Project Cost Management

The most important feature of a network analysis is the activities cost projection (Pinto, 2015). This is sometimes called PERT analysis. The main goal of project cost analysis is to evaluate the cost of various project durations. Activities taking place at normal duration require a lower cost to completion while crash duration requires higher costs (Kerzner, 2017). Again, project completion time can be altered through reducing the project duration. Some methods or ways of reducing the project duration are more expensive as compared to others. Table 1 shows the network summary for crashing activity ABCDEFG.

Table 1:

Project cost management schedule

Activity

Normal duration

crash duration

maximum time

Normal cost

crash cost

crash cost per day

A

4

3

1

1000

2000

1000

B

5

3

2

2500

5000

1250

C

3

2

1

750

1200

450

D

7

5

2

3500

5000

750

E

2

1

1

500

3000

2500

F

5

4

1

2000

3000

1000

G

9

7

2

4500

6300

900

According to table 1, it is easier to crash activities C, D and G, because the activities have the lowest crash cost per day. The activities can be crashed at the minimum cost possible without making the business to utilize more resources.

When the project critical path is identified as A-C-D-F, the activities prioritized for crashing include A and B. this is because they are along the critical path and at the same time have the lowest crushable cost per day.   Based on this argument, the crushable cost per day is $ 450 and $ 750 for activities A & B respectively.

The critical path from the network has changed the decision rule in that only the activities along the critical path are available for crashing. If for instance, the project manager has decided to crash the activity that is outside the critical path, all the activities may become critical hence may it hard to reduce the project completion duration.

To this end, the project cost and duration rescheduling is only possible when the project is well managed. In addition, crashing the project should be done at the lowest cost possible.

References

Kerzner, H., & Kerzner, H. R. (2017). Project management: a systems approach to planning, scheduling, and controlling. John Wiley & Sons.

Pinto, J. K. (2015). Project management: achieving competitive advantage. Prentice Hall.

                                                                    Appendix A                                       

Gantt chart

This a bar chart representing the project schedule. The type like in figure 1 represents the activities performed on the vertical axis and the duration taken to accomplish the activities on the horizontal axis. Here, the data are presented using the early approach or earliest start time. For instance, the project is assumed to have started on February 2018 and end in March 2018.

Figure 1

The project Gantt chart