Project_Part_II

Project_Part_II - DS 412 Operations Management Project...

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DS 412 Operations Management Project Management Part II
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Project Costs Project Indirect Costs: These costs are associated with the project as a whole such as overhead, penalties for delays, penalties for lost business, etc. These costs create the motivation to reduce project duration. Reducing project duration is called “crashing” the project and can be achieved by “crashing” certain critical project activities
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Activity Costs Activity Direct costs: These costs are associated with each specific activity. Crashing an activity (shortening the activity time) increases the activity direct costs. Crashing activities requires spending more money on: Overtime Hiring/training additional workers Subcontracting tasks to the outside Buying more/better/faster machines
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Cost/Time Tradeoffs Crashing a project is achieved by crashing activities that will shorten the project duration. For each activity, we must begin with estimates for the following: Normal time and associated cost. Crash time and associated cost (higher than normal cost) Tradeoffs for crashing a project are between: Lower project indirect cost vs higher activity direct costs
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Crashing a Project Crashing Steps: 1. Use the normal times find the critical path and critical
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Project_Part_II - DS 412 Operations Management Project...

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