Lecture 8
Lecture 8
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Technical University of Middle Euphrates Engineering Management and Construction Equipment
Technical University of Middle Euphrates Engineering Management and Construction Equipment
Example 9-1: The table below shows the durations and costs of a small project. Overhead costs
Example 8-1:The table below shows the durations and costs of a small project. Overhead costs
Example 9-1:
of the project are $2000 per week. Find the optimum duration of the project and the associated
The
of thetable below
project showsperthe
are $2000 durations
week. Find theand costs of
optimum a small
duration project.
of the projectOverhead costs
and the associated
of the cost, then
project draw
are thethe
$2000 least cost network and the project cost-duration curve.
cost, then draw least per
cost week.
networkFind theproject
and the optimum durationcurve.
cost-duration of the project and the
associated cost, then draw the least cost network and the project cost-duration curve.
Sol/:
Sol./
Sol./
Duration (weeks) Cost ($) Days to Cost
Activity Duration (weeks) Cost ($) Days to
reduce Cost
slope
Activity reduce slope
Normal Crash Normal Crash (week) ($/week)
Normal Crash Normal Crash (week) ($/week)
1-2 4 2 4000 12000 2 4000
1-2 4 2 4000 12000 2 4000
2-3 5 2 3000 7500 3 1500
2-3 5 2 3000 7500 3 1500
2-4 7 5 3600 6000 2 1200
2-4 7 5 3600 6000 2 1200
3-4 4 2 5000 10000 2 2500
3-4 4 2 5000 10000 2 2500
∑ 15600
∑ 15600
13
13
4
4
7
7
4
0 4 4
0 4 1 9
4 9
1 4 2 5 3
1 2 5 3
3-4 4 2 5000 10000 2 2500
∑ 15600
13
7
4
0 4
9
1 4 2 5 3
By crashing activity 2-3, 2 weeks, cost to pay = 1500 × 2 = $3000 Direct cost of the
project = 15600 + 3000 = $18600
Total cost of the project = 18600 + 2000 × 11 = $40600
1-2-4 = 11 weeks
1-2-3-4 = 11 weeks
By crashing both of activity 2-3 and activity 2-4, 1 week, cost to pay = 1500 + 1200
= $2700 Direct cost of the project = 18600 + 2700 = $21300
Total cost of the project = 21300 + 2000 × 10 = $41300
1-2-4 = 10 weeks
1-2-3-4 = 10 weeks
Optimum duration of the project completion 11 weeks
Total cost of the project associated with optimum duration is $40600 To draw the
cost-duration curve more points are required
By crashing both of activity 2-4 and activity 3-4, 1 week, cost to pay = 1200 + 2500
= $3700 Direct cost of the project = 21300 + 3700 = $25000
Total cost of the project = 25000 + 2000 × 9 = $43000
1-2-4 = 9 weeks
1-2-3-4 = 9 weeks
By crashing activity 1-2, 2 weeks, cost to pay = 4000 × 2 = $8000 Direct cost of the
project = 25000 + 8000 = $33000
2
By crashing activity 1-2, 2 weeks, cost to pay = 4000 × 2 = $8000
By crashing activity 1-2, 2 weeks, cost to pay = 4000 × 2 = $8000
Direct cost of the project = 25000 + 8000 = $33000
Direct cost of the project = 25000 + 8000 = $33000
Total cost of the project = 33000 + 2000 × 7 = $47000
Total cost of the project = 33000
Total cost + 2000
of the project × 7 = +$47000
= 33000 2000 × 7 = $47000
1-2-4 = 7 weeks
1-2-4 = 7 weeks
1-2-4 = 7 weeks
1-2-3-4 = 7 weeks
1-2-3-4 = 7 weeks1-2-3-4 = 7 weeks
$
$ $
$ $
$
(weeks)
(weeks)
4
4
7
47
4
1 4 2
4 3
1 2 3
3 3
Page 3 of 5
Page 3 of 5
3
Example 9-2: The network and cost data for activities of a simple project are illustrated below.
