Time Cost Trade Off Cost Control In Construction Important of MIS

1. Department of Collegiate and Technical Education
Week – 09, Session - 03
Course outcome: 20CE43P
Site Management ( IV Semester)
Civil Engineering
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2. Table of Content
1. Time-Cost Trade-Off
2. Cost Control in Construction
3. Importance of Management Information System
4. MCQ
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3. 1. Time-Cost Trade-Off
Terms related to Time-Cost Trade-Off
a) Direct Project Cost : The cost and expenses that are
accountable on facility, function or product such as cost
incurred on labour, material, equipment etc. are called as
direct costs.
 Normal Time : Normal time is the standard time that an
estimator would usually allowed for an activity.
 Crash Time : Crash time is the minimum possible time in
which an activity can be completed.
 Normal Cost : This is direct cost required to complete the
activity in normal time duration.
 Crash Cost : This is the direct cost corresponding to the
completion of the activity within crash time.
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4.  Cost Slope : This is the slope of the direct cost curve,
approximated as straight line.
𝐶𝑜𝑠𝑡 𝑆𝑙𝑜𝑝𝑒 =
(𝐶𝑟𝑎𝑠ℎ 𝐶𝑜𝑠𝑡 − 𝑁𝑜𝑟𝑚𝑎𝑙 𝐶𝑜𝑠𝑡)
(𝑁𝑜𝑟𝑚𝑎𝑙 𝑇𝑖𝑚𝑒 − 𝐶𝑟𝑎𝑠ℎ 𝑇𝑖𝑚𝑒)
b) Indirect Project Cost : An indirect cost in construction is an
expense that doesn't relate directly to the functions, products
or operations of a construction project such as cost incurred
on administrative processes and staff salaries, overhead cost,
lost profit, loss of revenue, penalty etc.
c) Total Project Cost : This is the sum of direct project cost and
indirect project cost.
d) Optimum Duration & Optimum Cost : The duration in
which minimum total cost is obtained is known as optimum
duration and the corresponding cost is known as optimum
cost.
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5. What is Time-Cost Trade-Off or Crashing ?
The process of reduction of total project duration along the
longest path (time wise) of the network i.e. along the critical path
to obtain the optimum project cost and optimum duration is called
“time-cost trade-off or crashing”.
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.
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6. Procedure for crashing the network :
1) Draw the network diagram.
2) Determine the critical path.
3) Indicates critical path along network diagram.
4) Determine cost slope of each activity.
5) Start crashing the activities along the critical path having
minimum cost slope.
6) Activity having minimum cost slope is crashed until its
crashing potential is exhausted and new critical path are
formed.
7) If new critical path is formed then we to crash
combination of critical activity (parallel activity) having
minimum cost slope and continue till there is no further
scope of crashing.
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7. 1.1 Example for crashing of project work :
Consider the data of a project as shown in the following table-
1.1which has to be complete in 9days. Take overhead cost of the
project = Rs.200/day
Table-1.1
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Activity Normal
Time
(Days)
Normal
Cost
(Rs.)
Crash Time
(Days)
Crash
Cost
(Rs.)
1-2 3 2500 1 3500
2-3 4 2600 2 3400
2-4 7 2500 4 3400
3-4 5 2400 2 3000

8. Solution :
Step -1 : Draw the network diagram.
Fig-1.1
Step -2 : Determine the critical path.
Fig-1.2 Civil Engineering – 20CE43P
Possible Paths = 1-2-3-4=12days
1-2-7=10days
Critical Path = 1-2-3-4
Project Duration = 12days
Normal Project Cost = 10000
Total Project Cost = 10000+12x200
=12400

9. Step-3 : Determine cost slope of each activity
𝐶𝑜𝑠𝑡 𝑆𝑙𝑜𝑝𝑒 =
(𝐶𝑟𝑎𝑠ℎ 𝐶𝑜𝑠𝑡 − 𝑁𝑜𝑟𝑚𝑎𝑙 𝐶𝑜𝑠𝑡)
(𝑁𝑜𝑟𝑚𝑎𝑙 𝑇𝑖𝑚𝑒 − 𝐶𝑟𝑎𝑠ℎ 𝑇𝑖𝑚𝑒)
𝐶𝑜𝑠𝑡 𝑆𝑙𝑜𝑝𝑒 𝑜𝑓 1 − 2 =
3500 − 2500
3 − 1
= 500
Similarly calculate the cost slope of each activity and enter as
shown in table-1.2
Table-1.2
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Activity Normal
Time
(Days)
Normal
Cost
(Rs.)
Crash
Time
(Days)
Crash
Cost
(Rs.)
Cost
Slope
(Rs.)
1-2 3 2500 1 3500 500
2-3 4 2600 2 3400 400
2-4 7 2500 4 3400 100
3-4 5 2400 2 3000 200

