Page 142 - DMGT206_PRODUCTION_AND_OPERATIONS_MANAGEMENT

Unit 7: Efficiency and Effectiveness

7. Changes resulting from ……………… benchmarking may be difficult to implement and Notes
take a long time to materialize.
8. Application of benchmarking involves ……………… key steps.

7.3 Pursuit of Excellence in Organizations

For tracking down fineness or excellence, organizations follow the following techniques:
 Analyzing Cost time trade off
 Using project software

7.3.1 Analyzing Cost Time Trade Off

Organization has as its objective, optimizing a system where “Cost is a function of performance,
time, and scope”. By determining the network and the critical path, the scope of the project has
been completely defined, as the assumption in developing the CPM network has been that
resources are available.
However, once you have determined that the end date can somehow be met, you must see
whether your unlimited resource assumption has overloaded your available resources. When
you assess your resources, remember that nobody is available to do productive work more than
80 per cent of a workday. You lose 20 per cent to personal time, fatigue, and delays.

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Caution You also need to examine the network to keep project costs at acceptable levels.
This is almost always as important as meeting schedule dates.
There are always Time-Cost Trade-offs. If you want to schedule within the available float, it is
called time-critical resource leveling, because time is of essence for your project.

If you minimize resources and continue sliding tasks over until resources become available,
even if it means slipping the end date, it is called resource-critical leveling.

Example: A project can often be completed earlier than scheduled by hiring more workers
or running extra shifts or using additional equipment. Such actions could be advantageous if
savings or additional revenues accrue from completing the project early.
There are a number of possibilities. There are three areas to examine.

 You should first see whether any task has enough float to allow it to be delayed until
resources become available.
 You should also ask whether you can reduce scope, change the time limit, or reduce
performance. Usually performance is not negotiable, but the other areas may be.

Example: Sometimes you can reduce scope, and the project deliverable will still be
acceptable to the client.

Cost to Crash

Total project costs are constituted of direct costs, indirect costs, and penalty costs. The sum of
these costs is the total project cost. These costs depend on activity times and project completion
times.

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