Running Head: DIRECT COST 1 DIRECT COST 8 Direct Cost Daniel Keith Bailey MGT410 - 1 Project Management Colorado State University Global Campus Dr. Thomas Brantle April 16, 2017 Direct Cost In order to reduce the number of times a project can be completed, then an extra cost usually termed as the crash cost must be incurred. The total project cost is achieved by adding the indirect cost and the direct cost (Devaux, 2014). Critical part is formed by the activities that take the longest path/time in a project (Kelley & Walker, 1959). In this project, we shall come up with three paths which are: Part 1: A, B, E, G and H Part 2: A, C, F, G and H Part 3: A, D and H To find the solution to this, we have to identify the critical path that takes most time, In this case the path A-B-E-G-H (17times) The basic Direct Cost for the 17 times is $310 To reduce 17times to16 times In order to reduce the project by one time, we will use crash cost (extra dollars ($) are spent in order to reduce time). To begin with, we will focus on the trend whereby the crash cost is the least in the critical path and in this scenario; Activity A is least with a crash cost of $20 and the time taken to complete the task is 3times The project therefore will be reduced to 16times. To reduce 16 times to15 times For the project to be reduced for one more time, we shall look for the least cost. This time we shall not use Activity A as a crash time since A allows a maximum of 1 time crash time. We therefore low for a critical path with the low cost In the critical path A (20), B (20), E (0), G (40), H (60) We shall not use Activity A or E since the cost of 0. We shall therefore crash on the activity with least cost and in this case, we shall crash Activity B and time to complete task B is 2 times (Business News Daily, 2017). There will be an extra cost of $20 that will help in reducing the task by one. To reduce 15 times to 14times In reducing the number of times to 14 we shall focus on the three critical paths which are: 1Sst Path A (3), B (2), E (4), G (2), H (4) 2nd Path A (3), C (3), F (3), G (2), H (4) 3rd Path A (3), D (5), H (4) To reduce the number of times that the project can take, we can reduce 1 time from each of the critical paths, i.e. 1st path: B has the least cost $20 2nd path: C has the least cost of $ 40 3rd path: D has the least cost of $30 In this situation, we can avoid the expenses and crash on H since it will adjust the other sections automatically (Project Cost Management, 2008). We shall therefore crash H which will cost us an extra of $60 and therefore reduce task by 1 and task H will take 3 times We have the calculation in the appendix whe ...

1. Running Head: DIRECT COST
1
DIRECT COST
8
Direct Cost
Daniel Keith Bailey
MGT410 - 1 Project Management
Colorado State University Global Campus
Dr. Thomas Brantle
April 16,
2017
Direct Cost
In order to reduce the number of times a project can be
completed, then an extra cost usually termed as the crash cost

2. must be incurred. The total project cost is achieved by adding
the indirect cost and the direct cost (Devaux, 2014).
Critical part is formed by the activities that take the longest
path/time in a project (Kelley & Walker, 1959).
In this project, we shall come up with three paths which are:
Part 1: A, B, E, G and H
Part 2: A, C, F, G and H
Part 3: A, D and H
To find the solution to this, we have to identify the critical path
that takes most time,
In this case the path A-B-E-G-H (17times)
The basic Direct Cost for the 17 times is $310
To reduce 17times to16 times
In order to reduce the project by one time, we will use crash
cost (extra dollars ($) are spent in order to reduce time).
To begin with, we will focus on the trend whereby the crash
cost is the least in the critical path and in this scenario; Activity
A is least with a crash cost of $20 and the time taken to
complete the task is 3times
The project therefore will be reduced to 16times.
To reduce 16 times to15 times
For the project to be reduced for one more time, we shall look
for the least cost. This time we shall not use Activity A as a
crash time since A allows a maximum of 1 time crash time.
We therefore low for a critical path with the low cost
In the critical path A (20), B (20), E (0), G (40), H (60)
We shall not use Activity A or E since the cost of 0.
We shall therefore crash on the activity with least cost and in
this case, we shall crash Activity B and time to complete task B
is 2 times (Business News Daily, 2017).
There will be an extra cost of $20 that will help in reducing the
task by one.
To reduce 15 times to 14times
In reducing the number of times to 14 we shall focus on the
three critical paths which are:

3. 1Sst Path A (3), B (2), E (4), G (2), H (4)
2nd Path A (3), C (3), F (3), G (2), H (4)
3rd Path A (3), D (5), H (4)
To reduce the number of times that the project can take, we can
reduce 1 time from each of the critical paths, i.e.
1st path: B has the least cost $20
2nd path: C has the least cost of $ 40
3rd path: D has the least cost of $30
In this situation, we can avoid the expenses and crash on H
since it will adjust the other sections automatically (Project
Cost Management, 2008).
We shall therefore crash H which will cost us an extra of $60
and therefore reduce task by 1 and task H will take 3 times
We have the calculation in the appendix where we will find out
that the project if run 15 times will cost the cheapest.

4. References
Devaux, S. (2014). Managing Projects as Investments. Industrial
Innovation
Each, Direct. "Direct Costs Vs. Indirect Costs: Understanding
Each". Business News Daily. N.p., 2017. Web. 16 Apr. 2017.
Kelley, J. E., & Walker, M. R. (1959). Critical-path planning
and scheduling Papers presented at the December 1-3, 1959,
eastern joint IRE-AIEE-ACM computer conference on - IRE-
AIEE-ACM '59 (Eastern)
Project Cost Management. (2008). Industrial Project
Management, 121-137.
Appendix
Initial project
Duration 17
Total Direct cost $310
B
3
E

5. 4
G
2
F
C
3
H
4
3
A
4
D
5
Activity
Crash cost
Max Crash Time
Normal time
Normal cost
A
20
1
4
50
B

6. 20
2
3
40
C
40
2
3
60
D
30
2
5
60
E
0
0
4
20
F
100
2
3
40
G
40
1
2
20
H
60
1
4
20

7. Formulating the total direct costs incurred:
17 times
Basic Direct Cost
310
Total Direct Cost
310
16 times
Basic Direct cost
310
Crash cost-1st Time Act. A
20
Total direct cost
330
15 times
Basic Direct Cost
310
Crash cost-1st time Act. A
20
Crash cost-2nd time Act. B
20
Total Direct cost
350

8. 14 times
Basic Direct Cost
310
Crash Cost-1st time Act. A
20
Crash cost-2nd time Act. B
20
Crash cost-3rd time Act. H
60
Total direct cost
410

9. Formulating this into table is
Times
14
15
16
17
Indirect Cost
250
300
350
400
Total Direct Cost
410
350
330
310
Total Project Cost
660
650
680
710
GRAPH INDICATING PROJECT COSTS
No of Times

10. Cost in $
In this calculation we look for the overall cost reduction
whereby in this case the cheapest cost of the project will be
$650 that is if the project is reduces to 15times, this means that
14 times will have a cost of $660 which is still expensive to run
the project.
So, the project will be done 15 times at $650.
indirect cost 14 15 16 17 250 300 350 400 Total
direct cost 14 15 16 17 410 350 330 310 Total
project cost 14 15 16 17 660 650 680 710
1 1 2 0 5 4
2 1 2 0 3 1
3 1 1 0 3 0
4 1 2 2 4 3
5 1 3 4 7 3
6 2 3 7 9 0
7 2 3 4 9 0
ID Res Dur ES LF SLC
Schedule the resource load chart with ES and Slack updates
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

11. 0 1 2 3 4 5 6 7 8
9 10 11 12 13 14 15
Resources scheduled
Resources available