Compressing project to minimize the increased risk and cost

Abstract

In a highly competitive market environment, organizations must improve their productivity, reduce production costs and improve management methods, in order to maintain a favorable competitive position. Project factors, such as time, cost and risk are closely linked. If one of those factors is out of control, the progress of the whole project will inevitably be delayed. When the progress of the project is delayed, duration compression measures such as crashing or fast tracking are usually employed to ensure the backward schedule returns to the original plan. However, the implementation of duration compression measures increases the cost and risk of the project. In most previous study of the critical path, only activity time is involved, and cost and risk are not considered. In the present study, a mathematical model is built to solve the optimal duration compression scheme objectives of the minimization of risk and cost. The model is verified by two cases, and the best solution is obtained by using LINGO software and Excel solver. The mathematical model is found to provide the best duration compression scheme for the project, with the least increases in cost and risk.