Time Cost Trade Off

Time Cost Trade Off
Cost Control In Construction
Important of MIS

1. Department of Collegiate and Technical Education Week – 09, Session - 03 Course outcome: 20CE43P Site Management ( IV Semester) Civil Engineering Civil Engineering – 20CE43P

2. Table of Content Time-Cost Trade-Off Cost Control in Construction Importance of Management Information System MCQ Civil Engineering – 20CE43P

3. 1. Time-Cost Trade-Off Terms related to Time-Cost Trade-Off Direct Project Cost : The cost and expenses that are accountable on facility, function or product such as cost incurred on labour , material, equipment etc. are called as direct costs. Normal Time : Normal time is the standard time that an estimator would usually allowed for an activity. Crash Time : Crash time is the minimum possible time in which an activity can be completed. Normal Cost : This is direct cost required to complete the activity in normal time duration. Crash Cost : This is the direct cost corresponding to the completion of the activity within crash time. Civil Engineering – 20CE43P

4. Cost Slope : This is the slope of the direct cost curve, approximated as straight line. Indirect Project Cost : An indirect cost in construction is an expense that doesn't relate directly to the functions, products or operations of a construction project such as cost incurred on administrative processes and staff salaries, overhead cost, lost profit, loss of revenue, penalty etc. Total Project Cost : This is the sum of direct project cost and indirect project cost. Optimum Duration & Optimum Cost : The duration in which minimum total cost is obtained is known as optimum duration and the corresponding cost is known as optimum cost.   Civil Engineering – 20CE43P

5. What is Time-Cost Trade-Off or Crashing ? The process of reduction of total project duration along the longest path (time wise) of the network i.e. along the critical path to obtain the optimum project cost and optimum duration is called “time-cost trade-off or crashing”. The activity duration can be reduced by one of the following actions: Applying multiple-shifts work. Working extended hours (over time ). Offering incentive payments to increase the productivity. Working on week ends and holidays. Using additional resources. Using materials with faster installation methods. Using alternate construction methods or sequence. Civil Engineering – 20CE43P

6. Procedure for crashing the network : Draw the network diagram. Determine the critical path. Indicates critical path along network diagram. Determine cost slope of each activity. Start crashing the activities along the critical path having minimum cost slope. Activity having minimum cost slope is crashed until its crashing potential is exhausted and new critical path are formed. If new critical path is formed then we to crash combination of critical activity (parallel activity) having minimum cost slope and continue till there is no further scope of crashing. Civil Engineering – 20CE43P

7. 1.1 Example for crashing of project work : Consider the data of a project as shown in the following table-1.1which has to be complete in 9days. Take overhead cost of the project = Rs.200/day Table-1.1 Civil Engineering – 20CE43P Activity   Normal Time (Days) Normal Cost ( Rs .) Crash Time (Days) Crash Cost ( Rs .) 1-2 3 2500 1 3500 2-3 4 2600 2 3400 2-4 7 2500 4 3400 3-4 5 2400 2 3000

8. Solution : Step -1 : Draw the network diagram . Fig-1.1 Step -2 : Determine the critical path. Fig-1.2 Civil Engineering – 20CE43P Possible Paths = 1-2-3-4=12days 1-2-7=10days Critical Path = 1-2-3-4 Project Duration = 12days Normal Project Cost = 10000 Total Project Cost = 10000+12x200 = 12400

9. Step-3 : Determine cost slope of each activity Similarly calculate the cost slope of each activity and enter as shown in table-1.2 Table-1.2   Civil Engineering – 20CE43P Activity   Normal Time (Days ) Normal Cost ( Rs .) Crash Time (Days) Crash Cost ( Rs .) Cost Slope ( Rs .) 1-2 3 2500 1 3500 500 2-3 4 2600 2 3400 400 2-4 7 2500 4 3400 100 3-4 5 2400 2 3000 200

