Problems

12-1 Should a PERT/CPM network become a means of understanding reports and schedules, or should it be vice versa?

12-2 Before PERT diagrams are prepared, should the person performing the work have a clear definition of the requirements and objectives, both prime and supporting? Is it an absolute necessity?

12-3 Who prepares the PERT diagrams? Who is responsible for their integration?

12-4 Should PERT networks follow the work breakdown structure?

12-5 How can a PERT network be used to increase functional ability to relate to the total program?

12-6 What problems are associated with applying PERT to small programs?

12-7 Should PERT network design be dependent on the number of elements in the work breakdown structure?

12-8 Can bar charts and PERT diagrams be used to smooth out departmental manpower requirements?

12-9 Should key milestones be established at points where trade-offs are most likely to occur?

12-10 Would you agree or disagree that the cost of accelerating a project rises exponentially, especially as the project nears completion?

12-11 What are the major difficulties with PERT, and how can they be overcome?

12-12 Is PERT/cost designed to identify critical schedule slippages and cost overruns early enough that corrective action can be taken?

12-13 Draw the network and identify the critical path. Also calculate the earliest-latest starting and finishing times for each activity:

Activity

Preceding Activity

Time (Weeks)

A

7

B

8

C

6

D

A

6

E

B

6

F

B

8

G

C

4

H

D, E

7

I

F, G, H

3

12-14 Draw the network and identify the critical path. Also calculate the earliest-latest starting and finishing times for each activity:

Activity

Preceding Activity

Time (Weeks)

A

4

B

6

C

A, B

7

D

B

8

E

B

5

F

C

5

G

D

7

H

D, E

8

I

F, G, H

4

12-15 Consider the following network for a small maintenance project (all times are in days;

network proceeds from node 1 to node 7):

a. Draw an arrow diagram representing the project.

b. What is the critical path and associated time?

Network

Job Initial Final

(Activity) Node Node

Network

Job Initial Final

(Activity) Node Node

A

1

2

B

1

4

C

1

3

D

2

6

E

2

4

F

3

4

G

3

5

H

4

6

I

4

7

J

4

5

K

5

7

L

6

7

Optimistic Pessimistic Most

Time

Time

Likely

1

3

2

4

6

5

4

6

5

2

4

3

1

3

2

2

4

3

7

15

9

4

6

5

6

14

10

1

3

2

2

4

3

6

14

10

c. What is the total slack time in the network?

d. What is the expected time for 68, 95, and 99 percent completion e. If activity G had an estimated time of fifteen days, what impact would this have on your answer to part b?

12-16 Consider the following network for a small MIS project (all times are in days; network proceeds from node 1 to node 10):

Network

Job (Activity) Initial Node Final Node Estimated Time

Network

Job (Activity) Initial Node Final Node Estimated Time

A

1

2

2

B

1

3

3

C

1

4

3

D

2

5

3

E

2

9

3

F

3

5

1

G

3

6

2

H

3

7

3

I

4

7

5

J

4

8

3

K

5

6

3

L

6

9

4

M

7

9

4

N

8

9

3

O

9

10

2

a. Identify the critical path.

b. Calculate the total network slack time.

c. Suppose that activities A, B, and C all utilize the same manpower base, and shortening any one of these three activities causes one of the other two to increase by the same amount. Can network replanning, only for these three activities, shorten the length of the critical path?

d. Repeat parts a, b, and c assuming that the estimated time for job C is 4.

12-17 On May 1, Arnie Watson sent a memo to his boss, the director of project management, stating that the MX project would require thirteen weeks for completion according to the figure shown below.

Arnie realized that the customer wanted the job completed in less time. After discussions with the functional managers, Arnie developed the table shown below:

Normal Crash

Activity

Time

Cost

Time

Cost

Additional (Crash) Cost/Week

A

3

6,000

2

8,000

2,000

B

5

12,000

4

13,500

1,500

C

5

16,000

3

22,000

3,000

D

4

8,000

2

10,000

1,000

E

2

6,000

1

7,500

1,500

F

3

14.000 $62,000

1

20,000

3,000

a. According to the contract, there is a penalty payment of $5,000 per week for every week over six. What is the minimum amount of additional funding that Arnie should request?

b. Suppose your answer to part a gives you the same additional minimum cost for both an eight-week and a nine-week project. What factors would you consider before deciding whether to do it in eight or nine weeks?

12-18 On March 1, the project manager received three status reports indicating resource utilization to date. Shown below are the three reports as well as the PERT diagram.

