Project Management Essay

Time, cost and quality trade-off in
project management: a case study

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Answer to Discussion Questions:
1. Different levels of quality were taken into account where options for crashing the project were decided upon. Why are margins of tolerance more flexible at lower levels of quality?

Margins of tolerance are more flexible at lower quality levels of 89% and 85% because the optimal average quality when cost and completion time are bounded. to where the thresholds are not as sharp as with the higher quality tolerances.

In each given quality level, a budget threshold exists beyond which there would be of little value to increase budget in the hope of expediting further project completion.

These thresholds are given as follows:
185.60 million baht at a 98% quality allowance
195.60 million baht at a 95% quality allowance
215.60 million baht at a 92% quality allowance

The equivalent completion times are 482 days, 431 days and 391 days, accordingly.

If there will be a decrease in average quality requirement, these budget thresholds, which can be interpreted as the practical limiting costs for crashing, will increase, which in turn allows for a further reduction in project completion time.

Project cost is almost independent of the quality requirement and therefore, the cost or time curves in Optimal average quality when cost and completion time are bounded Model coincide for all quality levels. This fact is not surprising because the performance quality at each activity was assumed to
be a function of the time factor only.

There is a critical value for project completion time, beyond which it would be extremely expensive to crash further. Optimal cost when completion time and average quality are bounded Model indicates that this critical value is around 400 days.

2. If the function linking time and cost is Y = 12.6 – 0.0125 X, with time as the predictor or independent variable, what will the cost of crashing the project at 390 days be? What other parameters would you want to consider before deciding to choose this solution?

Analysis of computational results: All these problems were solved repeatedly using different values for the goal constraints in cost, time and quality. The maximum budget varied with increments of 10 million baht except for the last increment from the normal cost of 175.60 million baht to the maximum crash cost of 263.60 million baht. The lower bound for completion time was allowed to change in increments of 20 days or 21 days for the last three increments from the maximum crash time of 371 days to the normal time of 554 days. In order to help managers to gain better insight of the trade-off among time, cost and quality factors of the project, the output of Optimal completion time when costs and quality are bounded Model is re-organized by quality requirements.

Wherever an increase in budget is not accompanied by a reduction in completion time, only the minimum budget required for that time is recorded. The results are summarized in below table & graph :

The same is true if 95% average project quality is the performance that can be accepted, then trying to complete the project in less than 431 days may be very expensive.

3. As there is a legal limit on the length of overtime labor for Thai workers, what alternative solutions could you explore to further reduce project time?

Most of the work at the pre-heater tower is labour intensive with relatively clear defnition. As it is typical for construction sites in Thailand, the number of workers working 6 days a week at the project is already at the maximum due to the limited work area. In this way, according to the managers, the only way activities can be accelerated is through using overtime. Since the maximum overtime allowed is 4 hours on top of the regular 8-hour working day, activities may be crashed on average at a ratio of 2:3. These crash times were then adjusted for each of the 52 work-packages taking into account the possibility that workers may sometimes be asked to work on Sunday also, and that some work would permit less hours of overtime due to lighting conditions and safety reasons. Site managers also believed that when activities need be crashed, the cost increase is mostly due to the double rate for overtime. As consequence, they had no problem in accepting the assumption of linear relationship between cost escalation and time crashed The managers involved in this research consider as reasonable the assumption of linear relationship between cost and time.

The reality of crashing this particular project was approximately possible only through overtime not only made the hypothesis readily acceptable, but also facilitated estimating the required parameters. The extent of the assumption between quality and time is more problematic. It is absolutely difficult and probably most controversial, task in applying the method in the case project was to assess the quality reduction associated with crashing. In the current research, this is achieved, to a certain degree of satisfaction of both the researchers and practitioners. Even then, it is recognized that the quality measures at best reflect only relative performance levels of various activities with different crashing decisions.

Major limitation of the method was highlighted because of situations requiring great effort. Only a very small portion bears direct relation with crashing decisions in all practically justifiable measurements of quality. In this way, the quality factor considered in the models accounts for only a small, and unfortunately usually not the most relevant, part of the performance of managerial interest.

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