Chapter 9 Reducing Project Duration audio

hi everyone this is Professor Jurgens Cole at San Jacinto College and this is the lecture for chapter 9 for business management 1309 project management and we will be talking about how to reduce a schedule so again today we're going to be discussing chapter 9 on reducing the schedule this is an important topic for a lot of reasons and will will touch on on the reasons why we might want to reduce a schedule in the next couple of slides and we'll also discuss your homework assignment and a couple of particular ways in which we can reduce the schedule which include crashing and fast tracking is the two most common methodologies for shortening the schedule and then we'll talk about in particular how we might crash a schedule we'll also talk a little bit about that term of crashing as well and then of course we'll touch on the homework assignment so chapter 9 will help to satisfy the learning objectives for the course and in particular learn objective a which is to identify sequence and estimate duration of activities that must be performed to accomplish the schedule and project goals in particular we are going to be discussing how we can shorten this schedule and that will include shortening the schedule of specific activities as well as shortening the schedule of the overall project so there's a lot of reasons why we might want to talk about reducing the schedule and reducing the project duration one of these of course is time to market pressures in a global world like we're working right now there's a lot of pressure for businesses to be first to market in fact companies that are first to market with a new product will often be the ones that receive the most lifetime earnings from that product over its its life cycle so being first to market has a lot of advantages for a company and so if if they notice perhaps that a competitor is coming close to marketing a similar product they might want to reduce the schedule of their product in order to get it to market quicker so that's one reason to reduce the schedule another reason we never know what's going to happen on a project until we start doing the work and certainly those unforeseen delays can cause us to later be falling behind schedule and then needing to shorten the schedule so that we can catch up in essence there are also contractual obligations sometimes that are intentionally put into contracts and into project agreements for example this happens a lot in transportation projects where the Department of Transportation will ask that a company account they'll they'll build into the contract an incentive bonus that if you complete the work early will give you a bonus a really outstanding example of that was a few years ago there was a bridge collapse in Minneapolis st. Paul on the i-35 bridge and the Department of Transportation said that if you can repair this bridge quicker the faster you repair it the more money you get and there were millions of dollars in incentives for that because it was a major thoroughfare between Milwaukee I mean excuse me Minneapolis and st. Paul and that bridge needed to be in place in order to keep traffic flow out of maximum there are also deadlines and other contractual commitments that might require a project to be shortened for example if you were marketing a retail product that is very seasonal you may need to meet a deadline to say get that product to market for a trade show so that it can be in the stores for that particular season and another reason is to reduce overhead costs the more that we can reduce cost the better the profitability of the project would be so in the case of any project overhead costs tend to increase and we're going to talk about direct cost and indirect cost later today those overhead costs tend to accumulate over the life of the project so if we can reduce the time of the project then those overhead costs will also be reduced and then as we talked about earlier this term there are often multiple projects that are attractive to a company at any given time so if the company can shorten the schedule on one project they'll be able to do more projects that is by transferring resources from one project to the next project so a whole host of reasons of why we might want to reduce the schedule of a project in to shorten its overall duration so some key terms that we're going to talk about today include crashing and fast tracking crashing is a methodology that we use in project management I don't particularly like the term crashing because I usually think of a car crash but the term crashing is more like a party crasher and in this case we're talking about adding resources to a project and as we add resources to our project then we're hoping that we can accomplish the schedule of that project you know in a much quicker way you'll also want to be familiar with the term crash time and crash cost and we'll be talking a little bit about those later today and they're also in your textbook as well and you'll be doing a homework assignment that's going to address that likewise so crashing is the ability to add resources one thing that crashing does however is it always adds cost to a project because you're either hiring extra resources you're going outside the company to outsource as parts of the work you're paying people over time to work on the project so crashing always costs money to add to shorten that schedule the other term that we want to talk about is called fast tracking and this is doing activities in parallel instead of in sequence and remember when we talked about putting together the project schedule we talked about the difference between mandatory dependencies and discretionary dependencies so in this case we would be trying to do some of those discretionary dependencies that we put into the network diagram by putting those activities in parallel instead of sequence your textbook talks about this as far as switching from a finish to start which is our most common dependency to a start to start type of dependency so in essence we're saying that well we would prefer to do these activities in sequence we're going to go ahead and try to do them in parallel in order to speed up the activities of the project there is a distinctive risk involved in this because the output of one activity can impact the inputs of another activity so if those outputs are not aligned there's a risk having a project delay because of that or having to do rework etc on the project so some common methods we're going to talk mostly about crashing today and I I do have to say that this is at least the second time I've recorded this lecture because ironically enough my