FIGURE 14-20. Project documentation costs.

14-7 How can upper-level management use the functional cost and hour summary to determine manpower planning for the entire company? How would you expect management to react if the functional cost and hour summary indicated a shortage or an abundance of trained personnel?

14-8 Which of the figures presented in this chapter should program management make available to the functional managers? Explain your answer.

14-9 The Jennings Construction Company has decided to bid on the construction for each of the two phases of a large project. The bidding requirements are that the costs for each phase be submitted separately together with a transition cost for turning over the first phase of the program to a second contractor should Jennings not receive both awards or perform unsatisfactorily on the first phase. The evaluation for the award of the second phase will not be made until the first phase is near completion. How can the transition costs be identified in the strategic planning model?

14-10 Two contractors decide to enter into a joint venture on a project. What difficulties can occur if the contractors have decided on who does what work, but changes may take place if problems occur? What happens if one contractor has higher salary levels and overhead rates?

14-11 The Jones Manufacturing Company is competing for a production contract that requires that work begin in January 2003. The cost package for the proposal must be submitted by July 2002. The business base, and therefore the overhead rates, are uncertain because Jones has the possibility of winning another contract, to be announced in September 2002. How can the impact of the announcement be included in the proposal? How would you handle a situation where another contract may not be renewed after January 2003, i.e., assume that the announcement would not be made until March?

14-12 Many competitive programs contain two phases: research and development, and production. Production profits far exceed R&D profits. The company that wins the R&D contract normally becomes a favorite for the production contract, as well as for any follow-on work. How can the dollar figures attached to follow-on work influence the cost package that you submit for the R&D phase? Would your answer change if the man-hours submitted for the R&D phase become the basis for the production phase?

14-13 During initial pricing activities, one of the functional managers discovers that the work breakdown structure requires costing data at a level that is not normally made, and will undoubtedly incur additional costs. How should you, as a program manager, respond to this situation? What are your alternatives?

14-14 Should the project manager give the final manpower loading curves to the functional managers? If so, at what point in time?

14-15 You have been asked to price out a project for an outside customer. The project will run for eight months. Direct labor is $100,000 for each month and the overhead rate is fixed at 100 percent per month. Termination liability on the direct labor and overhead rate is 80 percent of the following month's expenses. Material expenses are as follows:

Material A: Cost is $100,000 payable 30 days net. Material is needed at the end of the fifth month. Lead time is four months with termination liability expenses as follows:

Material B: Cost is $200,000, payable on delivery. Material is needed at the end of the seventh month. Lead time is three months with termination liability as follows:

Complete the table below, neglecting profits.

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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