LEAST-COST SCHEDULING METHOD

OF PROJECT TIME CRASHING

Dr. Nida Azhar

Dated : October 1, 2014

Definition
A least cost schedule is one with
optimum project duration such that
to lengthen or shorten it would
increase the project total cost.

TIME-COST RELATIONSHIPS
Direct Costs
Direct costs, once a target schedule has
been developed, normally increase with
a decrease in time.

Indirect costs
Indirect costs, generally, vary directly
with time, i.e. a decrease in time causes
a decrease in indirect costs, and vice
versa.

Conditions governing the shortening

of project duration (1/2)
The shortening of project without increasing direct costs will
increase the rate of capital turnover, and will reduce the
indirect costs, i.e. those that vary directly with time. This
may be the case when the technique to perform an activity
is revised and replaced i.e. a more cost-effective technique
is used which also provides a reduced project duration.
By re-defining activity links (revised time planning)
By using more efficient construction methods
By improving resource productivity / using more efficient
resources
By optimizing available resources (revised resource & cost
planning)

Conditions governing the shortening

of project duration (1/2)
Increased direct costs due to crashed action may
result in saving time, thereby increasing capital
turnover, and possibly decreasing total costs as
well, if the cost of the crash action is less than the
incidence of indirect costs for the time saved.
This is normally the case and we will consider this
case to illustrate least-cost scheduling.

Cost Slope

Normal time (DN) and normal cost (CN) are the values
achieved when the activity is performed at minimum
cost. Crash time (DC) and crash cost (CC) are the
values for performing the activity in minimum time.

Cost slope =

(CC CN)/(DN DC)

Method Approach
The prime purpose of time-cost
tradeoff study of a network is to
reduce the project duration to the
most economical duration, which is
the point where the total cost curve
is a minimum.

Method Assumptions
The planned duration of an activity can be any
whole day value between and including the normal
and crash durations. For example, if A has a normal
duration = 10 days and a crash duration = 7 days,
then it has a possible duration = 7, 8, 9, or 10 days.
Linear Compression i.e. the direct cost of an activity
is linear between the normal and crash direct costs.
For example, if As cost for a 10-day duration = Rs.
1700 and for a 7-day duration = Rs. 2000, then As
cost for an 8-day duration = Rs. 1900 and for a 9day duration = Rs. 1800.

Method Steps
1. Develop the project network diagram and perform CPM calculations
considering normal project conditions.
2. Identify critical activities (these are the activities that will be crashed).
3. Among critical activities, select an activity which has least cost slope.
4. Compress the selected activity. An activity can be compressed maximum
up to its crash limit.
5. Note that if, during compression of the selected activity, another path
becomes critical, select another activity from the newly generated
critical path having least cost slope and compress these two activities
simultaneously.
6. Compress all critical activities till their crash limits (or up to desired
limit).
7. Note that if there is more than one critical path, and crash limit of one is
fully consumed, crashing cannot be continued further.
8. The result will be the optimum time-cost solution.

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