Chapter 7 discussed the impact of crashing activities and the relationship of schedules to cost. The method assumes that as activity duration is decreased, the direct cost increases owing to the increases in direct labor rates from overtime.

Overhead rates also may vary, although the overhead rate is often lower for overtime work. For example, the overhead rate may be 100 percent for regular time but only 20 percent for overtime. In both cases, the overhead rate is associated with the wage rate being used.

Suppose that in the MARS project in Table 8.2, 1,000 direct hours of labor are required at $50 per hour, and the associated overhead rate is 100 percent for regular time. Now suppose an overhead rate of 10 percent and overtime wage rate of time-and-a-half.

Compare the project cost if it were done entirely on regular time with the cost if it were done entirely on overtime. Which is less expensive?