REDUCING THE DURATION OF PROJECTS PDF

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Reasons for Project Duration Reduction, Alternatives to Accelerate Project Completion, Overtime Scheduling, Establishment of a Central Project Team, Acceleration, Project Scope Reduction, Quality Commitment, Cost Explanation of the projects, determination of the activities to be shortened, practical...

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REDUCING THE DURATION OF PROJECTS

Reasons for reducing the duration of projects There are some circumstances in which a project administrator or owner would not want to reduce the time to complete a project. Decreasing the time of a critical activity in a project can be done, but it almost always results in a higher direct cost; thus, the administrator faces a cost-to-time decision problem. Is the time reduction worth the additional cost? Cost and time situations focus on reducing the critical path that determines the project completion date. There are many good reasons to try to reduce the duration of a project. One of the most important today is the time to market. Intense global competition and rapid technological advances have made speed a competitive advantage. To be successful, companies need to spot new opportunities, launch project teams, and bring new products or services to market in the blink of an eye. Perhaps in no industry does speed matter as much as electronics. For example, a practical rule for companies with moderate to high technology is that a six-month delay in bringing a product to market can result in a gross loss of market share profit by about 35%. In these cases, high-tech companies often assume that time savings and avoid profit losses are worth any additional costs to reduce time without any formal analysis. Another common reason for reducing project time occurs when unforeseen delays, such as adverse weather, design failures, and equipment decompressure, cause substantial delays in the middle of the project. Generally, catching up on the program requires compressing time into some of the critical activities. The additional costs of being updated in the program should be compared to the consequences of being delayed. This is particularly true when time is one of the priorities. Incentive contracts can make reducing project time freefor both the project contractor and the owner. For example, a contractor finished 18 months earlier a bridge across a lake and received more than $6 million for early termination. The availability of the bridge to the neighboring community, 18 months in advance to reduce traffic congestion, made the cost of the incentive by the community seem small to users. Another example: in a continuous improvement arrangement, the joint effort of the owner and contractor resulted in an early termination of a river lock and a 50/50 division of savings for the owner and contractor. "Specificdates"are another reason to speed up project completion. For example, a politician who makes a public statement that a newlawyer's office will be available in two years. Or the president of a software company points out in a speech that

new advanced software will be ready in a year. Very often, such declarations become imposed dates of the duration of a project, without any consideration of the problems or the cost of meeting the deadline. The duration of the project is set when the project reaches its "concept" phase before or without any detailed program of all project activities. This phenomenon is repeated a lot in practice. Unfortunately, this practice almost always leads to a project having a higher cost than one that is established through detailed, low-cost planning. In addition, quality is sometimes committed to meeting maturities. More importantly, these higher costs of imposed duration dates are rarely recognized or noted by project participants. Sometimes too high overheads are recognized before the project begins. In these cases it is prudent to examine the direct costs of shortening the critical path compared to overhead savings. There are usually opportunities to shorten some critical activities in less than the daily overhead rate. Under specific conditions(whichare not rare), it is possible to have large savings with little risk. Finally, there are times when it's important to reassign team or critical people to new projects. Under these circumstances, the cost of compressing the project can be compared to the costs of not releasing the equipment or fundamental people. Alternatives to accelerate project completion Alternatives when there is no resource limitation Add resources The most common method for shortening project time is to assign additional personnel and equipment to activities. However, there are limits to how fast you can get when adding staff. Duplicating the workforce will not halve the termination time. The relationship would be correct only when tasks could be divided so that minimal communication between workers is needed, such as harvesting a seed by hand or repaving a road. Most projects are not established that way; additional workers increase communication needs to coordinate their efforts. For example, duplicating a computer when adding two workers requires six times of peer intercom more than is required on the original two-person computer. Not only does it take more time to coordinate and manage a larger team; there is the additional delay in training new people and making them accelerate the project. The end resultis captured in Brooks' law: adding human element to a delayed software project slows him down further. Frederick Brooks developed this principle from his experience as a project manager for IBM System/360 software in the early 1960s. Subsequent research concluded that adding more people to a backward project does not necessarily cause it to be further delayed. The key is whether new staff are added in advance so that there is time to recover lost ground, as new members have been completely assimilated.

