| dc.description.abstract | The PERT time technique has a very wide field of application, but
the use of the PERT cost technique is very often neglected, especially
in smaller industrial. construction projects. This results in costs
running unnecessarily high due to bad planning. Cash flow presents
another problem which can be eliminated by good planning - using the
PERT-system.
Starting with the ordinary critical path diagram derived from the basic
time estimates, an optimum cost schedule can be prepared. This can
be done by analysing every activity in the construction project and
finding the cheapest way in which it can be done. This "cheapest
way of doing the job" or the lov1est cost way, must of course take into
account both direct and indirect costs.
By using these optimum costs, a new construction diagram can be drawn
up to indicate the schedule according to which the project should be
completed, involving the lov1est total cost. An additional benefit of
this analysis of costs for each activity, is that a figure becomes
available which indicates the cost rise involved in shortening activities
on the critical path by any fraction .
Out of the analysis of the activities combined with the terms of payment
agreed on with each contractor individually, an estimate can be
made of the cash flow during the project, which serves as a programme
for management in finding the funds at the right time.
By using the PERT cost technique together with the PERT time technique,
it is quite easy for management to get a complete set of plans of how
long the project is going to take, what it will cost to shorten any
part of the project, what the total cost of the project should be, and
at what rate cash will have to made available . | en_US |