PERCENT -COMPLETION REPORT

Time to

Activity Date Started % Completed Complete

*Note: Because of priorities, resources for activity DE will not be available until 3/14. Management estimate that this activity can be crashed from 3 weeks to 2 weeks at an additional cost of $3,000

PROJECT PLANNING BUDGET: WEEKS AFTER GO-AHEAD

Activity

1

2

3

4

5

ó

7

AB

2,000

2,000

2,000

AC

3,000

4,000

4,000

4,000

5,000

AD

2,000

3,000

2,500

BF

2,000

3,000

4,000

3,000

CE

2,500

DE

3,500

3,500

3,500

EF

3.000

Total

7,000

9,000

8,500

9,500

11,500

10,000

3,000

COST SUMMARY

Week Ending Cumulative to Date

Activity

Budget Cost

Actual

(Over) Under

Budget Cost

Actual

(Over) Under

AB

6,000

6,200

(200)

AC

4,000

4,500

(500)

15,000

12,500

2,500

AD

2,400

(2,400)

7,500

7,400

100

BF

2,000

2,800

(800)

2,000

4,500

(2,500)

DE

3,500

3,500

3,500

3,500

Total

9,500

9,700

(200)

34,000

30,600

3,400

a. As of the end of week 4, how much time is required to complete the project (i.e., time to compl b. At the end of week 4, are you over/under budget, and by how much, for the work (either partial has been completed to date? (This is not a cost to complete.)

c. At what point in time should the decision be made to crash activities?

d. Either construct a single table by which cost and performance data are more easily seen, or mod tables accordingly.

To solve this problem, you must make an assumption about the relationship between percent complete and time/cost. In the project planning budget table, assume that percent complete is linear with time and nonlinear with cost (i.e., cost must be read from table.).

12-19 Can PERT charts have more depth than the WBS?

12-20 Estimating activity time is not an easy task, especially if assumptions must be made. State whether each item identified below can be accounted for in the construction of a PERT/CPM network:

a. Consideration of weather conditions b. Consideration of weekend activities c. Unleveled manpower requirements d. Checking of resource allocations e. Variable crew size f. Splitting (or interrupting) of activities g. Assignment of unused resources h. Accounting for project priorities

12-21 Scheduling departmental manpower for a project is a very difficult task, even if slack time is available. Many managers would prefer to supply manpower at a constant rate rather than continually shuffle people in and out of a project.

a. Using the information shown below, construct the PERT network, identify the critical path, and determine the slack time for each node.

Personnel Required

Activity Weeks (Full-time)

b. The network you have just created is a departmental PERT chart. Construct a weekly manpower plot assuming that all activities begin as early as possible. (Note: Overtime cannot be used to shorten the activity time.)

c. The department manager wishes to assign eight people full-time for the duration of the project. However, if an employee is no longer needed on the project, he can be assigned elsewhere. Using the base of eight people, identify the standby (or idle) time and the overtime periods.

d. Determine the standby and overtime costs, assuming that each employee is paid $300 per week and overtime is paid at time and a half. During standby time the employee draws his full salary.

e. Repeat parts c and d and try to consider slack time in order to smooth out the manpower curve. (Hint: Some activities should begin as early as possible, while others begin as late as possible.) Identify the optimum manpower level so as to minimize the standby and overtime costs. Assume all employees must work full-time.

f. Would your answer to parts d and e change if the employees must remain for the full duration of the project, even if they are no longer required?

12-22 How does a manager decide whether the work breakdown structure should be based on a ''tree" diagram or the PERT diagram?

12-23 Using Table 12-3, draw the CPM chart for the project. In this case, make all identifications on the arrows (activities) rather than the events. Show that the critical path is twenty-one weeks.

Using Table 12-4, draw the precedence chart for the project, showing interrelationships. Try to use a different color or shade for the critical path.

Calculate the minimum cash flow needed for the first four weeks of the project, assuming the following distribution.

Activity

Total Cost for Each Activity

A-H

16,960

I-P

5,160

Q-V

40,960

W

67,200

X

22,940

Furthermore, assume that all costs are linear with time, and that the activity X cost must be spent in the first two weeks. Prove that the minimum cash flow is $92,000.

TABLE 12-3. DATA FOR PROJECT CPM CHART

Normal

Preceding Time

Activity Activity (Weeks)

DC 2

EC 2

ON 2

US 2

*Stands for total length of project. This is management support.

TABLE 12-4. PROJECT PRECEDENCE CHART*

Weeks

*Draw the appropriate bar charts into the figure, assuming that such activity starts as early as possible (identify slack). Ti interrelationships as in a precedence network.

