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Crash Cost

The document outlines formulas for calculating crash costs and project duration reductions in project management. Key calculations include Crash Cost Per Unit Time, Total Crash Cost, Time Savings Impact, and the total cost after crashing, which considers both direct and indirect costs. It also provides steps for effectively implementing project crashing by prioritizing activities based on cost efficiency.

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65 views2 pages

Crash Cost

The document outlines formulas for calculating crash costs and project duration reductions in project management. Key calculations include Crash Cost Per Unit Time, Total Crash Cost, Time Savings Impact, and the total cost after crashing, which considers both direct and indirect costs. It also provides steps for effectively implementing project crashing by prioritizing activities based on cost efficiency.

Uploaded by

vtu12369
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

Crash Cost Per Unit Time


This formula calculates the cost to reduce the project duration by one unit of
time (e.g., days, weeks).
Crash Cost Per Unit Time=Crash Cost−Normal CostNormal Time−Crash Time\
text{Crash Cost Per Unit Time} = \frac{\text{Crash Cost} - \text{Normal Cost}}
{\text{Normal Time} - \text{Crash
Time}}Crash Cost Per Unit Time=Normal Time−Crash TimeCrash Cost−Normal C
ost
Where:
 Normal Cost = Cost to complete the task in normal time.
 Crash Cost = Cost to complete the task in crash time.
 Normal Time = Time to complete the task without crashing.
 Crash Time = Time to complete the task with crashing.

2. Total Crash Cost


To calculate the total crash cost for a specific reduction in project duration:
Total Crash Cost=Crash Cost Per Unit Time×Time Reduced\text{Total Crash Cost}
= \text{Crash Cost Per Unit Time} \times \text{Time
Reduced}Total Crash Cost=Crash Cost Per Unit Time×Time Reduced

3. Time Savings Impact


This formula measures how much time is saved by crashing activities.
Time Savings Impact=Original Project Duration−Reduced Project Duration\
text{Time Savings Impact} = \text{Original Project Duration} - \text{Reduced
Project
Duration}Time Savings Impact=Original Project Duration−Reduced Project Durati
on

4. Revised Project Duration


Revised Project Duration=Original Duration−∑(Time Reduced for Activities)\
text{Revised Project Duration} = \text{Original Duration} - \sum(\text{Time
Reduced for
Activities})Revised Project Duration=Original Duration−∑(Time Reduced for Activ
ities)

5. Direct and Indirect Costs Tradeoff


The total project cost after crashing includes both direct and indirect costs.
Total Cost After Crashing=Total Direct Cost+Total Indirect Cost\text{Total Cost
After Crashing} = \text{Total Direct Cost} + \text{Total Indirect
Cost}Total Cost After Crashing=Total Direct Cost+Total Indirect Cost
 Direct Costs = Costs associated with crashing specific activities.
 Indirect Costs = Overhead or general costs proportional to project
duration.

6. Optimal Point Analysis


The optimal crash point minimizes the total project cost:
Optimal Point: Minimum Total Cost=Direct Cost+Indirect Cost\text{Optimal Point:
Minimum Total Cost} = \text{Direct Cost} + \text{Indirect
Cost}Optimal Point: Minimum Total Cost=Direct Cost+Indirect Cost

Steps in Project Crashing:


1. Identify critical path activities.
2. Calculate crash cost per unit time for each activity.
3. Prioritize crashing activities with the lowest cost per unit time.
4. Update project schedule and recalculate the critical path.
5. Ensure constraints like resources and quality are met.
Let me know if you'd like help applying these formulas to a specific project!

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