Time Cost Trade Off PDF

PROJECT TIME-COST TRADE-OFF
Activity durations can often vary depending upon the type and amount of resources that are applied.
Assigning more workers to a particular activity will normally result in a shorter duration. Greater speed
may result in higher costs and lower quality. Reducing both construction projects cost and time is
critical in todays market-driven economy. This relationship between construction projects time and
cost is called time-cost trade-off decisions, which has been investigated extensively in the construction
management literature. Time-cost trade-off decisions are complex and require selection of appropriate
construction method for each project task. Time-cost trade-off, in fact, is an important management
tool for overcoming one of the critical path method limitations of being unable to bring the project
schedule to a specified duration.
Time-Cost Trade-Off
The objective of the time-cost trade-off analysis is to reduce the original project duration, determined
form the critical path analysis, to meet a specific deadline, with the least cost.
In addition to that it might be necessary to finish the project in a specific time to:
1. Finish the project in a predefined deadline date.

2. Recover early delays.
3. Avoid liquidated damages.
4. Free key resources early for other projects.
5. Avoid adverse weather conditions that might affect productivity.
6. Receive an early completion-bonus.
7. Improve project cash flow
Reducing project duration can be done by adjusting overlaps between activities or by reducing activities
duration. What is the reason for an increase in direct cost as the activity duration is reduced? A simple
case arises in the use of overtime work. By scheduling weekend or evening work, the completion time
for an activity as measured in calendar days will be reduced. However, extra wages must be paid for
such overtime work, so the cost will increase. Also, overtime work is more prone to accidents and
quality problems that must be corrected, so costs may increase. The activity duration can be reduced by
one of the following actions:
1. Applying multiple-shifts work.

2. Working extended hours (over time).
3. Offering incentive payments to increase the productivity.
4. Working on week ends and holidays.
5. Using additional resources.
6. Using materials with faster installation methods.
7. Using alternate construction methods or sequence.
8.2 Activity Time-Cost Relationship
In general, there is a trade-off between the time and the direct cost to complete an activity; the less
expensive the resources, the larger duration they take to complete an activity. Shortening the duration
on an activity will normally increase its direct cost which comprises: the cost of labor, equipment, and
material. It should never be assumed that the quantity of resources deployed and the task duration are
inversely related. Thus one should never automatically assume that the work that can be done by one
man in 16 weeks can actually be done by 16 men in one week.
A simple representation of the possible relationship between the duration of an activity and its direct
costs appears in Figure 8.1. Considering only this activity in isolation and without reference to the
project completion deadline, a manager would choose a duration which implies minimum direct cost,
called the normal duration. At the other extreme, a manager might choose to complete the activity in
the minimum possible time, called crashed duration, but at a maximum cost.
The linear relationship shown in the Figure 8.1 between these two points implies that any intermediate
duration could also be chosen. It is possible that some intermediate point may represent the ideal or
optimal trade-off between time and cost for this activity. The slope of the line connecting the normal
point (lower point) and the crash point (upper point) is called the cost slope of the activity. The slope of
this line can be calculated mathematically by knowing the coordinates of the normal and crash points.
Cost slope = crash cost normal cost / normal duration crash duration
As shown in Figures 8.1, 8.2, and 8.3, the least direct cost required to complete an activity is called the
normal cost (minimum cost), and the corresponding duration is called the normal duration. The shortest
possible duration required for completing the activity is called the crash duration, and the corresponding
cost is called the crash cost. Normally, a planner start his/her estimation and scheduling process by
assuming the least costly option

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PROJECT TIME-COST TRADE-OFF

1. Finish the project in a predefined deadline date.

1. Applying multiple-shifts work.

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