Chapter Ninereducing Project Duration91copyright 2018 Mcgraw Hill E ✓ Solved

Chapter Nine Reducing Project Duration 9–1 9–2 Where We Are Now Project Management 6e. 9–2 Learning Objectives Understand the different reasons for crashing a project Identify the different options for crashing an activity when resources are not constrained Identify the different options for crashing an activity when resources are constrained Determine the optimum cost-time point in a project network Understand the risks associated with compressing or crashing a project Identify different options for reducing the costs of a project 9–3 Chapter Outline 9.1 Rationale for Reducing Project Duration 9.2 Options for Accelerating Project Completion 9.3 Project Cost-Duration Graph 9.4 Constructing a Project Cost-Duration Graph 9.5 Practical Considerations 9.6 What If Cost, Not Time, Is the Issue?

9–4 9–5 Rationale for Reducing Project Duration Time Is Money: Cost-Time Tradeoffs Reducing the time of a critical activity usually incurs additional direct costs. Cost-time solutions focus on reducing (crashing) activities on the critical path to shorten overall duration of the project. Reasons for imposed project duration dates: Time-to-market pressures Unforeseen delays Incentive contracts (bonuses for early completion) Imposed deadlines and contract commitments Overhead and public goodwill costs Pressure to move resources to other projects Project Management 6e. 9––6 Options for Accelerating Project Completion Resources Not Constrained Adding resources Outsourcing project work Scheduling overtime Establishing a core project team Do it twice—fast and then correctly Resources Constrained Improving project team efficiency Fast-tracking Critical-chain Reducing project scope Compromise quality Project Management 6e.

9––7 Reducing Project Duration to Reduce Project Cost Compute total costs for specific durations and compare to benefits of reducing project time Search critical activities for lowest direct-cost activities to shorten project duration Identifying direct costs to reduce project time Gather information about direct and indirect costs of specific project durations Project Management 6e. 9––8 Explanation of Project Costs Project Indirect Costs Costs that cannot be associated with any particular work package or project activity Supervision, administration, consultants, and interest Costs that vary (increase) with time Reducing project time directly reduces indirect costs Project Direct Costs Normal costs that can be assigned directly to a specific work package or project activity Labor, materials, equipment, and subcontractors Crashing activities increases direct costs.

Project Management 6e. 9––9 Project Cost–Duration Graph FIGURE 9.1 Project Management 6e. 9––10 Constructing a Project Cost–Duration Graph Find total direct costs for selected project durations Find total indirect costs for selected project durations Sum direct and indirect costs for these selected project durations Compare additional cost alternatives for benefits Project Management 6e. 9––11 Constructing a Project Cost–Duration Graph Determining Activities to Shorten Shorten the activities with the smallest increase in cost per unit of time Assumptions: The cost-time relationship is linear. Normal time assumes low-cost, efficient methods to complete the activity.

Crash time represents a limit—the greatest time reduction possible under realistic conditions. Slope represents a constant cost per unit of time. All accelerations must occur within the normal and crash times. Project Management 6e. 9––12 Activity Graph FIGURE 9.2 Project Management 6e.

9––13 Cost–Duration Trade-off Example FIGURE 9.3 Project Management 6e. 9––14 Cost–Duration Trade-off Example (cont’d) FIGURE 9.3 (cont’d) Project Management 6e. 9––15 Cost–Duration Trade-off Example (cont’d) FIGURE 9.4 Project Management 6e. 9––16 Cost–Duration Trade-off Example (cont’d) FIGURE 9.4 (cont’d) Project Management 6e. 9––17 Summary Costs by Duration FIGURE 9.5 Project Management 6e.

9––18 Project Cost–Duration Graph FIGURE 9.6 Project Management 6e. 9––19 Practical Considerations Using the Project Cost–Duration Graph Crash Times Linearity Assumption Choice of Activities to Crash Revisited Time Reduction Decisions and Sensitivity Project Management 6e. 9––20 What if Cost, Not Time Is the Issue? Commonly Used Options for Cutting Costs Reducing project scope Having owner take on more responsibility Outsourcing project activities or even the entire project Brainstorming cost savings options Project Management 6e. 9––21 Key Terms Crashing Crash point Crash time Direct costs Fast-tracking Indirect costs Outsourcing Project cost–duration graph Project Management 6e.

9––22 Project Priority Matrix: Whitbread Project FIGURE C9.1 Project Management 6e. 9–22 st:[x1 double array] Fs:[1x1 double array]

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Assignment: Strategies for Reducing Project Duration and Associated Costs

Introduction

Project duration can significantly influence project costs and overall success. As highlighted in Chapter Nine of "Project Management 6e" (McGraw Hill, 2018), various strategies exist for reducing project timelines. Delays can incur significant costs, both direct and indirect, which makes it essential for managers to understand the rationale behind project duration reduction, the costs associated with it, and the implications of the methods employed. This paper will explore strategies for shortening project timelines while considering cost implications, risks, and practical considerations.

1. Rationale for Reducing Project Duration

The core justification for reducing project duration is often grounded in the "time is money" principle. When project completion is delayed, indirect costs, such as overhead and administration expenses, accumulate. For instance, firms may face the pressure of time-to-market demands, unforeseen delays, incentive contracts (which may offer bonuses for early completion), and resource allocation to other projects, all of which necessitate a reduction in project duration (Verma & Sinha, 2020).
Moreover, project managers often encounter situations where imposed deadlines involve contractual commitments or are influenced by market conditions. In such scenarios, timely completion can enhance public goodwill and financial returns (Gido & Clements, 2018). The risk of losing competitive advantage drives organizations to prioritize rapid execution, leading to increased pressure to reduce project duration.

