Question
Suppose you were trying to decide whether or not it made sense to crash your project. You know that normal project duration and direct costs
Suppose you were trying to decide whether or not it made sense to crash your project. You know that normal project duration and direct costs are 60 days and $125,000. You are worried, though, because you have a very tight delivery schedule and the customer has placed a severe penalty into the contract in the form of $5,000 in liquidated damages for every day the project is late after 50 days. After working with the cost accountant, you have generated the following table of project costs at different completion durations:
Project Duration (in days) | Direct Costs | Overhead Costs | Penalty Charges | Total Costs |
60 | $125,000 | $15,500 | $50,000 | |
57 | 140,000 | 13,000 | 35,000 | |
54 | 175,000 | 10,500 | 20,000 | |
51 | 210,000 | 8,000 | 5,000 |
Complete the table. How many days would you advise the project should be crashed? Why?
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