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:

➢ Finish
the project in a predefined deadline date.
➢ Recover early delays.
➢Avoid liquidated damages.
➢Free key resources early for other projects.
➢Avoid adverse weather conditions that might affect
productivity.
➢ Receive an early completion-bonus.
➢ Improve project cash flow
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.
 a manager might choose to complete the activity in the minimum possible time, called
crashed duration, but at a maximum cost.

Normal time:
Normal time is the time required to
complete the activity at normal
conditions and cost.
Crash time:
Crash time is the shortest possible
activity time; crashing more than the
normal time will increase the direct
cost.
Cost Slope
Cost slope is the increase in cost per unit of
time saved by crashing.
Assume the following project data given in the table. It is required to crash the project duration
from its original duration to a final duration of 110 days. Assume daily cost of P 100.00.
ACTIVITY PRECEDED BY NORMAL CRASH

Duration(day) Cost (P) Duration (day) Cost (P)

A --- 120 12000 100 14000

B --- 20 1800 15 2800

C B 40 16000 30 22000

D C 30 1400 20 2000

E D,F 50 3600 40 4800

F B 60 13500 45 18000
 COST SLOPE
DAYS CRASHED The critical path is B-C-D-E and the project duration is
20 100
140 days.
Project total normal direct cost = sum of normal direct
A (120)
costs of all activities = 48300.
0 20
END (0)
120 140
140 140
10 600 10 60 10 120 140 140
START (0)
C (40) D (30) E (50)
0 0
20 20 60 60 90 90
0 0
60 60 90 90 140 140

B (20) 15 300
0 0 F(60)
20 20 20 30

5 200 80 90
 COST SLOPE
DAYS CRASHED A new critical path is formed: B-F-E
20 100
New project Duration: 130 days
The project direct cost is increased by 10x60 = 600
A (120)
Project direct cost: 48300+600= 48900
0 10
END (0)
120 130
130 130
10 600 10 120 130 130
START (0)
C (40) D (20) E (50)
0 0
20 20 60 60 80 80
0 0
60 60 80 90 130 130

B (20) 15 300
0 0 F(60)
20 20 20 20

5 200 80 80
 COST SLOPE
DAYS CRASHED A new critical path is formed: A
20 100
New project Duration: 120 days
The project direct cost is increased by 10x120 = 1200
A (120)
Project direct cost: 48900+1200= 50,100
0 0
END (0)
120 120
120 120
10 600 120 120
START (0)
C (40) D (20) E (40)
0 0
20 20 60 60 80 80
0 0
60 60 80 80 120 120

B (20) 15 300
0 0 F(60)
20 20 20 20

5 200 80 80
 COST SLOPE
DAYS CRASHED New project Duration: 115 days
20 100
The project direct cost is increased by 5(100+200) =1500
Project direct cost: 50,100 + 1500=51,600
A (115)
0 0
END (0)
120 115
115 115
10 600 115 115
START (0)
C (40) D (20) E (40)
0 0
15 15 55 55 75 75
0 0
55 55 75 75 115 115

B (15) 15 300
0 0 F(60)
15 15 15 15

5 200 75 75
 COST SLOPE
DAYS CRASHED New project Duration: 110 days
10 100
The project direct cost is increased by 5(100+200) =1500
Project direct cost: 50,100 + 1500=51,600
A (110)
0 0
END (0)
120 110
110 110
5 600 110 110
START (0)
C (35) D (20) E (40)
0 0
15 15 50 50 70 70
0 0
50 50 70 70 110 110

B (15) 10 300
0 0 F(55)
15 15 15 15
70 70