Introduction:
The reduction in project time refers to the process of completing a project in less time than originally planned. This can be achieved through various techniques such as fast-tracking, resource optimization, and schedule compression. However, it is important to consider the impact of reducing project time on costs, both direct and indirect.

Explanation:
When project time is reduced, there are certain cost implications that need to be considered. The correct answer to the question is option 'B,' which states that reducing project time will result in increasing the direct cost and decreasing the indirect cost. Let's understand why this is the case:

Direct Cost:
1. Increased Labor Costs: When project time is reduced, it often requires additional labor resources to complete the work within the shortened timeframe. This may involve hiring more workers or paying overtime wages to existing employees. These increased labor costs directly contribute to the overall direct cost of the project.
2. Expediting Materials and Equipment: In order to meet the accelerated schedule, materials and equipment may need to be expedited, which can come at a premium cost. Suppliers may charge higher prices for rush orders or expedited shipping, resulting in increased direct costs.

Indirect Cost:
1. Reduced Overhead Costs: As the project duration is shortened, the time period during which indirect costs are incurred is also reduced. Indirect costs include expenses such as office rent, utilities, insurance, and administrative expenses. With a shorter project duration, these costs will be lower since they are spread over a shorter time frame.
2. Lower Financing Costs: When a project is completed in a shorter duration, the financing costs associated with the project are reduced. This is because the interest costs on loans or financing arrangements will be incurred for a shorter period, resulting in lower indirect costs.

Therefore, reducing project time typically leads to increased direct costs due to additional labor and expedited materials, while indirect costs decrease due to reduced overhead and financing costs.

Conclusion:
In conclusion, reducing project time has cost implications, with direct costs increasing and indirect costs decreasing. It is important for project managers to carefully analyze the trade-offs between time and cost and consider these factors when making decisions regarding project schedules and resource allocation.