DRAG Cost

 

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DRAG Cost is the amount of money by which expected project profit is reduced due to the delay of performing a critical path activity, or other critical path delay factor such as a schedule lag or scheduling constraint.  DRAG Cost is the sum of two factors:

  1.  A reduction in a project’s expected monetary value due to acceleration premium or delay cost caused by the DRAG of a critical path activity or delay.
  2. An increase in a project’s cost due to the project’s indirect costs being extended due to a DRAG amount.

DRAG Cost computation is a useful technique for justifying additional project resources.  For example, if an activity’s DRAG Cost is $50,000 (based on ten days at $5,000 each), but duration compression could reduce the DRAG to five days through the addition of a resource costing a total of $10,000, the additional resource expense would be more than justified.

Just as DRAG is only found on critical path activities and delays, the same is true of DRAG Cost.  DRAG Cost is a key component in computing an activity’s “true cost of work”.

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