Duration Trade-off Example (cont.)

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4. CONSTRUCTING
5. PRACTICAL CONSIDERATIONS
A PROJECT COST–DURATION GRAPH

Cost–Duration Trade-off Example (cont.) 1. Using the Project Cost–Duration Graph

 Crash Times

 Linearity Assumption

 Choice of Activities to Crash Revisited

2. Time Reduction Decisions and Sensitivity

Summary Costs by Duration

Project Cost–Duration Graph

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6. WHAT IF COST, NOT TIME, IS THE ISSUE?
1. Reduce Project Scope
2. Have Owner Take on More Responsibility
3. Outsourcing Project Activities or Even the Entire Project
4. Brainstorming Cost Savings Options
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7. CHAPTER SUMMARY
1. The need for reducing the project duration occurs for many
reasons such as imposed duration dates, time-to-market
considerations, incentive contracts, key resource needs,
high overhead costs, or simply unforeseen delays. These
situations are very common in practice and are known as
cost-time trade-off decisions.
2. Crashing project duration increases the risk of being late.
3. A sensitive network is one that has several critical or near-
critical paths. Conversely, insensitive networks represent
opportunities for potentially large project cost savings by
eliminating some overhead costs with little downside risk.
4. Project acceleration typically comes at a cost of either
spending money for more resources or compromising the
scope of the project.
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