Chapter 9: Reducing Project Duration 4KF3

Transcription

1 Lecture Notes Options for Accelerating Project Completion Unconstrained Resources o Adding resources o Outsourcing o Overtime o Core project team o Do it twice Constrained Resources o Fast-tracking o Critical-chain o Reduce scope o Compromise quality Project Crashing The process of accelerating a project. PMBOK: A specific type of project schedule compression technique performed by taking action to decrease the total project schedule duration after analyzing a number of alternatives to determine how to get the maximum schedule duration compression for the least additional cost. Project Cost Duration Graph Crashing Crash Time vs. Normal Time Crash Cost vs. Normal Cost Crash Point Page 1 of 10

2 Project Crashing An Example Page 2 of 10

3 Page 3 of 10

4 Page 4 of 10

5 Page 5 of 10

6 How Short is Short Enough? Include contract provisions in your calculations; Some contracts have penalties for late delivery Other projects have bonuses for early completion Is the cost of crashing lower than the penalty for lateness? Is the cost of crashing lower than the bonus? Is there a strategic benefit to early completion? Page 6 of 10

7 Finding the Optimum Point Terminology All Normal a project schedule in which all durations and costs are at the normal rates. All Crash a project schedule in which all durations are at their lowest durations. Considerations Crash Time Estimates Linearity Assumption Choice of Activities Network Sensitivity If Cost is the Issue, Not Time? Reduce scope Have owner take on responsibility Outsource Brainstorm for Savings Reading Notes Rationale for Reducing Project Duration Time to market o Business survival depends on adaptability When unforeseen delays cause substantial problems o Costs of getting back on track vs. being late Incentive contract can make reduction of project time rewarding Imposed deadlines Avoid/reduce high overhead costs When it is important to reassign key equipment and/or people to new projects Page 7 of 10

8 Options for Accelerating Project Completion Options When Resources ARE NOT Constrained Adding Resources o Most common method o Limited not necessarily a direct correlation between resources and speed Outsourcing Project Work o Subcontracting an activity to a contractor who may have superior knowledge or abilities Scheduling Overtime o Easiest o Disadvantages include added fees for hourly overtime charges, productivity losses, organizational concerns, etc. Establish a Core Project Team o Avoiding hidden costs of multi-tasking Do It Twice Fast and Correctly o Quick and dirty short-term solutions before actual solutions Options When Resources ARE Constrained Fast-Tracking o Changing activity relationships from sequential to parallel Critical-Chain o Recall: CCPM Reducing Project Scope o The most common response o Reassess the true specifications of the project o Calculate the savings Compromise Quality o Rarely acceptable or used Project Cost-Duration Graph Procedure for identifying the costs of reducing project time so that the comparisons can be made with the benefits of getting the project completed sooner Project Cost-Duration Graph: see figure 9.1 o The total cost for each duration is the sum of direct and indirect costs Indirect costs Supervision, administration, consultants, interest Can vary directly with time Direct costs Labour, materials, equipment, subcontractors Assigned directly to a work package and activity Page 8 of 10

9 Constructing a Project Cost-Duration Graph (3 Steps) 1) Find total direct costs for project durations 2) Find total indirect costs for project durations 3) Sum direct and indirect costs for these selected durations Determining the Activities to Shorten: Managers need to look for critical activities that can be shortened with the smallest increase in cost per unit of time Normal time for an activity represents low-cost, realistic, efficient methods for completing the activity under normal conditions Crashing: shortening an activity Crash time: the shortest possible time an activity can realistically completed Crash cost: the direct cost for completing an activity in its crash time is called crash cost Crash point: represents the maximum time an activity can be compressed The heavy line connecting the normal and crash points represent the slope, which assumes the cost of reducing the time of the activity is a constant per unit of time Assumptions of graph: o The cost-time relationship is linear o Normal time assumes low-cost, efficient methods to complete the activity o Crash time represents a limit the greatest time reduction possible under realistic conditions o Slope represents per unit of time o All accelerations must occur within normal and crash times See example on pages Practical Considerations Using the Project Cost-Duration Graph o Graph is valuable to compare any proposed alternative or change with the optimum cost and time o Want to create graph as early as possible Crash times o Collecting crash times can be difficult o Times are rough at best Linearity Assumption Page 9 of 10

10 o Reasonable, quick comparisons can be made using the linear assumption and is adequate for most projects Choices of Activities to Crash Revisited o Other factors beyond cost: Inherent risks with crashing Timing of activities Overallocation of resources Impact on morale and motivation Time Reduction Decisions and Sensitivity o How far to reduce the project time toward the optimum depends on the sensitivity of the project network o A network is sensitive if it has several critical or near-critical paths o Slack reduction in a project with several near-critical paths increases the chances of being late o Large savings can result in reducing paths that are insensitive (occur in about 25% of all projects) What if Cost, Not Time, Is the Issue? Commonly used options for cutting costs: o Reduce Project Scope o Have Owner Take on More Responsibility Identifying tasks that customer can do themselves o Outsourcing Project Activities or Even the Entire Project o Brainstorming Cost Savings Options Page 10 of 10