Case Studies

Crosby Manufacturing Corporation

"I've called this meeting to resolve a major problem with our management cost and control system (MCCS)," remarked Wilfred Livingston, president. "We're having one hell of a time trying to meet competition with our antiquated MCCS reporting procedures. Last year we were considered nonresponsive to three large government contracts because we could not adhere to the customer's financial reporting requirements. The government has recently shown a renewed interest in Crosby Manufacturing Corporation. If we can computerize our project financial reporting procedure, we'll be in great shape to meet the competition head-on. The customer might even waive the financial reporting requirements if we show our immediate intent to convert."

Crosby Manufacturing was a $50-million-a-year electronics component manufacturing firm in 1985, at which time Wilfred "Willy" Livingston became president. His first major act was to reorganize the 700 employees into a modified matrix structure. This reorganization was the first step in Livingston's long-range plan to obtain large government contracts. The matrix provided the customer focal point policy that government agencies prefer. After three years, the matrix seemed to be working. Now they could begin the second phase, an improved MCCS policy.

On October 20, 1988, Livingston called a meeting with department managers from project management, cost accounting, MIS, data processing, and planning.

Livingston: "We have to replace our present computer with a more advanced model so as to update our MCCS reporting procedures. In order for us to grow, we'll have to develop capabilities for keeping two or even three different sets of books for our customers. Our present computer does not have this capability. We're talking about a sizable cash outlay, not necessarily to impress our customers, but to increase our business base and grow. We need weekly, or even daily, cost data so as to better control our projects."

MIS Manager: "I guess the first step in the design, development, and implementation process would be the feasibility study. I have prepared a list of the major topics which are normally included in a feasibility study of this sort" (see Exhibit 12-1).

Exhibit 12—1. Feasibility Study

• Objectives of the study

• Manual or computer-based solution?

• Objectives of the system

• Input requriements

• Output requirements

• Processing requirements

• Preliminary system description

• Evaluation of bids from vendors

• Financial analysis

• Conclusions

Exhibit 12-2. Typical Schedule (in Months)

Normal Time Crash Time Activity to Complete to Complete

Management go-ahead

0

0

Release of preliminary system specs.

ó

2

Receipt of bids on specs.

2

1

Order hardware and systems software

2

1

Flow charts completed

2

2

Applications programs completed

3

ó

Receipt of hardware and systems software

3

3

Testing and debugging done

2

2

Documentation, if required

_2

Changeover completed

22

15*

*This assumes that some of the activities can be run in parallel, instead of series.

*This assumes that some of the activities can be run in parallel, instead of series.

Livingston: "What kind of costs are you considering in the feasibility study?"

MIS Manager: "The major cost items include input-output demands; processing; storage capacity; rental, purchase or lease of a system; nonrecurring expenditures; recurring expenditures; cost of supplies; facility requirements; and training requirements. We'll have to get a lot of this information from the EDP department."

EDP Manager: "You must remember that, for a short period of time, we'll end up with two computer systems in operation at the same time. This cannot be helped. However, I have prepared a typical (abbreviated) schedule of my own (see Exhibit 12-2). You'll notice from the right-hand column that I'm somewhat optimistic as to how long it should take us."

Livingston: "Have we prepared a checklist on how to evaluate a vendor?"

EDP Manager: "Besides the 'benchmark' test, I have prepared a list of topics that we must include in evaluation of any vendor (see Exhibit 12-3). We should plan to call on or visit other installations that have purchased the same equipment and see the sys-

Exhibit 12-3. Vendor Support Evaluation Factors

• Availability of hardware and software packages

• Hardware performance, delivery, and past track record

• Vendor proximity and service-and-support record

• Emergency backup procedure

• Availability of applications programs and their compatibility with our other systems

• Capacity for expansion

• Documentation

• Availability of consultants for systems programming and general training

• Who burdens training cost?

• Risk of obsolescence

• Ease of use tem in action. Unfortunately, we may have to commit real early and begin developing software packages. As a matter of fact, using the principle of concurrency, we should begin developing our software packages right now."

Livingston: "Because of the importance of this project, I'm going to violate our normal structure and appoint Tim Emary from our planning group as project leader. He's not as knowledgeable as you people are in regard to computers, but he does know how to lay out a schedule and get the job done. I'm sure your people will give him all the necessary support he needs. Remember, I'll be behind this project all the way. We're going to convene again one week from today, at which time I expect to see a detailed schedule with all major milestones, team meetings, design review meetings, etc., shown and identified. I'd like the project to be complete in eighteen months, if possible. If there are risks in the schedule, identify them. Any questions?"

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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