software crashed when I was talking about crashing so that was sort of frustrating to me so some options for crashing a project or crashing the schedule include adding resources to the project again if we add resources there are some challenges to that first of all adding resources will require extra money to pay those resources as well as it's a bit of a management challenge in order to add those resources because they these people now need to get brought up to speed on the project where are we out what are we doing they may need some special training so adding resources not only cost money but it also takes a lot of time from the management team outsourcing is when you say ok it might be more effective and efficient for me to have somebody else do this work so outsourcing involves the ability to find a second group or a third party group somebody outside of the core project team that will be doing some of the work that was previously assigned to the project team this can certainly speed things up of course there's a cost because you have to pay those people that are that third party there's also some risk involved in that since you're now outsourcing to an external party the internal project team doesn't have as much control over that work and again when the outputs of that work have to be integrated into the overall project it may be that there's some risk involved that the outputs don't don't align properly or a hundred percent with the ability of the the internal team to accomplish the work in a quicker fashion so again a cost associated with outsourcing and some potential risks and finally you can have your team members work over time so maybe if they're working overtime and they're salaried employees there might not be a direct cost however in most cases you're going to have hourly workers doing overtime work and so there will be a direct cost for having overtime also you want to think about your project team members who are already giving a lot of blood sweat and tears to accomplish your project work and even if they're salaried and they're not getting paid directly for their extra hours they can be getting to the point where they start to burn out in addition OSHA has rules about how many hours and days even salaried people can work continuously and that's especially true in in the industries that we have here in Houston around San Jacinto for the oil and gas industry so working overtime generally includes a cost because of hourly labor I'll normally get paid say time-and-a-half for their extra hours and even salaried people will experience burnout they might experience illness where you're still paying them for a time when they're not at work so you have to be very very careful when you start to ask resources to work overtime as a project manager so the steps that we want to consider and this is from your textbook for reducing the overall project duration means that we have a trade-off with cost time time is not free there's a monetary value associated with time so there's a monetary value associated with reducing the schedule and usually that is a it's a it's a positive cost to reduce the schedule to shorten the schedule so first we need to identify the direct costs associated with each activity and we're going to talk about the definition of direct and indirect costs on the next slide next we need to gather information about the direct and indirect costs of each specific activity that has a project duration associated with it and then we're going to want to search for activities that have the lowest direct so that we can shorten the project duration at the least amount of cost we don't want to shorten the thing that costs us the most we want to do it for the things that cost us the least and then we'll compute the total cost and we'll be able to compare and find an optimum point where we can reduce a project time for the least amount of additional cost um so some more definitions direct cost is one that is where we see an increase in the cost with the increased use of the material or the labor or the piece of equipment so some examples of that are raw materials and labor so say you're making shoes every time you purchase more leather to make the shoe you can make more shoes but there's an increased cost for getting that raw material the leather to make the shoes labor is generally a direct cost as you consume more labour there's an increased cost of using that labor so every hour of labor that you use of say an electrician then your there's a direct cost associated to the project it's very easy to track the direct cost of a project to the consumption of the resource indirect costs on the other hand don't change with the amount of usage so some examples would be rent and administrative supervision staff support maybe the copying machine it doesn't matter how many people are occupying the office building the rent is the same per month and so that ends up being a linear cost over the life of the project if the rent is $200 in month in per month and you have a six month project it's it'll ramp up linear 200 dollars spent in month one you'll have a total of 400 spent by month to a total of 600 spent by month three etc the same thing with a lot of administrative costs you cannot tie the exact administration or secretary or copy machine or paper and ink and toner to the project but there is a cost associated with having an office period that is available to conduct the work of the project so what happens if you'll take a look at figure nine point one in your textbook is that these indirect costs are the ones that are going to ramp up linearly so rent again would be one of those costs and it just ramps up every month by month six there's a fixed cost and others by month seven by month eight etc so those indirect costs will ramp linearly direct costs because they're associated with consumption of resources are going to change over the life of the project typically in in many cases the lowest cost will occur at the end of the project when the project is nearing completion if we add these two elements if we add the indirect cost plus the the direct cost that will give us the total cost of the project at any point in time those total costs then can be plotted against the project duration as shown in Figure 9.1 and were able to find the optimum which is the lowest cost by shortening the duration of the project originally this project was set to be 14 months but by optimizing we can shorten the schedule to 10 months and that will give us an increased cost that is the least amount of increased cost for shortening in the project schedule so the way we do this is by understanding that the cost