10. Step-4 : Start crashing the activities along the critical path having
minimum cost slope.
Crashing the activity 3-4 by 2 days which has minimum
cost slope of Rs.200
∴ Total Project Cost = 12400+2x200-2x200= 12400
Step-5 : If new critical path is formed then we have to crash
combination of critical activity (parallel activity) having
minimum cost slope and continue till there is no further scope of
crashing.
Fig-1.3
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11. From the above network (Fig-1.3) we found two critical paths (1-
2-3-4 and 1-2-4) of same duration. From the table-2 it is clear that
we can crash the activities 2-4 by 1day and 3-4 by 1day which
has minimum cost slope value of Rs.100 and Rs.200 respectively
to crash the network to maximum of 9 days.
Fig-1.4
∴ Total Project Cost = 12400+(1x100+1x200)-1x200=12500
Finally the total project cost to complete the project in 9days by
crashing the activities is Rs.12500
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Activity Crash
Time
(Days)
Cost
Slope
(Rs.)
1-2 1 500
2-3 2 400
2-4 4 100
3-4 2 200

12. 2. Cost Control in Construction
Cost control in construction is the process by which managers
keep expenses under control by managing labor, material, and
overhead costs to ensure that the project finishes on budget.
Cost Control Techniques :
Following are some of the valuable and essential techniques used
for efficient project cost control:
1. Planning the Project Budget
2. Keeping a Track of Costs
3. Effective Time Management
4. Project Change Control
5. Use of Earned Value
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13. 1. Planning the Project Budget
 Planning the project budget at the beginning of the planning
session.
 It involves a lot of research and critical thinking.
 always have to leave room for adjustments as the costs may not
remain the same.
 Adhering to the project budget at all times is key to the profit
from project.
2. Keeping a Track of Costs
 Keeping track of all actual costs is also equally important as any
other technique.
 The actual costs will have to be tracked against the periodic
targets that have been set out in the budget.(monthly or weekly or
yearly basis)
 This is much easier to work with rather than having one complete
budget for the entire period of the project.
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14. 3. Effective Time Management
 It is very important with regard to project cost control.
 Cost of project could keep rising if it is not completed in
scheduled time.
 The project manager would need to constantly remind his/her
team about project completion time.
4. Project Change Control
 Project change control is yet another vital technique
 Any change to the scope of the project will have an impact on the
deadlines of the deliverables
 So the changes may increase project cost
5. Use of Earned Value
 This technique is helpful to identify the value of the work that has
been carried out.
 This is particularly helpful for large projects
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15. 3.Importance Management Information System
“An information system consisting of the tools and techniques
used to gather, integrate, and disseminate the outputs of project
management processes.
 It support in all aspects of the project from initiating through
closing
 It provides information and data that needs to be managed and
organized.
 It helps project professionals to easily plan and track project
progress in all stages of its lifecycle.
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16. Requirements for selecting a PMIS :
1. Planning & Scheduling
2. Budget & Estimating
3. Resource & Procurement Management
4. Cost Management & Project Performance
5. Progress Reporting
6. Data & System Integration
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17. 1. Planning & Scheduling
 A PMIS will be able to plan and compute the project’s schedule
and its critical path.
2. Budget & Estimating
 A PMIS needs to combine project cost estimating, forecasting, cost
data and schedule information in order to determine accurate
project progress and performance.
3. Resource & Procurement Management
 It is important for a PMIS to have functionality to manage the
complete procurement process since resources and procured items
are a large portion of a project’s cost and preliminary budget.
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18. 4. Cost Management & Project Performance
 A solid PMIS enables project managers to control project cost
and performance.
 It will allow for updating existing plans as actuals against
planned data changes, and provide what-if scenarios to them
while tracking and managing all project changes.
5. Progress Reporting
 A PMIS will have the capability to create and share reports of
collected and analyzed data.
6. Data & System Integration
 A PMIS needs to be able to integrate with other applications or
software systems.
 This system integration allows for accessing data from different
projects for multi-project analysis and bridging gaps between
systems and applications needed to have all project information
in one place.
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19. Thank You
Moderator : Sudhindra Yeri, GPT Bagalkote/152
Content Developer : Aniket Gachchi, GPT Kalgi/166
Civil Engineering – 20CE43P