Production & Operations

Management
Session-15

Program: FT MBA Core

Trim: III
Instructor: Dr. Abhinav Sharma
 Time-Cost Trade-Offs

• Activity time estimates are made for some given level of resources

• It may be possible to reduce the duration of a project by injecting additional

resources

• Motivations:

• To avoid late penalties

• Monetary incentives

• Free resources for use on other projects

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 Crashing

Shortening activity durations

Typically, involves the use of additional funds to support additional personnel or

more efficient equipment, and the relaxing of some work specifications

The project duration may be shortened by increasing direct expenses, thereby

realizing savings in indirect project costs

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 Crashing Decisions

To make decisions concerning crashing requires information about:

1. Regular time and crash time estimates for each activity

2. Regular cost and crash cost estimates for each activity

3. A list of activities that are on the critical path

• Critical path activities are potential candidates for crashing

• Crashing non-critical path activities would not have an impact on

overall project duration
From an economic standpoint, activities should be crashed according to crashing costs: Crash
those with the lowest crash costs first
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 Crashing: Procedure
General procedure:
1. Crash the project one period at a time
2. Crash the least expensive activity that is on the critical path
3. 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

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 Crashing Costs

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 Project cost is 1000 dollars per day
2

1 5 6

3 4

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An important benefit of the sequential crashing procedure just described is that it provides the ability to quote
different budget costs for different project times

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Q.15 Stevenson

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