2. Options for Accelerating Project Completion

Accelerating project completion is often categorized into two frameworks: when resources are not constrained and when they are.
A. Resources Not Constrained
1. Adding Resources: One of the simplest methods to accelerate project completion is to add personnel or resources. While this method holds great potential, it may lead to diminishing returns due to potential communication issues (Wysocki, 2019).
2. Outsourcing: Organizations can choose to outsource specific tasks or activities to third-party vendors who can complete work faster or more effectively. Outsourcing can save time but necessitates careful selection of partners (Kerzner, 2017).
3. Scheduling Overtime: Compensating employees for overtime hours can hasten project timelines, although this option inflates labor costs and may affect staff morale (Oberlender & Tunis, 2017).
4. Establishing a Core Team: Focusing on a group of core project team members can enhance communication and expediency, subsequently reducing project duration.
5. Fast-Tracking: Overlapping project phases or tasks that were initially planned sequentially can also shorten timelines. However, this approach comes with increased risks of errors (Cliett & Willoughby, 2021).
B. Resources Constrained
When resources are scarce, organizations must consider alternative strategies, such as:
1. Improving Team Efficiency: Streamlining processes to ensure team members work more efficiently can help meet deadlines without additional costs. Enhancements in team communication and collaboration lead to higher productivity (Baker et al., 2020).
2. Fast-Tracking: This strategy is still applicable under constrained resources, but the potential risks must be evaluated carefully.
3. Reducing Project Scope: Limiting the project's overall deliverables can ease the pressure on resources and timelines.
4. Compromise on Quality: Lowering quality standards can speed project completion but can lead to dissatisfaction among stakeholders and potentially higher costs in the long run (Baccarini, 2020).

3. Project Cost-Duration Graph

One effective tool for analyzing the costs associated with reducing project duration is the Project Cost-Duration Graph, which illustrates the relationship between project duration and associated costs. The key points to consider are:
1. Direct Costs: These costs are linked directly to project work, including materials, labor, and equipment. Crashing activities generally leads to an increase in direct costs, while reducing the duration typically decreases indirect costs (Ritz, 2019).
2. Indirect Costs: Indirect costs increase with project duration and can significantly impact the total project expenditure. By compressing project timelines, these costs can be minimized.
3. Cost-Effectiveness Assessment: By assessing the total costs for different project durations and comparing them with the benefits gained from reducing project time, project managers can determine optimum cost-time points (Gido & Clements, 2018).

4. Risks Associated with Crashing a Project

While several strategies exist for shortening project timelines, they carry inherent risks:
1. Overuse of Resources: Rapid acceleration may lead to burnout among team members, reducing overall efficiency and engagement (Baker et al., 2020).
2. Quality Compromises: Fast-tracking may result in overlooking critical quality checks, leading to subpar deliverables (Verma & Sinha, 2020).
3. Increased Costs: The additional costs incurred through methods like overtime and outsourcing can outweigh the benefits of faster completion.
4. Stakeholder Satisfaction: Stakeholders’ expectations may become misaligned with project outputs if proper communications are not maintained throughout the process (Kerzner, 2017).

5. Practical Considerations and Conclusion

Ultimately, the decision to reduce project duration must consider both costs and quality. Employing a combination of methods can offer a balanced approach, although careful evaluation is necessary to find the most effective strategies.
1. Effective Communication: Ensuring continuous communication with stakeholders and team members is paramount to manage expectations and facilitate smooth execution (Wysocki, 2019).
2. Cost-Benefit Analysis: Conducting thorough analyses before implementing any duration reduction strategy can prevent unnecessary expenditure and ensure resource efficiency.
In summary, reducing project duration can yield significant benefits but must be executed with caution. An understanding of the different approaches, the associated risks, and a strategic analysis of costs are vital to ensure project success.

References

1. Baccarini, D. (2020). The Role of Quality in Project Management. Project Management Journal.
2. Baker, D. F., Murphy, D. F., & Fisher, W. A. (2020). Project Management: A Practical Guide to Requirements for Engineering, Science, and Technology. Wiley.
3. Cliett, A., & Willoughby, R. (2021). A Comprehensive Guide to Fast-Tracking: Best Practices in Project Management. Harvard Business Review.
4. Gido, J., & Clements, J. P. (2018). Successful Project Management. Cengage Learning.
5. Kerzner, H. (2017). Project Management: A Systems Approach to Planning, Scheduling, and Controlling. Wiley.
6. Oberlender, G. D., & Tunis, E. C. (2017). Project Management for Engineering and Construction. McGraw Hill.
7. Ritz, P. (2019). The Dynamics of Project Cost Management: Analyzing Cost Control Techniques. International Journal of Project Management.
8. Verma, V. & Sinha, A. (2020). Understanding Agility in Project Management: The Path to Effectiveness. Journal of Applied Project Management.
9. Wysocki, R. K. (2019). Effective Project Management: Tools and Techniques. Wiley.
10. PMBOK Guide (2021). A Guide to the Project Management Body of Knowledge. Project Management Institute.