The normal duration and normal cost of activity are 24 days and Rs. 50,000 respectively. The activity crash duration is 22 days and the indirect cost is Rs1000 per day. If the cost slope is Rs. 1500 per day, then the total cost of activity after the crashing will be:

Concept:

Indirect project Cost:

Indirect project costs are those expenditures that cannot be clearly allocated to the individual activities of the project but are assessed as a whole.

The indirect cost rises with an increase in duration. 

Direct Project Cost: 

These include labor cost, material cost, equipment cost, etc.

Direct cost decreases with an increase in duration.

Cost slope:

The cost slope is the slope of the direct cost curve, approximated as a straight line. It is defined as follows:

\(cost\ slope = \frac{{Crash\ \cos t - Normal\ cost}}{{Normal\ time - Crash\ time}}\)

\({C_s} = \frac{{{C_c} - {C_n}}}{{{t_n} - {t_c}}} = \frac{{Δ C}}{{Δ t}}\)

Where, Cs = Cost slope, ΔC = Increase in cost, Δt = Decrease in time

Calculation

Given data,

Normal activity duration = 24 days

Crash activity duration = 22 days

Cost slope = 1500/- , Indirect cost = 1000/- per day

Normal cost of activity = 50,000 /-

No. of days crashed = 24 - 22 = 2 days. 

The increase in direct cost for 2 days crashing

= Cost Slope × 2

= 1500 × 2

= 3000 rupees

The decrease in indirect cost for 2 days

= 1000 × 2

= 2000 rupees

Total project cost = Direct cost + Indirect cost

The total cost of the activities after crashing

=  50000 + 3000 - 2000

= 51000 rupees

∴ Total cost = 51,000 /-