time relationship is linear the normal cost the one that we've put into our activity network diagram and we're going to talk about costs in Chapter five in a much greater detail we assume that that's really the lowest cost and is the most efficient use of resources for a given project we also understand that crashing time is limited the old adage is that it takes one lady nine months to make a baby but crash time is limited because you can't cannot add resources and have nine ladies make a baby in one month so there is a limitation by the laws of nature mandatory dependency the physics and chemistry of processes that crash time is limited so if you've planned a certain amount of time for an activity there's only so much you can shorten it by without impacting the quality of the project and then we can only accelerate that activity between the normal and crash time and again those are our boundaries we've set up a normal time in our activity network diagram and we know that there's a maximum crash time because of laws of nature so we can only adjust the schedule of that project between that minimum amount of time which we define as the crash time and the normal time in which we have a normal set of work force assigned to conducting that activity so that's shown here in this figure where the crash point is our normal activity and then excuse me the normal point of the activity has a certain cost associated with it and then our crash time has a shorter duration but will cost us more so we can only work within this range which again is linear for the project so let's take a look at the example that's in your textbook and you'll probably want to read this more than once it's a pretty complicated stuff but go ahead and take a look at it to try to understand because your homework assignments are going to be to calculate some crash time and some crash Network information so the network diagram that's given in your textbook as an example is showing here and the project has a total direct cost of four hundred and fifty dollars the activities are shown in blue the durations are shown in the lower square so for example activity G shows six X and the X means that that has already maxed out on its crash time there is no way with the laws of nature with physics with chemistry with mandatory dependencies that G can be completed any shorter than six days so we have no leeway on changing the length of time for G we can also see that the critical path of this project is a d FG which gives us a duration of 25 days so we'll want to work with that as we move forward so we want to take a look at the crash time so the textbook has given us very graciously given us the information on our normal cost and normal time and then crash time and crash cost so we need to calculate that linear slope and the book shows you how to do that but again they've been very nice to give that to us and they've shown that the the slope will give us the amount of money that it will cost us to crash one time period so what we want to do here is the first thing we're gonna look at is activity a has the lowest crash cost of $20 per day so we want to start with that lowest cost activity to shorten the schedule and moreover a is one of the first activities we want to start as far to the left in that activity network diagram to do crashing because that's going to help us the most later on in the schedule and I think if you give some thought to that it just makes sense when we can fix things early on it makes it easier for the things that happen later on so our first thing we do then is we crash activity a and we shorten that schedule to two days and that's the maximum that we can do again that's shown with an X so our overall project duration has gone to 24 days but it cost us $20 to shorten activity a by one day and that will bring our total project cost to four hundred and seventy dollars so next we're going to take a look at activity D and F on the critical path and we may want to take a look at activity C as well so let's see what what the textbook tells us is the next logical step again a is shown with the X activity a is changed by 20 dollars giving us a total direct cost of four hundred and seventy dollars for this project with the crashing occurring as indicated so in the textbook we've now crashed activity a so we can do nothing more with that however activity D has a neat the next least cost at twenty-five dollars per day so we want to take a look at activity D and see if we can crash it so we can crash activity D and we continue through the network diagram crashing activities C D and E is shown here and what we really are doing is we're creating that cost on time trade-off graph by plotting our indirect cost which the textbook has given us against the total cost and we find that at two days excuse me 22 days that would present a minimum in our total cost for crashing the project schedule what that means then is though we could crash activity D by as much as four days we're only going to crash it by two days so take a look at that textbook example and be sure to thoroughly understand it because your homework assignment will involve crashing and and going through the same logic to create a project trade-off so your week six homework does include doing some crashing problems number one and number four in Chapter nine at the end of the chapter I would recommend that you also do number two you don't have to turn in number two but the answer is in the back of the book for problem number two and that will allow you to kind of double check your work and make sure you're on the right track and go ahead and work through the problem that's given in the textbook from pages in section in nine point four from pages of - excuse me 353 14 to 318 and that will also give you some more practice on that please check blackboard for the exact due date for this assignment then if you have any questions please feel free to email me this is this is kind of complicated stuff after we get through the cost element of this textbook and of project management I think things will will kind of seem easier we want to have as much math involved as we have thus far and we'll start talking about things like risk management quality management and procurement management for the projects which I think you'll also enjoy learning about so again if you have any questions please feel free to email me through blackboard and I hope you have a great week

Channel: Teresa Kowal

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Keywords: San Jacinto College, project management, crashing schedule

Id: ktwqjwsTZAA

Length: 23min 57sec (1437 seconds)

Published: Thu Oct 05 2017