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PP and CM Cost

The document discusses the relationship between cost and time in project management, emphasizing the concept of project crashing to reduce completion time at an increased cost. It outlines the steps for crashing a project, including calculating normal and crash times, determining cost slopes, and selecting activities to crash based on their impact on the critical path. An example illustrates how to calculate the total cost and duration of a project after crashing activities.

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Rahul Parjapat
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22 views7 pages

PP and CM Cost

The document discusses the relationship between cost and time in project management, emphasizing the concept of project crashing to reduce completion time at an increased cost. It outlines the steps for crashing a project, including calculating normal and crash times, determining cost slopes, and selecting activities to crash based on their impact on the critical path. An example illustrates how to calculate the total cost and duration of a project after crashing activities.

Uploaded by

Rahul Parjapat
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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CRASHING OF PROJECT

COST ANALYSIS
The two important components of any activity are the cost and time.
Cost is
directly proportional to time and vice versa.

For example, in constructing a shopping complex, the expected time of


completion can be calculated using the time estimates of various
activities. But if the construction has to be finished earlier, it requires
additional cost to complete the project. We need to arrive at a
time/cost trade-off between total cost of project and total time
required to complete it.
Normal time:
Normal time is the time required to
complete the activity at normal
conditions and cost.
Crash time:
Crash time is the shortest possible
activity time; crashing more than the
normal time will increase the direct
cost.
Cost Slope
Cost slope is the increase in cost per
unit of
Example

An activity takes 4 days to complete at a normal cost of Rs. 500.00. If it


is possible to complete the activity in 2 days with an additional cost
of Rs. 700.00, what is the incremental cost of the activity?

Incremental Cost or Cost Slope

It means, if one day is reduced we have to spend Rs. 100/- extra per day.

Project Crashing
Procedure for crashing

Step1: Draw the network diagram and mark the Normal time and Crash
time.

Step2: Calculate TE and TL for all the

activities. Step3: Find the critical path and

other paths.

Step 4: Find the slope for all activities and


Step 5: Establish a tabular column with required field.

Step 6: Select the lowest ranked activity; check whether it is a critical


activity. If so,crash the activity, else go to the next highest
ranked activity.
Note: The critical path must remain critical while crashing.
Step 7: Calculate the total cost of project for each crashing
Step 8: Repeat Step 6 until all the activities in the critical path are fully
crashed.
Example

The following Table


8.13 gives the
activities of a
construction
project and other
data.

If the indirect cost is Rs. 20 per day, crash the activities


to find the minimum duration of the project and the
project cost associated.
Solution

From the data provided in the table, draw the network diagram
(Figure 8.28) and find the critical path.

From the diagram,we observe


that the critical path is 1-2-5 with
project duration of 14 days

The cost slope for all activities and


their rank is calculated as shown in
Table 8.14
The available paths of the network are listed down in
Table 8.15 indicating the sequence of crashing (see
Figure 8.29).

The sequence of crashing


and the total cost
involved is given in Table
8.16 Initial direct cost
= sum of all normal costs
given
= Rs. 490.00
Activity Project Critical Path Direct Cost in (Rs.) Indirect Total
Duration Cost Cost in
Crashed in (Rs.)
(Rs.)
- 14 1-2-5 490 14 x 20 = 770
280

1 – 2(2) 10 1–2–5 490 + (2 x 15) + (2 x 10 x 20 = 970


2 – 5(2) 1–3–4–5 100) + (1 x 10) + (2 x 200
2 – 4(1) 1–2–4–5 20) = 770
3 – 4(2)

It is not possible to crash more than 10 days, as all the


activities in the critical path are fully crashed. Hence the
minimum project duration is 10 days with the total cost of
Rs. 970.00.

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