Describe how CPM handles the tradeoffs between time and cost

Describe how CPM handles the trade-offs between time and cost in the scheduling of a project. As a new project manager, what concerns would you have regarding these two concepts and what would you do to ensure the project stayed on schedule and on budget?

Solution

The Critical Path Method (CPM) is a project scheduling technique to analyze and represent the tasks involved in completing a given project. It incorporates a trade-off between an activity’s duration and cost

Time/cost trade-offs

The critical path method assumes that the duration of an activity depends on the amount of resources assigned to it, and incorporates a trade-off between its duration and the cost of the assigned resources. More precisely, the more resources have been assigned to the activity, leading to an overall increase in the cost, the lower the expected duration of the activity.

Time/cost trade-offs for a project activity

The CPM assumes four pieces of information for each project activity, as follows:

The normal duration is equal to the minimal expected duration when the activity is performed with the lowest possible amount of resources, leading to the lowest total activity cost (normal cost).

The crash duration is the shortest activity duration, when the maximum amount of resources has been assigned to the activity, leading to the highest activity cost (crash cost

The aim of the critical path method is to schedule the project under a pre-defined scheduling objective, i.e. the choice of an activity mode for each activity to optimize a scheduling objective. A decrease in an activity‘s duration and the corresponding increase in the activity cost is known as activity crashing.