Cost scheduling (crashing of
network)
•Once the time to complete a project is
determined, it is important to know how
much it will cost to do the project.
•If a project is completed within the normal
time, a given cost will be incurred. It can be
possible to reduce the time taken to complete
the project by using more resources such as
labour and also machinery, though at a higher
cost.
Penalties and bonuses
•These are common in projects whereby a contractor
may be given a bonus for completing the project
before the time specified and on the other hand
may have to pay a penalty if the project is not
completed within the scheduled time.
•It is important to calculate whether it is worthwhile
to take advantage of the bonus by employing more
resources by comparing the normal costs and the
costs of completing the project early.
Terminologies used in cost scheduling
•Normal cost- cost associated with a normal time.
•Crash cost – cost associated with minimum possible
time for an activity. Crash costs are normally higher
than the normal cost because of the need to
employ more resources.
•Crash time –The minimum possible time an activity
is planned to take by employing more resources.
•Cost slope- average cost of shortening an activity by
one time unit. It is given by the following formula:
•Cost slope= crash cost-normal cost
Normal time-crash time
Crashing guidelines
•Reduce only the duration of the critical path
activities.
•If there are two or more critical paths, reduce
the duration of all the critical paths
simultaneously by the same duration.
•Crash an activity by its maximum crushable
time or just make another part equally critical
whichever will result in the lower crash time.
•If there are alternative activities to be
crushed, start with the ones that will result in
the lowest cost slope i.e. cost per unit change
in time.
•After every crash, calculate a new schedule
before proceeding to the next crash.
•Perform a time cost analysis.
Example
•Assume that the normal time for undertaking an
activity is 40 weeks at a cost of Kshs.500,000. More
resources can be employed to complete the activity
within 30 weeks and the cost will be Kshs.650, 000.
Calculate the cost slope.
•Cost slope = (650,000-500,000)/40-30= 15,000
•The activity time can be reduced by a cost of
Kshs.15, 000 per week.
Example
•A project consists of 7 activities whose normal time
and cost, and crash time and cost are as given
below.
Activity
Normal
time
Normal cost
Crash time
Crash
cost
1
-2
4
600
3
800
1
2
400
2
400
