2.4 Cactus and the Einstein Toolkit
2.4.2 The HiSpID Thorn
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UNIT 8 PROJECT TIME MANAGEMENT
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2.0 OBJECTIVES
At the end of this unit, you should be able to:
• explain outsourcing
• enumerate the importance of outsourcing in project management
3.0 MAIN CONTENT
3.1 Reducing Project Duration
In recent years, emphasis on time –to- market has taken on new importance because of intense global competition and rapid technological advances. The market imposes a project duration date. For example, a rule of thumb for moderate – to high- technology firms is that a six month delay in bringing a product to market can result in a gross profit, loss or market share of about 30%. In these cases, high-technology firms typically assume that the time savings and avoidance of lost profits are worth any additional cost to reduce time without any formal analysis. It is interesting to observe how more serious analysis occurs in reception periods when cash flows are tight.
Incentive contracts in partnering arrangements can make reduction of project time regarding –usually for both the project contractor and owner. For example, a contractor finished a bridge across a lake 18 months early and received more than $6 million for the early completion. The availability of the bridge to the surrounding community 18 months early to reduce traffic gridlock make the incentive cost to the community seen small to users. In another example, in a partnering continuous improvement arrangement, the joint effort of the owner and contractor resulted in early completion of a river lock and a 50/50 split of the savings to the owner and contractor.
Another reason for reducing project time occurs when unforeseen delays –for example, adverse whether design flaws and equipment breakdown a cause substantial delays midway in the project. Getting back on schedule usually requires compressing the time on some of the remaining critical activities the additional costs of getting back on schedule need to be complied with the cost of being late.
Sometimes, very high overhead or good will costs are recognised before the project begins. In these cases, it is prudent to examine direct costs of shortening the critical path versus the overhead end /or goodwill cost savings, usually there are opportunities to shorten a few critical activities at less than the daily overhead rate or perceived goodwill cost,
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under specific conditions (which are not rare), huge saving are possible with little risk.
Managers have several effective methods for crashing specific projects activities when resources are not constrained. Several of these are summarised below:
Adding resources
The most common method for shortening project time is to assign addition staff and equipment to activities; there are limits, however, as to how much speed can be gained by adding staff. Doubling the size of the work force will not necessarily reduce completion time by half.
Outsourcing project work
A common method for shortening the project time is to subcontract an activity. The subcontract may have access to superior technology or expertise that will accelerate the completion of the activity.
3.2 Scheduling Overtime
The easiest way to add more labour to a project is not to add more people, but to schedule overtime. If a team works 50 hours a week instead of 40, it might accomplish 25 percent more .By scheduling overtime you avoid the additional costs of coordination and communication encountered when new people are added. If people involved are salaried workers, there may be no real additional cost for the extra work. Another advantage is that there is less distraction when people work outside normal hours.
Overtime has disadvantages. First, hourly workers are typically paid time and a half for overtime and double time for weekends and holidays.
Sustained overtime work by salaried employees may incur intangible costs such as divorce, and turnover.
3.3 Crashing Project
In order to reduce the project time, the duration of critical activities have to be reduced (by increasing resources etc.)
The reduction in duration will generally increase the cost of the project.
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Terminology:
NT = Normal Time (duration) of Activity NC = Crash Time (duration) of Activity CT = Cost of Activity at N
T
CC = Cost of Activity at Nc
Cost (CT, CC)
(NT, NC) Time
Cost Slope = Tan θ = CC- N
C/ N
T-C
T
In order to curtail the duration of the activity, cost slope values have to be viewed carefully.
Least cost slope activity must be curtailed first and so on.
If more than one critical path is generated after Crashing then duration of activities on all paths have to be curtailed. The following example will explain the technique of Crashing.
SELF-ASSESSMENT EXERCISE
1. What is outsourcing in project management?
2. What can you do to reduce the project time?
4.0 CONCLUSION
You have learnt the following in t h i s unit:
What outsourcing is all about
Scheduling overtime
Crashing project.
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5.0 SUMMARY
In this unit, you learnt that: Outsourcing has its own advantages
Managers have several effective methods for crashing specific projects activities when resources are not constrained
The easiest way to add more labour to a project is not to add more people, but to schedule overtime
to reduce the project time, the duration of critical activities have to be reduced (by increasing resources etc.)
6.0 TUTOR-MARKED ASSIGNMENT
1. Briefly discuss outsourcing project work.2. As a project manager, what can you do in order to reduce the project time?
7.0 REFERENCE/FURTHER READING
Little, I. M. D. & Mirrleas, J. A. (1969). Manual of Industrial Project Analysis in Developing Countries, Vol 11, Organisation for Economic Co-operation and Development. Paris.
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