CHAPTER 8 PROJECT TIME-COST TRADE-OFF

Cost (LE)3480034600344003420034000338003360033400332003300032130 35 40 45 50 55Duration (days)8.3 Project Time-Cost RelationshipFigure 8.4: Time-cost relationship of Example 8.1Total project costs include both direct costs and indirect costs of performing the activitiesof the project. Direct costs for the project include the costs of materials, labor, equipment,and subcontractors. Indirect costs, on the other hand, are the necessary costs of doingwork which can not be related to a particular activity, and in some cases can not berelated to a specific project.If each activity was scheduled for the duration that resulted in the minimum direct cost inthis way, the time to complete the entire project might be too long and substantialpenalties associated with the late project completion might be incurred. Thus, plannersperform what is called time-cost trade-off analysis to shorten the project duration. Thiscan be done by selecting some activities on the critical path to shorten their duration.As the direct cost for the project equals the sum of the direct costs of its activities, thenthe project direct cost will increase by decreasing its duration. On the other hand, theindirect cost will decrease by decreasing the project duration, as the indirect cost arealmost a linear function with the project duration. Figure 8.5 illustrates the direct andindirect cost relationships with the project duration.Construction Management 169 Dr. Emad Elbeltagi