A project involves completion of number of activities. The cost/duration of the project depends upon the activities, change in the duration and hence cost of an activity affects the project duration and the total cost of the project.

Time-cost Optimization determines duration and corresponding cost. It is also called as Time-cost trade-off.

The objective of time-cost optimization is to determine the normal duration of the project, the minimum possible duration of the project and the optimum duration of the project and the corresponding project costs. The technique used in time-cost optimization are-

• Compression
• Decompression

Compression of an activity refers to the reduction in the duration of an activity by increasing the resources allocated to it or by lowering the technical specification of the work. The process of shortening a project is called crashing and is usually achieved by adding extra resources to an activity.

The steps involved in the project crashing are the following-

• Schedule a project with all its activities at their normal duration as well as identify the critical path and critical activities.
• Calculate the cost slope for the different activities and rank the activities in the ascending order of the cost sloe.
• Crash the activities on the critical path as per the ranking i.e. activity having lower cost slope would be crashed first to the maximum extent possible.
• As the critical path duration is reduced by crashing in step 3 other paths may also become critical i.e. we get parallel critical paths. This means that the project duration can be reduced duly by simultaneous crashing of activities in the parallel critical paths.
• Crashing as per step 3 and 4, one reaches a point when further crashing is either not possible or does not result in the reduction of crashing of project duration.
• Compute the total project cost by adding corresponding fixed cost to the direct cost, which is obtained by adding the crashing cost cumulatively to the normal cost.