Professional Documents
Culture Documents
To determine a
reduced or optimum
length of contract and
still save money
1
ofproject duration
Reducing the duration of projects leads to
cost consideration.
Reducing the time ofproject may lead to
increase in cost due to use ofmore resources
There must be a balanced point wherein the
project finishes at minimum cost and
optimum duration.
2
OBJECTIVE
NETWORK TECHNIQUE
Bring improvement in the following :Planning
Scheduling
Control of project
RELATIONSHIP BETWEEN
TIME AND COST
In this time cost model we will assume that the
COST
Cost is considered to be a common parameter
DIRECT COSTS
As the project is conceived, cost is incurred
on the purchase of
Materials
Plant
Equipment
Manpower
Relationship of direct costs with time is of
prime importance
9
10
INDIRECT COSTS
Indirect Costs Includes :Overheads
Administrative expenses
Depreciation
Loss ofprofit
Loss ofrevenue
Penalty
The loss in profit, penalty comes under a
category called outage loss
11
12
TOTAL COST
Total cost = direct cost + indirect cost
13
called crashing.
14
SOME TERMS
Normal time (tn) - Standard time that an
Normal
CN = 2000
TN = 20 days
Time
20 and save on
completion
time on
18 and
save more
16
14
completion time
12
10
demonstration
of the Linearity
Add 25% of the extra
Assumption
cost...
Add to
Add more
tothe
the
normalnormal
cost...cost...
Crashing
CC = 4400
TC = 12 days
6
4
2
18
5 10 15 20 25 30 35 40 45
Cost (100)
Marginal Cost =
MM== E
R
19
Crashing activities
Meeting a Deadline at Minimum
Cost
20
ABCD Restaurant
Meeting a Deadline at Minimum
Cost
ABCD Restaurants
22
ABCD Restaurants
Network presentation
E
O
I
B
A
K
J
C
H
D
23
ABCD Restaurants
Marginal costs
R = T N TC = 5 3 = 2
E = CC CN = 36 25 = 11
M = E/R = 11/2 = 5.5
24
ABCD Restaurants
Heuristic Solution
Small crashing problems can be solved
heuristically.
Three observations lead to the heuristic.
The project completion time is reduced only when
critical activity times are reduced.
The maximum time reduction for each activity is limited.
The amount of time a critical activity can be reduced
before another path becomes critical is limited.
25
7.11 PERT/COST
PERT/Cost helps management gauge
Work Package 1
Activity 1
Activity 2
26
Work Package 3
Work Package 2
Activity 3
Activity 5
Activity 4
Activity 6
spread
evenly throughout its duration.
27
package)
where p is the estimated percentage of the work package completed.
Cost overrun =
[Actual Expenditures to Date] - [Value of Work to Date].
29
delays.
30
whenever needed.
Focus on uncompleted activities.
Determine whether crashing activities is desirable.
In the case of cost underrun, channel more resources
to problem activities.
Reduce resource allocation to non-critical activities.
31
AB COMPANY
Perri is running for Mayor.
Twenty weeks before the election the campaign
AB COMPANY
Status Report
AA
BB
CC
DD
EE
FF
GG
HH
II
33
Work
WorkPackage
Package
Hire
Hirecampaign
campaignstaff
staff
Prepare
Prepareposition
positionpaper
paper
Recruit
Recruitvolunteers
volunteers
Raise
Raisefunds
funds
File
Filecandidacy
candidacypapers
papers
Prepare
Preparecampaign
campaignmaterial
material
Locate/staff
Locate/staffheadquarter
headquarter
Run
Runpersonal
personalcampaign
campaign
Run
Runmedia
mediacampaign
campaign
Expenditures
Expenditures($)
($)
2,600
2,600
5,000
5,000
3,000
3,000
5,000
5,000
700
700
5,600
5,600
700
700
2,000
2,000
00
Status
Status
Finish
Finish
Finish
Finish
Finish
Finish
Finish
Finish
Finish
Finish
40%
40% complete
complete
Finish
Finish
25%
25% complete
complete
0%
0% complete
complete
20+15=35
I
9
Finish
27.8+9=36.8.8
20+7.8=27.8
34
AB Company
Es
t im
wo
rk
Budgeted
Values
val
ue
Co
Total
Total Percent
Estimated
Actual Cost
Work
to
st
da
Time te=(1 Cost Completed overValue Value Ocerrun
Package
A
B
C
D
E
F
G
H
I
35
Total
4
6
4
6
2
13
1
20
9
r
100% un =2,000
2,600
5
60
03,000 .40)=
100%
3,000
5,000
$5,
52
200 100%
4,500
4,500 00 3,000
=4
00
2,500
100%
2,500
5,000
500
100%
500
700
13,000
40%
5200
5,600
1,500
100%
1,500
700
6,000
25%
1,500
2,000
7,000
0%
0
0
600
2000
-1500
2,500
200
400
-800
-500
0
40,000
3,900
3 ,0
00)
2000
(0
20,700
24,600
AB COMPANY
Results Summary
The project is currently .8 weeks behind
schedule
There is a cost over-run of $3900.
The remaining completion time for
uncompleted work packages is:
Work package F: 7.8 weeks,
Work package H: 15 weeks,
Work package I:
9 weeks.