Reducing Project Duration: Project Crashing

Some Definitions Resource allocation permits efficient use of physical assets Within a project, or across multiple projects Drives both the identification of resources, and timing of their application There are generally two conditions: “Normal” “Crashed”

Rationale for Reducing Project Duration Time Is Money: Cost-Time Tradeoffs Reducing the time of a critical activity usually incurs additional direct costs. Cost-time solutions focus on reducing (crashing) activities on the critical path to shorten overall duration of the project. Reasons for imposed project duration dates: Customer requirements and contract commitments Time-to-market pressures Incentive contracts (bonuses for early completion) Unforeseen delays Overhead and goodwill costs Pressure to move resources to other projects

Explanation of Project Costs Project Indirect Costs Costs that cannot be associated with any particular work package or project activity. Supervision, administration, consultants, and interest Costs that vary (increase) with time. Reducing project time directly reduces indirect costs. Direct Costs Normal costs that can be assigned directly to a specific work package or project activity. Labor, materials, equipment, and subcontractors Crashing activities increases direct costs.

Normal and Crashing Normal: Most likely task duration, like “m” in ‘Schedule Control’ Crash: Expedite an activity, by applying additional resources Specialized or additional equipment More people (e.g., borrowed staff, temps) More hours (e.g., overtime, weekends)

No Free Lunch: Crashing Creates a Ripple Effect Crashing buys time, but nothing comes free Potential cost areas Additional equipment/material Extra labor Negative effects on other projects Reduced morale, from excessive hours/shifts Lower quality, from the pressure of time, inexperienced and tired staff “If you want it bad, you’ll get it bad . . .”

Case: Architectural Associates, Inc. Projects uniformly run late, thus over budget Is that the problem, or just the symptom?

Case: Architectural Associates, Inc. (cont’d) PROBLEM: Deterministic task schedules cause workers to plan to meet schedule – nothing more, nothing less Parkinson’s Law: “Work expands to fill the time available.” RESULT: Issues arising early in each task can be worked around, but late-occurring issues can’t be absorbed in schedule And most issues do arise late

Case: Architectural Associates, Inc. (concluded) The Solution: Use probabilistic time estimates (optimistic, pessimistic, most likely) Have staff schedule work for effectiveness and efficiency, not just to fill x-number of days

Reducing Project Duration to Reduce Project Cost Identifying direct costs to reduce project time Gather information about direct and indirect costs of specific project durations. Search critical activities for lowest direct-cost activities to shorten project duration. Compute total costs for specific durations and compare to benefits of reducing project time.

Project Cost—Duration Graph

Constructing a Project Cost—Duration Graph Find total direct costs for selected project durations. Find total indirect costs for selected project durations. Sum direct and indirect costs for these selected project durations. Compare additional cost alternatives for benefits.

When Trying to Crash a Project . . . Two basic principles 1. Generally, focus on the critical path Usually not helpful to shorten non-critical activities Exception: When a scarce resource is needed elsewhere, e.g., in another project 2. When shortening project duration, choose least expensive way to do it

Fast-Tracking a Project Used Primarily in Construction Industry Building phase started before design and planning phases completed Particularly appropriate when large proportion of work is routine

Approach to Expediting: Fast-tracking/Concurrency Different terms for similar concept “Fast-tracking” (construction), “Concurrent engineering” (manufacturing) Both refer to overlapping project phases E.g., design/build, or build/test

Fast-tracking/Concurrency (cont’d) Pros: Can shorten project duration Can reduce product development cycles Can help meet clients’ demands Cons: Can increase cost through redesigns, excessive changes, rework, out-of-sequence installation, and more

Constructing a Project Cost—Duration Graph Determining Activities to Shorten Shorten the activities with the smallest increase in cost per unit of time. Assumptions: The cost relationship is linear. Normal time assumes low-cost, efficient methods to complete the activity. Crash time represents a limit—the greatest time reduction possible under realistic conditions. Slope represents a constant cost per unit of time. All accelerations must occur within the normal and crash times.

Compute Cost per Day of Crashing a Project Compute cost/time slope for each expeditable activity Slope = crash cost – normal cost normal time - crash time

Activity Graph

FIGURE: Network with Normal and Crash Times and Their Costs

TABLE: Time-Cost Trade-Off

Cost—Duration Trade-off: Another Example

Cost—Duration Trade-off Example (cont’d)

Cost—Duration Trade-off Example (cont’d)

Cost—Duration Trade-off Example (cont’d)

Cost—Duration Trade-off Example (cont’d)

Summary Costs by Duration

Project Cost—Duration Graph

Practical Considerations Using the Project Cost—Duration Graph Crash Times Linearity Assumption Choice of Activities to Crash Revisited Time Reduction Decisions and Sensitivity

What if Cost, Not Time is the Issue? Commonly Used Options for Cutting Costs Reduce project scope Have owner take on more responsibility Outsourcing project activities or even the entire project Brainstorming cost savings options

“Cost, Schedule, or Performance: Pick Any Two.” Assuming fixed performance specifications, tradeoff areas must be in time or cost Time-limited or resource-limited If all three dimensions are fixed, the system is “overdetermined” Normally, no tradeoffs are possible But, something has to give . . .

Goldratt’s Critical Chain: Introduction Similar issues that trouble people about working on projects regardless of type of project unrealistic due dates too many changes resources and data not available unrealistic budget These issues/problems related to need to make trade-offs To what extent are these problems caused by human decisions and practices?

Goldratt’s Critical Chain There are systemic problems that plague project schedule performance These problems are not randomly distributed If they were random, there would be as many projects finishing early as late

Some Systemic Causes of Late Projects 1. Thoughtless Optimism Overpromising at project start “Success-oriented” schedules Lack of management reserves 2. Setting capacity equal to demand Ignoring concepts of resource loading and leveling

Common Chain of Events Safety time misused Misused safety time results in missed deadlines Hidden safety time complicates task of prioritizing project activities Lack of clear priorities results in poor multitasking

Some Systemic Causes of Late Projects (cont’d) 3. “The Student Syndrome” Delaying start of non-critical tasks Parkinson’s Law: “Work expands to fill the time available” 4. Multitasking to reduce idle time Switching back and forth between projects creates delays

Common Chain of Events Poor multitasking increases task durations Uneven demand on resources also results due to poor multitasking More projects undertaken to ensure all resources fully utilized More projects further increases poor multitasking

Some Systemic Causes of Late Projects (concluded) 5. Complexity of schedule drives delay Uncertainty and complex paths join to make trouble 6. People need reason to strive There’s often no advantage seen to finishing early 7. Game playing E.g., lower levels pad estimates, senior management slashes them Both can be equally arbitrary

Reversing the Cycle Reduce number of projects assigned to each individual Schedule start of new projects based on availability of bottleneck resources Reduce amount of safety time added to individual tasks and then add some fraction back as project buffer activity durations set so that there is a high probability the task will not be finished on time

The Critical Chain Longest chain of consecutively dependent events considers both precedence relationships and resource dependencies Project Buffer Feeding Buffer

Figure: Project and Feeder Buffers