Outsourcing of project work A common method for shortening project time is to outsource an activity. The subcontractor may have access to superior technology or experience that accelerates the completion of the activity. For example, hiring an excavator can accomplish in two hours what a team of workers can do in two days. Similarly, by hiring a consulting firm that specializes in ADSI programming, a company may be able to take half the time it would take for less experienced in-house programmers to get the job done. Outsourcing also frees up resources that can be allocated to a critical activity and will ideally result in shorter project life. Overtime scheduling The easiest way to add more labor to a project is not to add more people, but to schedule extra time. If a team works 50 hours a week instead of 40, it could achieve 25 percent more. By scheduling overtime, you avoid additional coordination and communication costs that you face when adding new staff. If the people involved are wage workers, there may not be a real additional cost for the extra work. Another advantage is that there are fewer distractions when people work outside normal hours. Overtime has its downsides. First, hourly workers are usually paid a while and a half for extra and double work forweekends and holidays. Overtime work done by employees can result in intangible envaluations, such as divorce, exhaustion, and rotation. The latter is a basic organizational concern when there is a shortage of workers. In addition, it isa simplisticexcessive trust to assume that during an extended period, a person is asproductive during his eleventh hour at work as during the third. There are natural limits to what is humanly possible and a large extra time can actually lead to a general decline in productivity when fatigue occurs. Extra time and working more hours are theoptionthat is preferred when it comesto accelerating the completion of the project, especially when the team is wage earner. The key is to use overtime judicially. Remember that a project is a marathon and not a fast race (sprint)! He doesn't want to run out of power before he gets to the finish line. Establishment of a central project team Oneof the advantages of creating a core team dedicated to finishing a project is speed. Assigning full-time professionals to a project avoids the hidden cost of multiple tasks, where people are forced to juggle the demands of various projects. Professionals are allowed to devote their full attention to a specificproject. This unique approach creates a shared goal that unites a diverse set of professionals into a highly cohesive team capable of accelerating project completion. Do it twice, fast and well

If you are in a hurry, try to build a short-term "fast and dirty" solution and then come back and do it right. For example, Rose Garden Stadium was supposed to be completed in time for the start of the 1995-1996 NBA (National Basketball Association) season. Delays made this impossible, so the team settemporary stands to welcome the crowd on opening night. The additional costs of doing so twice are often over-offset in exchangefor the benefits of meeting thedue date. Alternatives when there is resource limitation A project manager has fewer options to accelerate project compliance when there are no additional resources or when the budget is severely constrained. This is particularly true once the program has been established. Acceleration Sometimes it is possible to rearrange the logic of the project network so that critical activities are done in parallel (at the same time) kept sequentially. This alternative is good if the project situation is adequate. When this option is given serious attention, it's surprising to see how creative team members can be at finding ways to restructure sequential activities in parallel. Ornot the most common methods for restructuring activities is to change a "finish to start" relationship with a "start to start" relationship. For example, instead of waiting for the final design to be approved, manufacturing engineers can start building the production line as soonas key specifications havebeen set. Changing activities from sequential to parallel usually requires closer coordination among those responsible for the affected activities, although they can lead to tremendous time savings. Critical chain Critical Chain Project Management (CCPM) is designed to accelerate project completion. Even the principles of CCPM seem fierceand worthy of experimentation if speed is essential. It would also be difficult to unexpectedly implement the CCPM in a project. CCPM requires considerable training and a change in habits and perspectives that take time to adopt. Although there have been reports of immediate gains, especially in terms of compliance times, a longtermmanagement commitment may be needed to reapthefull benefits. Reducing the scope of the project Perhaps the most common response to meeting unattainable maturities is to reduce or re-evaluate the scope of the project. Invariably, this leads to a reduction in project functionality. For example, the new car will average only 25 miles per gallon instead of 30, or the software product will have fewer features than initially planned. While re-evaluating the scope of the project can lead to large savings in both time and money, it can come at a cost of reducing the value of the project. If the car gets less mileage per liter of gasoline, will it live up to the competitive models? Will customers still want software with fewer features? The key to

reducing the scope of a project without decreasing its value is to re-evaluate theactual project specifications. Requirements are often added under the best blue sky scenarios and represent desirable but not essential things. Here it is important to talk to the client or project sponsors and explain the situation; you can do it your way, but not until February. This can force them to accept an extension or add money to speed up the project. If not, then there should be a healthy discussion of what the essential requirements are and what things can be committed to meeting the needs of the deadlines to be respected. In reality, a re-revision of the requirements can improve the value of the project by doing so faster and at a lower cost. Calculating reduced project scope savings begins with the Work Breakdown Structure (WBS). Decrease functionality meansthatcertain tasks, pre-finished products, or requirements may be shortened or eliminated. These tasks must be found and the program adjusted. The focus has to be on changes in activities on the critical path. Commitment to quality Reducing quality is always an option, but it is rarely accepted or used. If quality issacrificed,it is possible to reduce the time of an activity on the critical route. In practice, the most commonly used methods for shortening projects are overtime scheduling, outsourcing, and the sum of resources. Each of them maintains the essence of the original plan. Options that arise from the original project plan include doing so twice and in an accelerated way. Rething project scope, customer needs and opportunity becomes important considerations for these techniques. Projectcostandduration Nothing on the horizon suggests that it will change the need to shorten project time. The challenge for the project manager is to use a quick and logical methodto comparethe benefitsof reducing project time with cost. When there are no reliable andlogical methods, it is difficult to isolate those activities that will have the greatest effect on reducing project time at lower cost. The method requires direct and indirect costs for specific projectdurations. Critical activities are searched to find those with the lowest direct cost that reduces project life. The total cost of project durations is calculated andthen compared to the benefitsof decreasing project time, before the project starts or while in progress. Explanation of project costs The total cost for each duration is the sum of indirect and direct costs. Indirect costs continue throughout the life of the project. Therefore, any reduction in the duration oftheproject means a decrease inindirect costs. Direct costs in the record growatan increasing rate as the duration of the projectis reduced to its original planned duration. With information from a recordlikethis fora project, administrators can quickly judge any alternative such as meeting a time expiration to the market.

