Exploring the Optimum Cost and Time for the Project 'Improvment Cemex Egypt Logistics Waiting Area'.

Author:Elkhouly, Sayed M.
 
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INTRODUCTION

CEMEX is a global building materials company that provides high-quality products and reliable service to customers and communities in more than 50 countries throughout the world. It maintains trade relationships in over 100 nations and works hard to develop and deliver the best solutions in cement, ready-mix, and aggregates. CEMEX was founded in Mexico in 1906 and has grown from a local player to one of the top global companies in our industry, with close to 46,500 employees worldwide. Today we are strategically positioned in the Americas, Europe, Africa, the Middle East, and Asia. Its operations network produces, distributes, and markets cement, ready-mix concrete, aggregates, and related building materials to customers in over 50 countries and we maintain trade relationships in approximately 100 nations.

One of the main priorities of CEMEX is health and safety, So CEMEX Egypt decided to improve the logistics waiting/parking area to meet safety standards. The project consists of improving the safety conditions in four areas. These are the waiting/parking area of single trucks-its space is approximately equal to (5,000 m2); External waiting/parking area at the CEMEX Egypt plant-its space is approximately equal to (7,500 m2); The waiting/parking area of double trucks (10,000 m2); and enter and exit roads of the logistics area (350 m,l). The improvement of each area has a set of activities, as we will explain in our paper.

OBJECTIVE

- Efficiency: Minimize project time/cost (organize, activate and resources).

- Accuracy: Set accurate prediction for the project completion time.

- Follow up: Ability to follow up the progress of the project at any time.

PROJECT CHALLENGE

Finalize the upgrade of the waiting area without stopping the operation, maintain a smooth traffic flow and meet the safety conditions.

LITERATURE REVIEW

Project management is a tool that is used by many organizations to improve performance and competitiveness. The execution of any project requires resources and is associated with different risks as well. This project emphasizes the schedule/time risk and its associated costs. The schedule/time risk essentially implies not completing the project activities on time, Late project completion drawbacks may lead to delay penalties that directly affect cost and may have indirect effects as well, such as going against stakeholders' satisfaction.

The project manager can bring the project back on track if the project is running late by incorporating additional resources. This method of risk mitigation is known as crashing.

The traditional method for crashing is known as CPM/PERT networks. These are considered the average time of the activities of the critical path. This ignores the uncertainty that arises with the duration of the activities and other paths that have a potential to become critical. As a way to overcome this issue, simulations are used to shape the stochastic nature of the activities' duration.

Integrating the stochastic durations in the crash process allows the distribution of the project completion time and gives a clear analysis of the real effect that a specific crashing of a network may have on the project.

THEORETICAL BACKGROUND

Crashing

Crashing refers to a set of project schedule compressing with the aim of decreasing the period of time or the total project duration. Decreasing the project duration takes place after a cautious analysis of all possibilities of project duration reduction alternatives through which all or any method reaches the highest schedule duration for the least additional cost. The purpose of crashing any network is to find the optimum project schedule. Crashing is necessary to accelerate the project execution, with no respect to the cost increase. Every phase consumes some of the resources and so has some cost associated. Mostly, the cost may fluctuate with the duration of time consumed by each phase. The total cost of the project will mainly depend on the project duration and if it can be reduced to some extent. The objective is mainly to trade off and balance the cost and time to achieve an optimum project schedule. Optimum minimum cost project schedules imply the lowest cost with the related time for the project management.

Activity time-cost relationship

The relationship between the activities' duration and the associated direct costs is presented in figure1. Any shortening in the duration of any activity will generally increase its direct cost. The duration of the direct cost is mainly called the normal duration and the lowest possible time for the completion of an activity is called the crash duration, but at the highest cost. The linear relationship that is shown in the figure between the two points mainly implies that any midway duration could also be chosen.

Some midway points may stand for the optimal tradeoff between cost and time for the activity The slope of the line that connects the lower point (normal point) and the highest point (crash point) represents the cost slope of this activity. The line slope can be calculated by using the coordinates of the crash and normal points:

Cost slope = (crash cost - normal cost) / (normal duration-crash duration) since the duration of the activity is reduced the direct cost is relatively increased. There is a simple case that arises as a result of using the overtime work and the high wages paid for the overtime. As well, problems of quality and accidents that are related to the overtime use must be corrected. This can lead to an increase in the indirect costs as well, as shown in figure2.

Project time-cost relationship

Total project costs include both the direct and the indirect costs of the activities of the project. If the project activities are scheduled based on the duration related to the lowest direct cost (normal duration), then the entire project completion time will be long and the cost may increase as a result of possible related penalties the late project completion might occur. On the other hand, the project manager may choose the lowest possible time to complete the activities (crash duration), but this will lead to the highest cost. So adequate planning is required...

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