Time-Cost Trade off

Presented by: Group 1

Course title: BLDG 6801

Professor Khaled El-Fekhfakh

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Time-Cost Trade-off

Mohamed Fared Zuhri Yafi 9762132

Overview

Introduction

Scheduling Techniques

Earned Value

Incentives/disincentives effect

Optimization of time-cost trade-off problems

Case study

Conclusion

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Introduction

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What is time cost trade-off? Determining which activities to “crash” in order to produce the maximum

overall job profit.

What is crashing?

Why is it important?.

CASE STUDY: Renovation of residential building in downtown Montreal.

Scheduling Techniques

4

Bar Chart CPM

PertMonte Carlo Method

BIM LOB LSM

Earned Value Project Management

• Integration the project scope, time and cost using HEURISTIC METHODS

Incentives/disincentives effect on time cost off

5

Offering contractors a monetary incentive for early project completion .

Types of Incentives :

Bonus /penalty : Time based used to reward and penalize contractors for early and late project completion .

Advantage: Reduce the duration of the project

Disadvantage: Increase the cost

8

Optimization of time-cost trade-off problems

73 72 71 70 69 68 67 66 65 64 63 62 61 60 59 580

200

400

600

800

1000

1200

1400

1600

1800

2000

Project Indirect Cost

Project Direct Cost

Total Cost

Time (Days)

Cost

($)

Indirect costs

increase by prolonging the duration

Direct costs

increases by reducing the duration

Optimum point

The duration of a specific project in

which the least total cost happens.

Initiation Planning Execution Monitoring Closing

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Generating algorithms• Optimum point can’t be found easily

• Many repetitions

• Need to define population size and set an algorithm.

Changing

activity duration

Critical path

changes

New project

duration

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Ant colony optimization

Ants leave a pheromone trail between the nest and the food.

1. Other ants follow the trail.

2. Too much pheromone try a new trail

3. Different ways Chose the shorter ones

• Avoid repetition

• Avoid following unnecessary paths.

Initiation Planning Execution Monitoring Closing

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Fuzzy Sets• Adding weight to:

Time Cost Quality

Fitness function• Defines how much risk is the PM or the

owner willing to take.

Case study

Renovation of residential building in Montreal downtown on the corner of De la Montagne and

Notre-dame .

2-storey building of 200 sq.m/floor, and 125 sq.m parking space.

Building to be delivered as a space for a restaurant including a 200 sq.m ground floor,

consisting of a kitchen, dining area and two small bars. A 200 sq.m First floor divided into 100

sq.m dining area including a bar counter and a 100 sq.m terrace.

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Earned Value Implementation

The date when analysis was done was as of 31st of January 2013. Duration before delay = 1/1/2013 to 4/4/2013

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As of 31st Jan 2013

Activity Budgeted Cost Actual Cost Earned Scheduled Start Date Scheduled End Date Scheduled Duration Actual Start Date Actual End Date Actual DurationA -$ -$ -$ 01/01/2013 02/01/2013 2 01/01/2013 02/01/2013 2B -$ -$ -$ 03/01/2013 07/01/2013 3 03/01/2013 07/01/2013 3C -$ -$ -$ 03/01/2013 04/01/2013 2 03/01/2013 04/01/2013 2D 1,382.00$ 1,210.00$ 1,382.00$ 08/01/2013 09/01/2013 2 08/01/2013 09/01/2013 2E 4,145.90$ 3,890.00$ 4,145.90$ 15/01/2013 23/01/2013 7 15/01/2013 23/01/2013 7F 6,909.80$ 6,200.00$ 6,909.80$ 10/01/2013 11/01/2013 2 10/01/2013 11/01/2013 2G 3,454.90$ 3,128.00$ 3,454.90$ 10/01/2013 14/01/2013 3 10/01/2013 14/01/2013 3H 1,049.00$ 1,000.00$ 210.00$ 28/01/2013 31/01/2013 4 28/01/2013 Not Finished 1I 410.00$ 400.00$ 200.00$ 24/01/2013 25/01/2013 2 24/01/2013 Not Finished 1J 369.80$ -$ -$ 24/01/2013 25/01/2013 2 Not Started Not Finished 0

Earned Value is implemented after activity H (Demolition)

Earned Value Results

Duration after delay = 1/1/2013 to 4/9/2013 (3 business days delay).

Original Cost = $138,169.59

Overhead = 35% of Original Cost = $48,359.36

Original Duration = 68 days working days.

Overhead per day = 48359.36 / 68

= $711.17 / working day.

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Planned Value 17,721.40$ Actual Cost 15,828.00$ Earned Value 16,302.60$

Cost Variance 474.60$ Schedule Variance (1,418.80)$ Cost Performance Index 1.02998484Schedule Performance Index 0.91993861

Updated Schedule

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Crashing Cost & Maximum Crashing Time

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Three Cases:

Case I Penalty for delay

Case II Bonus for speed & Penalty for delay

Case III Complete crashing test for optimization

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Case I

CONTRACTUAL DEADLINE = 4/4/2013,

FEE OF $500/DAY OF DELAY.

