Time-Cost Tradeoff

Concept: Make sure Money putting in the project Shortens project duration!!!

So, to shorten project duration, shorten critical activities!!!

Example 1: Learn the concept

At normal schedule, available activities for shortening are act20, act22, and act30.

However, shortening act20 would not shorten project duration.

We can shorten project duration by shorten either act22 for +100 a day or act30 for +200 a day.

Common sense, Pay less to get more. We shorten act22 for +100 a day.
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Next question is HOW MANY DAYS???

IMPORTANT: stop shortening an activity when

1. Non-critical activities become critical.

2. Critical activities become non-critical.

Therefore, from normal schedule to schedule 1, we only shorten act22 to 8 days, because non-critical activity
act20 becomes a critical activity.

After schedule1, we can:

1. shorten act20&act22 together for +400 a day

2. shorten only act30 for +200 a day

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Example 2: Using Excel Solver

Check Top row and Left column, then click OK button.

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Setup formula for SD and FD based on Duration using NormalDuration

NormalSchedule (set Duration to NormalDuration)

CrashSchedule (change Duration to CrashDuration)

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IMPORTANT: TURN ON EXCEL SOLVER by

1. Go to File->Options-> Add-Ins
2. At Manage, select Excel-Add-ins

3. Check Solver Add-in

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Setup Solver Parameters as shown below

Note:

We are trying to minimize project direct cost at a specified project duration

$AW$9 is the FD of act30 which is the project duration
Try $AW$9 from 23 (project duration of normal schedule), 22, 21, , to 16 (that of crash schedule)

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 Homework
1. Use Excel Solver to find minimum direct cost at different project duration (from normal to crash)
2. Calculate project indirect cost using
3. Calculate minimum project total cost
4. Plot a graph with project indirect cost, minimum project direct cost, and project total cost

Minimum Project Total Cost = Project Indirect Cost + Minimum Project Direct Cost
Indirect Cost = 800 + (Project Duration 21) x 250

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Solution