CRASHING AND

COST PLANPREPARED BY:

JULIUS N. CUARESMA

BSCE 5-1

REDUCING TIME AND COST1. To avoid penalties for not completing the project on time.

2. To take advantage of monetary incentives for completing the project on or before the target date.

3. To free the resources such as money, equipment and men for use on other projects.

4. Reduce indirect costs associated with the project such as:

a. Facilities and equipment cost

b. Supervision cost

c. Labor cost

d. Personnel cost

Crashing Certain Activities

1. The use of additional funds to support the

following

2. Additional personnel

3. Have more efficient equipment

4. Relaxing of some work specification

The manager needs the

following informations:

1. Regular time and crash time estimates

for each activity.

2. Regular cost and crash estimate for each

activity.

3. A list of activities that are on the critical

path.

From the economic view, activities should

be crashed according to crashing costs.

1. The lowest cost should be crashed first

2. Crashing should continue as long as the

cost to crash is less than the benefits

received from crashing.

Procedure in Crashing Project

Time

1. Obtain an estimate of regular and crash time plus the costs of each activity.

2. Determine the length of all paths and their float time.

3. Determine which activities are on the critical path.

4. Crash the critical activities in the order of increasing costs as long as crashing costs do not exceed benefits.

Example Problem

THE INDIRECT COSTS OF A PROJECT IS P10, 000

PER WEEK UP TO ITS DURATION. THE PROJECT

MANAGER WAS FURNISHED THE FOLLOWING

COST AND TIME INFORMATION.

1. DETERMINE AN OPTIMUM CRASHING PLAN

2. GRAPH THE TOTAL COSTS FOR THE PLAN

ACTIVITY CRASHING POTENTIAL WEEK COST PER WEEK TO CRASH

A 3 8000

B 3 FIRST WEEK 3000

2ND WEEK 4000

C 2 5000

D 1 1000

E 3 5000

F 1 2000

B-14

A-8

C-11 D-6

F-7

E-14

1

2

5 3

4

SOLUTION:1. DETERMINE THE PATH LENGTHS AND

IDENTIFY THE CRITICAL PATH.

PATH DURATION IN WEEKS

A,B 22

C,D 17

E,F 21

2. RANK THE CRITICAL ACTIVITIES OF PATH A,B ACCORDING TO CRASHING COSTS.

ACTIVITY COST PER WEEK TO CRASH

B 3000 1ST WEEK

A 8000

ACTIVITY B HAS THE LOWER CRASHING COST, HENCE, IT

SHOULD BE SHORTENED BY ONE WEEK. THIS WILL REDUCE THE

INDIRECT COSTS BY:

10,000 – 3,000 = 7,000 NET SAVINGS

AT THIS POINT, PATH A,B AND E,F WILL HAVE THE SAME

LENGTH OF 21 WEEKS, THUS BOTH WOULD BE CRITICAL PATH.

3. RANK ACTIVITIES BY CRASHING COSTS ON THE TWO

CRITICAL PATH.

PATH ACTIVITY COST PER WEEK TO CRASH

A-B B 4000

A 8000

E-F F 2000

E 5000

CHOOSE ONE ACTIVITY ON EACH PATH TO

CRASH. SAY B ON ACTIVITY A-B AND F ON

ACTIVITY E-F :

4000 + 2000 = 6000 CRASHING COSTS

10,000 – 6,000 = 4,000 NET SAVINGS

4. VERIFY WHICH PATH MIGHT BE CRITICAL.

PATH A-B AND E-F WOULD BE 20 WEEKS TO

CRASH ONE WEEK AND C-D WOULD STILL BE

17 WEEKS

5. AGAIN, RANK ACTIVITIES ON THE CRITICAL PATH.

CRASH B ON PATH A-B AND E ON PATH E-F:

4,000 + 5,000 = 9,000 CRASHING COSTS

10,000 – 9,000 = 1,000 NET SAVINGS

6. AT THIS POINT, NO FURTHER

IMPROVEMENT IS POSSIBLE. BOTH PATH A-B

ANG PATH E-F HAS 19 WEEKS AND TO

SHORTEN ONE MORE WEEK FROM EACH PATH

WOULD MEAN ANOTHER P8,000 FOR

ACTIVITY A AND P5,000 FOR ACTIVITY E OR A

TOTAL OF P13,000 WHICH EXCEEDS THE

P10,000 POTENTIAL SAVINGS IN INDIRECT

COSTS.

SUMMARY OF THE RESULT SHOWING THE LENGTH OF THE

PROJECT AFTER CRASHING N WEEKS.

SUMMARY OF COSTS

.