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19

•Crashing Activity J has no effect•Activity I cannot be crashed

Activity

Crash Cost / Day ($)

J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

20

•Crashing Activity K 1 day reduces schedule by 1 day and costs $246 (<$1211.17).•New critical path (add N).•Activities K & N one Activity total crashing cost = 246+300=$546 per day. •Crash H first

Activity


J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

21

•Crashing Activity H 1 day reduces schedule 3 days and costs $525.50 (<$1211.17) •Activity H can no longer be crashed•Activity X next to be crashed = $678.51• However, it is cheaper to crash Activities K&N at the cost of $546

Activity


J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

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•Crashing Activities K&N reduces schedule by 1 day and costs $546 (<$1211.17). •This brings the contractor back to the contractual deadline of 4/4/13

Activity


J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

Case I Summary

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Total cost of crashing = $1,317.5

Days Saved = 3

Total cost of delay = Penalty + Indirect Costs= 2500+2,135.1 = $4,635.1

Crashing Cost < Cost of Delay

Most of the activities are critical.

Case II

BONUS OF 10% OF ORIGINAL COST [$13,816.96]

IF COMPLETED IN MARCH 3/22/2013

EARLIER THAN CONTRACTUAL DEADLINE

FEE OF $500/DAY OF DELAY.

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•Crashing Activity J has no effect•Activity I cannot be crashed

Activity


J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

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•Crashing Activity K 1 day reduces schedule by 1 day and costs $246 (<$1211.17).•New critical path (add N).•Activities K & N one Activity total crashing cost = 246+300=$546 per day. •Crash H first

Activity


J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

27

•Crashing Activity H 1 day reduces schedule 3 days and costs $525.50 (<$1211.17) •Activity H can no longer be crashed•Activity X next to be crashed = $678.51• However, it is cheaper to crash Activities K&N at the cost of $546

Activity


J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

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•Crashing Activities K&N reduces schedule by 1 day and costs $546 (<$1211.17) •K&N Can’t be crashed, crashing L is useless•Fee No Longer Applicable !

Activity


J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

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•Crashing Activity X 1 day reduces schedule by 1 day and costs $678.51 (<$711.17). •Activity Y in the critical path , Activity X is no longer crash-able.

Activity


J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

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•Crashing Activity W 3 days reduces the schedule by 5 days and costs $2,251.53 (>$711.17x3 working days=$2,133.51).

•Crashing not justified.•Reward absorbs [13816.96] - 2251.53 + 2133.51 = $13,698.94

Activity


J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

31

•Crashing Activity T 1 day reduces schedule by 1 day and costs $1910.45 (>$711.17).

•Activities S&U critical path. Activity X no longer crash-able.•Crashing not justified.•Reward absorbs [13698.4] – 1910.45 + 711.17 = $12,499.66•To continue crashing, Activities T&U are to be crashed or S&U. S&U are cheaper.

Activity


J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

32

•Crashing Activities S&T 1 day each reduces schedule by 1 day and costs $2,293.4 (>$711.17).

•Activity T no longer be crashed. Reducing Activities S&U right now will not reduce schedule.

•Crashing not justified.•Reward absorbs [12499.66] – 2293.4 + 711.17 = $10,917.83•To continue crashing Activity R.

Activity


J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

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•Crashing Activities R&U 3 days each reduces schedule by 5 days and costs $10,126.98 (>$711.17x3 business days).

•Crashing not justified.•Reward absorbs [10917.83] – 10126.98+ 711.17 = $2,923.53•Bonus deadline met

Activity


J 180

I n/a

K 246

N 300

S 382

U 407

H 525

L 633

X 678

W 750

O 1528

T 1910

Z 2667

R 2968

P 2999

Y 4702

M n/a

Q n/a

V n/a

Case II Summary

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Days Saved = 9

Total cost of delay = Penalty + Indirect Costs= 2500+6,400.53= $8,900.53

Bonus = $13,816.96

Total Benefit = 13816.96+8900.53-18578.37= $4,139.12

Crashing Cost < Cost of Delay + Bonus

Risk vs. Reward

Case III

CRASH ALL THE ACTIVITIES, REGARDLESS OF COST

TEST FOR OPTIMIZATION

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Case III Summary

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Days Saved = 13

Total cost of delay = Indirect Costs= $9,245.21

Total Benefit = 9,245.21-27,770.65= -$18,525.44

Crashing Cost > Cost of Delay

Most of the activities are critical.

Case III Results

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Indirect Total Day Original Cost Crashing Cost Accumalative Crashing Cost Project Cost Overhead Project Cost73 138169.59 0 138169.59 51915.41 19008572 138169.59 1051 1051 139220.59 51204.24 190424.8371 138169.59 246 1297 139466.59 50493.07 189959.6670 138169.59 546 1843 140012.59 49781.9 189794.4969 138169.59 146011.59 49070.73 195082.3268 138169.59 5999 7842 146011.59 48359.56 194371.1567 138169.59 2968.03 10810.03 148979.62 47648.39 196628.0166 138169.59 153615.78 46937.22 20055365 138169.59 4636.16 15446.19 153615.78 46226.05 199841.8364 138169.59 3375.66 18821.85 156991.44 45514.88 202506.3263 138169.59 3350.98 22172.83 160342.42 44803.71 205146.1362 138169.59 678.51 22851.34 161020.93 44092.54 205113.4761 138169.59 163272.46 43381.37 206653.8360 138169.59 163272.46 42670.2 205942.6659 138169.59 2251.53 25102.87 163272.46 41959.03 205231.4958 138169.59 2667.78 27770.65 165940.24 41247.86 207188.1

Direct

Optimum Point – With Revised Schedule

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Conclusion

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• Tedious

• Beneficial

• ‘Prevention is better than cure’

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Thank You

Time-Cost Trade off

Business

Transcript of Time-Cost Trade off