Chapter 9 Flashcards Preview

Intro to Project Management > Chapter 9 > Flashcards

Flashcards in Chapter 9 Deck (21):
1

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

2

If Resources Not Constrained

Adding resources
Outsourcing project work
Scheduling overtime
Establishing a core project team
Do it twice—fast and then correctly

3

If Critical Resources Constrained

Fast-tracking
Reducing project scope
Compromise quality

4

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.

5

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.

6

Project Costs

Project Indirect Costs
Project Direct Costs

7

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.

8

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 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.

9

Practical Considerations

Using the Project Cost–Duration Graph
Crash Times
Linearity Assumption
Choice of Activities to Crash Revisited
Time Reduction Decisions and Sensitivity

10

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

11

Group Project : Time & Instructions

Introductions, confirm roles & review the case
5 minutes
Your group must reach agreement on the following
Which events in the case study will be completed
How each event will be completed
What the cost is for each event & final total cost
Identify and sequence each event/task to which the group has agreed
tasks and sub-tasks
Plot a timeline for each event
Identify the critical path – time and task
25 minutes

12

Debrief: Case Study

PM to provide a synopsis of group success
Challenges & opportunities

Materials collectors:
Return items and discard work sheets
Collect scoring sheets & hand in completed sheets

13

Measuring Group Success

Your name on the sheet
Colleague names
Overall group success
Participation
Task completion
Comment on:
One element of this activity that focused on a personal strength (yours) that helped your colleagues
One element of this activity that you learned from your colleagues

14

Options to accelerate projects with non-constrained resources

Adding resources
Outsourcing project work
Scheduling Overtime
Establish a Core Project Team
Do it twice - Fast and correctly

15

Options to accelerate projects with constrained resources

Fast tracking
Critical-Chain
Reducing Project Scope
Compromise Quality

16

Indirect Costs

Generally represent overhead costs such as supervision, administration consultants, and interest

Cannot be associated with any particular work package or activity, hence the term.

17

Direct Costs

Commonly represent labor, materials, equipment, and sometimes sub-contractors.

18

Three major steps to construct 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 durations

19

Determining the Activities to Shorten

Managers need to look for critical activities that can be short-ended with the smallest increase in cost per unit of time.

20

Equation Cost slop

Rise/Run

21

What if Cost, Not Time, Is the Issue?

Reduce Project Scope
Have Owner Take on More Responsibility
Outsourcing
Brainstorming cost savings options