1. Time-Cost Trade-Off (Time Reduction = Time Compression = Time Shortening)
4/17/ :55 AM

2. Reasons to Reduce Project Durations:
To realize incentive pay
To fit within the contractually required time (influences Bid price).
To avoid paying Liquated Damages/Damage for delay causes (or avoid damaging the company’s relationship).
To complete a project early & move on to another project (Although the Job-specify profit may reduce, company profile may increase).
To complete a project when weather conditions make it less expensive (Avoid temporary Heating, avoid completing site work during raining season).
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

3. Methods to reduce durations:
Have the existing crew work overtime. This increase the labor costs due to increase pay rate and decrease productivity.
Bring in additional workers to enlarge crew size. This increases labor costs due to overcrowding and poor learning curve.
Use better/more advanced equipment. This will usually increase costs due to rental and transport fees. If labor costs (per unit) are reduced, this could reduce costs.
Add subcontracted labor to the activity. This almost always increases the cost of an activity unless the subcontracted labor is for more efficient.
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

4. Project Costs Definitions
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

5. Practices to Estimate the Project cost
Some company assigns Overhead office as % of direct cost.
Most companies don’t consider profit as a cost of the job. Instead, analysis are completed by using Direct costs + Indirect costs + Company overhead vs. Budgeted (estimated costs).
Similar to each activity, the project as a whole has an ideal (Lease expensive) Duration.
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

6. Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

7. Accelerating the Critical and Noncritical path
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

8. Network Compression Algorithm
Determine Normal project duration, and cost.
Identify Normal duration Critical Path.
For large network, using CRITICALITY THEORM to eliminate the noncritical paths that do not need to be crashed.
Compute the cost slop :
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

9. Network Compression Algorithm
shortening the CRITICAL ACTIVITIES beginning with the activity having the lowest cost-slope
Determine the compression limit (Nil)
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

10. Network Compression Algorithm
Organize the data as in the following table:
Update the project network
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

11. Network Compression Algorithm
When a new Critical path is formed:
Shorten the combination of activity which Falls on Both Critical Paths, OR
Shorten one activity from each of the critical paths. Use the combined cost of shortening both activities when determining if it is cost effective to shorten the project.
At each shortening cycle, compute the new project duration and project cost
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

12. Network Compression Algorithm
Continue until no further shortening is possible
Tabulate and Plot the Indirect project Cost on the same time-cost graph
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

13. Network Compression Algorithm
Add direct and indirect cost to find the project cost at each duration.
Use the total project cost-time curve to find the optimum time.
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

14. cost for expediting the contract . um
Example 1:
The durations and direct costs for each activity in the network of a small construction
contract under both normal and crash condition
are given in
below
Tabl
e. Establish the least
cost for expediting the contract .
Determine the optim um
duration of the contract assuming the
indirect cost amounts to SR
125/week.
Normal
Crash
Activity
Preceded by
Duration
(weeks)
Cost ( ) A — 12
7000 10
7200 B 8
5000 6
5300 C 15
4000
4600 D 23 E 5
1000 4
1050 F
3000
3300 G
E,C 20
6000
6300 H 13
2500 11
2580 I
, G, H
3140 å 36 ,
500
38470
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

15. 12 A 27 5 32 29 2 34 F 15 C 8 20 14 22 B 23 43 24 4 47 D 25 E G 59 I 13 45 H ES L S LF
Activity
Crash limit
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

16. 2@70 Cycle # Activity to Shorten Can Be Shortened Nil Days Cost per 12 A 27 5 32 F 15 C 8 20 14 2 22 B 23 43 45 D 25 E 18 G 57 55 I 13 H ES L S LF
Activity
Crash limit
Cycle #
Activity
to Shorten
Can Be
Shortened
Nil
Days
Cost per
Week
Cost for
Total
Cost
Project
Duration - 36 ,
500 59 1 G 5 2 60
120
620 57 I 70
140
760 55
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

17. Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

18. Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

19. Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

20. Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

21. Project Optimal Duration
Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani

22. Spring 2008, King Saud University
Time-Cost-Trade-off
Dr. Khalid Al-Gahtani