Indirect project costs Indirect costs typically represent overheads such as supervision, administration, consultants, and interests. Indirect costs cannot be associated with a particular work package or activity, hence the term. Indirect costs vary directly over time. That is, any decrease in time should result in a reduction in indirect costs. For example, if the daily costs of supervision, administration, and consultants are $2,000, any reduction in the duration of a project would represent savings of $2,000 per day. If indirect costs are asignificant percentageof total project costs, reductions in project time can represent very real savings (if we assume indirect resources can be used anywhere). Direct project costs On a regular basis, direct costs represent labor, materials, equipment, and sometimes subcontractors. Direct costs are directly allocated to a package and work activity, hence the term. The ideal assumption is that the direct costs of any uptime represent normal costs, which usuallymeanlow-costmethods and conditions for normal time. When project durations are imposed, direct costs can no longer represent low-costmethods and conditions. The costs for the imposed duration date will be higher than for the duration of the project developed of normal times, ideal for activities. As it is assumed that direct costs will be developed from normal methods and time, any reduction in uptime must be added to the costs of the activity. The sum of the costs of all work packages or activities represents the total direct costs of the project. Andncontrate the total direct cost for each project duration as project time is compressed; the process requires choosing the critical activities that are less expensive to shorten. (Note: the go fica implies that there is always an optimal point of cost and time. That's only true if shortening a program has indirect cost savings that exceed the upstream direct cost incurred. In practice, however, there are almost always various activities where the direct costs of shorting the project are lower than indirect costs.) Construction of a largedurationand cost of the project There are three important steps required to build acostand duration of the project: 1. Find the total direct costs for the selected project durations. 2. Find the total indirect costs for the selected project durations. 3. Add direct and indirect costs for selected durations. Then, therecordis used to compare additional cost options to obtainabenefit. Determining the activities to be shortened The most difficult task in building acost-and-duration record is to find the total direct costs for project-specific durationsover a relevantscope. The central concern is to

decide which activities will be shortened and how far the shortening process will take. Basically, administrators need to look for critical activities that can be shortened with the lowest increase in cost per unit of time. Thefairnessfor choosing critical activities depends on the identification of normal times and the shortening of activities and the corresponding costs. The normal time of an activity representslow-cost, realistic, and reliable methods for completing the activity under normal conditions. Abbreviating an activity is called crashing. The shortest possible time that an activity can be realistically completed is called crash time. The direct cost to complete an activity in its shortening time is called the crash cost. Normal and shortening costs and times are obtained from staff most familiar with termination of activity. The normal time for the activity is 10 units of time and the corresponding cost is $400. The activity shortening time is five units of time and $800. The intersection of normal time and cost represents the original low-cost early start program. The shortening point represents the maximum time that an activity can be compressed. The heavy line connecting the normal and shortening points represents the slope, which assumes that the cost of reducing activity time is constant per unit of time. The assumptions that are the basis of the use of thisrecordare as follows: 1. The cost-time ratio is linear. 2. Normal time assumeslow-cost methods and physents to finish the activity. 3. Shortening times represent a limit, the greatest possible time reduction under realistic conditions. 4. The slope represents the cost per unit of time. 5. All accelerations must occur within normal and crash times. Knowing the slope of activities allows administrators to compare which critical activities are to be abbreviated. The less inclined the slope of an activity's costs, the less it costs to shorten a period; the steeper the slope, the more it will cost to shorten a unit of time. The slope of the cost line is $80 for each occasion that the unit of time is reduced; the reduction in uptime limit is five units of time. Comparing the slopes of all critical activities allows us to determine which activities will be abbreviated to minimize the total direct cost. Given the preliminary project program (or one in progress) with all activities set for its early start times, the process of finding critical activities as candidates for reduction can begin. The total direct cost of each duration of the specific compressed projectmust befound. Practical considerations Use of theproject'sduration and cost More importantly, the creation ofsuch a recordmaintains the relevance of indirect costs in the foreground of decision-making. Indirect costs in the field are often

forgotten when the pressure of action is intense. Finally, thatrecordcan be used before the project starts or while it isin progress. The first option is to createtherecordin the planning phase of the preproject without an imposed duration because the normal timeis moresignificant. Creating the recordinthe planning phase of the project with animposed duration is less desirable because the normal time is made to fit the imposed date and may not be a low cost. Creating therecordafter the process has started is theleast desirable, as some alternatives may be left out of the decision process. Administrators can choose not to use the demonstrated formal procedure. However, regardless of the method used, the principles and concepts in...