# Is it possible to reduce costs by crashing a project?

I'm working on a study assignment, which involves creating a WBS and GANTT chart for a 6-month project.

Then I'm supposed expedite one of the tasks by increasing resources to it, thus decreasing the amount of time required to perform it.

So I add another resource to one of the tasks, and give both resources an even share of the time, so that the amount of time the task will take halved.

Now the assignment claims that I should able to reduce time and costs by doing this.

I can see how it reduces time, but how can it reduce cost, when I still have to pay the same amount of money for both resources per unit of work?

Broadly speaking, is it ever possible to reduce the overall cost of a project, purely by using crashing techniques?

• "Nine women, one month, one baby!" Oct 7 '11 at 17:58

This would be possible in a project that has an overhead cost that is calculated by a fixed rate over the entire length of the project. One example I can think of is a building construction project. The job trailer, on-site temporary utilities, and on-site security fencing is a dollar-per-day rental cost. If you crash the schedule, then the total cost of those items will be reduced.

In my experience, these general overhead costs are quite low so I doubt you would save that much money but it is a cost savings

• Except that you increase the cost of communication between all resources, often resulting in an increase in both time AND cost of the project, rather than the opposite. Oct 6 '11 at 14:43
• Good example, but even here, the savings would only be realized if the crashing is done on Critical Path tasks (shortening TOTAL time to completion). Otherwise the OH costs will remain the same. Oct 6 '11 at 19:21
• Totally agree with both of you. In reality, it highly unlikely that crashing a schedule with ever save money in total but there will be at least a couple of expense categories that will get cheaper. Oct 7 '11 at 5:43

It is also possible to reduce costs if your second resource is cheaper and the primary resource could shed the lesser work to them. There will be a natural work increase due to communications... but that might be offset if say a \$100 per hour resource is doing 50% \$20/hr work. Then you add a \$20/hr resource that does the 50% that requires less effort. We do this commonly by hiring an admin level resource to serve coordinator tasks for Project Managers for example.

It depends on how you define "costs."

Usually, crashing a project increases your OUT OF POCKET costs (labor overtime, more machine failures, etc.) Call these extra costs X.

Time has a cost, that's often not explicitly stated. If crashing the project saves a number of hours or days, then the time savings should be reduced to a cost savings amount, Y.

The answer to the question of "savings" is then found by comparing X to Y. Hopefully, the relationship is X < Y.

Indirect costs are the only costs subject to the POSSIBLE savings as a consequence of crashing your schedule. Direct costs will climb with absolute certainty. Crashing is a schedule reducing intervention, not a cost reducing intervention. Hoping for a cost savings sequel to a crash is akin to wishful thinking.

I am surprised, actually, your class would teach that a cost savings can be achieved through crashing.