10. Step-4 : Start crashing the activities along the critical path having minimum cost slope. Crashing the activity 3-4 by 2 days which has minimum cost slope of Rs.200 ∴ Total Project Cost = 12400+2x200-2x200= 12400 Step-5 : If new critical path is formed then we have to crash combination of critical activity (parallel activity) having minimum cost slope and continue till there is no further scope of crashing. Fig-1.3 Civil Engineering – 20CE43P

11. From the above network (Fig-1.3) we found two critical paths (1-2-3-4 and 1-2-4) of same duration. From the table-2 it is clear that we can crash the activities 2-4 by 1day and 3-4 by 1day which has minimum cost slope value of Rs.100 and Rs.200 respectively to crash the network to maximum of 9 days. Fig-1.4 ∴ Total Project Cost = 12400+(1x100+1x200)-1x200=12500 Finally the total project cost to complete the project in 9days by crashing the activities is Rs.12500 Civil Engineering – 20CE43P Activity   Crash Time (Days) Cost Slope ( Rs .) 1-2 1 500 2-3 2 400 2-4 4 100 3-4 2 200

12. 2. Cost Control in Construction Cost control in construction is the process by which managers keep expenses under control by managing labor, material, and overhead costs to ensure that the project finishes on budget . Cost Control Techniques : Following are some of the valuable and essential techniques used for efficient project cost control: Planning the Project Budget Keeping a Track of Costs Effective Time Management Project Change Control Use of Earned Value Civil Engineering – 20CE43P

13. 1. Planning the Project Budget Planning the project budget at the beginning of the planning session. It involves a lot of research and critical thinking . always have to leave room for adjustments as the costs may not remain the same. Adhering to the project budget at all times is key to the profit from project . 2. Keeping a Track of Costs Keeping track of all actual costs is also equally important as any other technique . The actual costs will have to be tracked against the periodic targets that have been set out in the budget.(monthly or weekly or yearly basis ) This is much easier to work with rather than having one complete budget for the entire period of the project. Civil Engineering – 20CE43P

14. 3. Effective Time Management It is very important with regard to project cost control. Cost of project could keep rising if it is not completed in scheduled time. The project manager would need to constantly remind his/her team about project completion time. 4. Project Change Control Project change control is yet another vital technique Any change to the scope of the project will have an impact on the deadlines of the deliverables S o the changes may increase project cost 5. Use of Earned Value This technique is helpful to identify the value of the work that has been carried out. This is particularly helpful for large projects Civil Engineering – 20CE43P

15. 3.Importance Management Information System “ An information system consisting of the tools and techniques used to gather, integrate, and disseminate the outputs of project management processes. It support in all aspects of the project from initiating through closing It provides information and data that needs to be managed and organized. It helps project professionals to easily plan and track project progress in all stages of its lifecycle .  Civil Engineering – 20CE43P

16. Requirements for selecting a PMIS : Planning & Scheduling Budget & Estimating Resource & Procurement Management Cost Management & Project Performance Progress Reporting Data & System Integration Civil Engineering – 20CE43P

17. 1. Planning & Scheduling A PMIS will be able to plan and compute the project’s schedule and its critical path. 2. Budget & Estimating A PMIS needs to combine project cost estimating, forecasting, cost data and schedule information in order to determine accurate project progress and performance . 3. Resource & Procurement Management It is important for a PMIS to have functionality to manage the complete procurement process since resources and procured items are a large portion of a project’s cost and preliminary budget.  Civil Engineering – 20CE43P

18. 4. Cost Management & Project Performance A solid PMIS enables project managers to control project cost and performance. It will allow for updating existing plans as actuals against planned data changes, and provide what-if scenarios to them while tracking and managing all project changes.  5. Progress Reporting A PMIS will have the capability to create and share reports of collected and analyzed data . 6. Data & System Integration A PMIS needs to be able to integrate with other applications or software systems. This system integration allows for accessing data from different projects for multi-project analysis and bridging gaps between systems and applications needed to have all project information in one place. Civil Engineering – 20CE43P

19. Thank You Moderator : Sudhindra Yeri , GPT Bagalkote /152 Content Developer : Aniket Gachchi , GPT Kalgi /166 Civil Engineering – 20CE43P