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:

a. Complete the table. How many days would you advise the project should be crashed? Why?
b. Suppose direct costs of crashing the project only increased $5,000 per day crashed at a steady rate (starting with $125,000 on day 60). How many days would you advise that the project be crashed? Show your work.

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Project Duration (in days) 60 57 54 51 Direct Costs Overhead Costs Penalty Charges Total Costs $125,000 140,000 175,000 210,000 $15,500 13,000 10,500 8,000 $50,000190,500 35,000188,000 20,000 205,500 5,000 223,000