Compromise time-cost
There is a relationship between a project of execution time and its cost. For certain types of costs, the relationship is in direct proportion; for other types, there's a direct arbitration. Because these two types of costs, there is an optimal project of pace, at a minimal cost. By understanding the cost-time relationship, we are better able to predict the impact of a change of schedule on the cost of the project.
Types of costs
The costs associated with a project can be classified as direct costs and indirect costs.
• Direct costs are those directly related to project activities, such as salaries, travel and equipment projects directly. If the pace of activity is increased in order to reduce project execution time, the direct costs increased generally since more resources must be allocated to accelerate the pace.
• Indirect costs are overhead costs which are not directly related to the activities of specific projects such as offices, administrative staff and taxes. These costs tend to be relatively constant per unit time for the duration of the project. As a result, the total indirect costs decrease the decrease in the duration of project.
The cost of the project is the sum of the direct and indirect costs.
Compress the project calendar
Compression or if overwrite the calendar of the project refers to the acceleration of the project activities in order to complete the project earlier. The time required to complete a project is determined by the critical path, so to compress a draft annex a should focus on the activities of the critical path.
A procedure to determine the optimal timing of project is to determine the normal lead time for each critical path activity and a moment of the accident. The time of the accident is the shortest time in which an activity can be performed. Then, the direct costs are calculated for the normal time and the crash of each activity. The slope of each cost compromise versus time can be determined for each activity as follows:
Slope = (Crash cost - Normal cost) / (Normal time - crash time)
Activities that have the lowest cost per unit of time reduction should be curtailed first. In this way, can scroll through critical path activities and create a graph of the total cost of the project in relation to the duration of the project. The indirect and direct costs total project can then be calculated for different values for project. The optimum point is the duration, resulting in the minimum cost of the project, as shown in the following graph:
Cost of the project compared to the
Caution must be the critical path to ensure that it remains critical path after the time of the activity is reduced. If a new critical path emerges, there are reductions in later times.
To minimize the cost, the activities that are not on the critical path can be extended to minimize their costs without increasing the project execution time.
Model of time-cost assumptions
The above cost-time model is based on the following assumptions:
• The normal cost of an activity is less than the cost of the accident.
• There is a linear relationship between time and cost.
• Resources are available to shorten the activity.
The model should be adapted to the case where the assumptions do not hold. For example, the calendar may need to take into account the need to level the load on a specialized resource limited as a piece of equipment.
Additional considerations
There are other considerations in addition to the cost of the project. For example, when the project is part of the development of a new product, time-to-market can be extremely important and it can be beneficial to accelerate the project to a point where its cost is much greater than the minimum cost.
In the contract of employment, there may be incentive payments related to the rapid completion or penalties associated with delay. A model of cost-time can be adjusted to take these incentives and sanctions into account in modelling them as indirect costs.
Due to the importance of the critical path in a project schedule compression, a technical planning such as the method of road project critical or PERT must be used to identify the critical path before attempting to compress the schedule.
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