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Question 6 ­ NewillPost:Question 6 ­ NewillAuthor:Posted Date:February 27, 2016 3:56 PMStatus:PublishedDescribe how time­cost tradeoffs for project activities should be identified andanalyzed. Provide an example of this trade­off.In order to know if certain activities would worth crashing in order to savemoney or time, they first need to know the following information:NT ­ Normal time to complete activityNC ­ Normal cost to complete activityCT ­ Crash time or shortest timee to complete activityCC ­ Crash cost or cost associated to complete crash time activity.A manager would then use the following formula to calculate the cost of crashingan activity:If the project time can be shortened, the indirect costs would be less. Using thisformula a manager can then decided if the indirect cost savings are higher thenthe cost to crash. If so it would be worth doing so. If a project is running behindand there is risk of losing a customer or future business, it is also worth lookingat the cost to crash activities in order to finish on time, even if the companywould take a loss from what they would originally be making.An example would be drywalling activity of the project took longer thenexpected to complete by 2 days and not the project is behind schedule. Thenormal critical activity of painting the interior of a house on a remodel project normally took 5days and cost $4000. In order to get back on schedule the manager can hire extra painters inLinda Newill
3/6/2016Collection – MBA675­T303 Operations & Logistics in the (...21/28(Post is Read)order to complete the paining in 3 days at the cost of $5000. Would this be an good idea? Themanager would use the following formula to find that the cost of getting back on track would be$1000 to finish 2 days earlier. If there is a bonus of more than $1000 to finish on time or apenalty greater than $1000 to finish late, I then as the manager would say it would be worthcrashing the painting activity.I also found a great explanation of Project Crashing and Time­Cost Trade­on onthe following website:Thread:Question 6 ­ NewillPost:RE: Question 6 ­ NewillAuthor:Posted Date:February 29, 2016 6:06 PMStatus:Published(Post is Read)Great example.There are always time–cost tradeoffs in project management situations.Overall project length is driven by the length of the critical path, so if it isnecessary to finish the project more quickly, the activities that should beshortened are those on the critical path. Whether the goal is to reduce theproject’s length to avoid a penalty, meet a deadline, or to reach an incentive, thecheapest activities on the critical path should be attacked first. If the objectiveis to minimize costs, then the project manager should reduce the critical path byexpediting activities until the increase in direct costs exceeds the savings that

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