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The steering committee could not identify the real status of the project from this brief report. Even after comparing this brief status report with the project planning budget (see Table 15-10), the real status was not readily apparent.

Management instructed the project manager to prepare a better status report that depicted the true status of the project, as well as the amount of profit that could be expected at project completion. Your assignment is to prepare a table such as Table 15-9.

15-18 The Alpha Machine Tool Project

Acme Corporation has received a contractual order to build a new tooling machine for Alpha Corporation. The project started several months ago. Table 15-11 is the Monthly Cost Summary for June, 2002. Some of the entries in the table have been purposely omitted, but the following additional information is provided to help you answer the questions below:

A. Assume that the overhead of 100% is fixed over the period of performance.

B. The report you are given is at a month end, June 30, 2002.

C. The 80/20 sharing ratio says that the customer (i.e., Alpha) will pay 80 percent of the dollars above the target cost and up to the ceiling cost. Likewise, 80 percent of the cost savings below the target cost go back to Alpha.

D. The revised BCWS is revised from the released BCWS.

E. The ceiling price is based on cost (i.e., without profit).

Answer the following questions by extracting data from the Alpha Machine Tool Project's monthly summary report.

1. What is the total negotiated target value of the contract? _

2. What is the budgeted target value for all work authorized under this contract? _

3. What is the total budgetary amount that Acme had originally allocated/released to the Alpha Project? _

4. What is the new/revised total budgetary amount that Acme has released to the

Alpha Project? _

Week

Activity

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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