Optimization of Crew Configurations Using Activity-Based Costing

Abstract

The goal of this research was to develop and illustrate a technique for finding the optimum crew configuration, from a range of possible configurations, assigned to complete a defined quantity of work in a timely and cost-effective manner. The concept of activity-based costing was used to define the scope of the work in terms of the activities to be accomplished and their associated productivity rates and cost of performance. These data are modeled as distributions of random variables. Past experience, as well as local job conditions, can be used to determine the values associated with these distributions. The temporal and logical relationships between the activities are established through a process flowchart. An activity based, stochastic simulation program (ABC-SIM), was used to measure the elapsed time and activity cost for each of the candidate crew configurations. Excess cost is the activity cost minus the shift cost, which is based on the number of full shifts required to accomplish the work multiplied by the cost per shift. Excess cost is a measure of inefficiency caused by crews waiting in queue. Finally, an optimum crew configuration can be selected using an optimization rule that best satisfies project objectives.