Example 8-2: cost of the project is $500 per week and the gain for early completion is $800 per
The indirect
The week. Determine the optimum duration of the project and the associated cost.
network and cost data for activities of a simple project are illustrated below. The
indirect cost of the project is $500 per week and the gain for early completion is $800
per week. Determine the optimum duration of the project and the associated cost.
Cost (US$)
Duration (Weeks)
Activity
Sol/:
Page 4 of 5
4
Sol./
5
Activity Normal Crash
Time (days) Cost ($) Time (days) Cost ($)
1-2 3 360 2 400
2-3 6 1440 4 1620
2-4 9 2160 5 2380
2-5 7 1120 5 1600
3-4 8 400 4 800
4-5 5 1600 3 1770
5-6 3 480 2 760
Programme Evaluation and Review Technique 15.19
Sol/:
Obviously the 1st course is to be preferred and the network. if now revised. would be
identical with the one of figure E.
Activity Normal Crash Crash Crash Cost
Often. however. management would be interested in the least total cost duration
Durationrather than ($)
Time Cost ($) Time Cost ($)
the least possible
(days) duration. (days) (days)
Now, suppose there is an indirect cost of Rs. 800 per day. What would then be the least cost
1-2 3 360 2 400 1 40
project duration for the example on hand ? The various cost data are tabulated below:
2-3 Duration 6 Direct1440
(Crashing) cost 4 Indirect 1620
cost 2Total cost 90
2-4 12 9 2160 0 5 96002380 4 9600 55
2-5 11 7 1120100 5 88001600 2 8900 240
3-4 10 8 400 600 4 8000 800 4 8600 100
4-5
9 5 1600
1200 3
72001770 2
8400 85
8 2100 6400 8500
5-6 3 480 2 760 1 280
Thus 9 days is the least toal cost duration and rationally the management should go in for
this unless high opportunity losses compel them to select a lower7560 duration project plan.
Illustration
Consider the following network and the table for a particular project which consists of 7
activities.
Figure 11
Possible(The
paths to execute
number the project:
indicated along the activity arrows are the normal duration.)
1-2-4-5-6= 20
Activity Noraml Crash Cost slopes
Times Cost Time Cost ∆T ∆ C ∆C/∆T
1-2-3-4-5-6= 25 CP (days) Rs. (days) Rs.
1–2 3 360 2 400 1 40 40
1-2-5-6= 13
2–3 6 1440 4 1620 2 180 90
2–4 9 2160 5 2380 4 220 55
Project completion
2–5 time7 = 25 1120
days 5 1600 2 480 240
3–4 8 400 4 80 4 400 100
4–5 5 1600 3 6 1770 2 170 85
5–6 3 480 2 760 1 280 280
7560 9330
Normal direct cost of the project = $7560
Normal indirect cost of the project= 100*25= $2500
Total normal cost of the project = 7560 + 2500= $10010
By crashing activity 1-2, 1 day, cost to pay = 40 × 1 = $40
Direct cost of the project = 7560+ 40 = $7600
1-2-4-5-6= 19
1-2-3-4-5-6= 24 CP
1-2-5-6= 12
Indirect cost of the project= 100 * 24= $2400
$ &/,5694(3(5+*9(:/;04,:(5++09,*;*6:;:-69;/,(*;0=0;0,:6-(7961,*;(9,:/6>5),36>
Total cost of the project = 7600 + 2400 = $10000
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Homework 8-1:
( 9(>;/,5,;>692+0(.9(4
) ,;,9405,;/,*90;0*(37(;/
The *
normal and crash times and direct costs for the activities of a project
05+;/,40504<4*6:;7961,*;:*/,+<3,0-;/,05+09,*;*6:;:(9,%:7,9>,,2 are shown
below:
Q5. The normal and crash times and direct costs for the activities of a project are shown below:
Activities Time Cost
7
8