IIMT3603 PROJECT MANAGEMENT Homework 3 Sample Solution
(Due – November 24, 2016, 11:55 PM)
Electronic Submission (Moodle Course Web page)
(i) MS Word
(ii) File name: IIMT3603_hw3_HKUID (e.g. IIMT3603_hw3_1234567)
No Late Submission.
1. (40%) Sandy Point is the project manager of a small project that consists of seven
tasks. After careful and extensive planning, Sandy and her project staff agreed
on a proposed project schedule that is indicated by the following Gann chart: Today Scheduled critical task A
Scheduled non-critical task B
C Used but not planned D
Planned but not used E
F
G
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Time As indicated in their original project plan, Sandy and her staff had estimated the
following durations and (total) direct costs for each task:
Task
A
B
C
D
E
F
G Duration Planned
(weeks)
Value
4
$2,000
7
$2,800
3
$1,150
5
$ $ 625
5
$1,350
3
$1.050
3
$ $ 270 This morning (beginning of week 6), Sandy received a progress report; as indicated
in the Gantt chart, task C could not be started until this week due to the unexpected
delay in completing task A. The report also indicates that task B has been completed
two weeks earlier than expected. Information from the progress report is
summarized in the following table. Homework #3
1 IIMT3603 PROJECT MANAGEMENT
Task Current
Status A
B
C
D
E
F
G Completed
Completed
Just started
In progress
Not started
Not started
Not started Actual
Expenditures
to Date
$2,000
$2,800
$0
$330
$0
$0
$0 Percent of
Work
Completed
100%
100%
0%
55%
0%
0%
0% a. (15%) As of today (beginning of week 6), what is the cost variance of the
project? What is the schedule variance of the project?
b. (10%) Based on information provided to date, what is your assessment of the
current status of the project?
c. (15%) If you use a fixed 30/70 formula to compute the value of the work
completed (BCWP) instead of relying on progress reports to estimate the
percent of work completed, what is the value of the cost index for the project
at the beginning of week 6? What is the schedule index for the project? Does
this change your view of the project progress to date?
2. (20%) Discuss the effects of the various organizational forms on coordination
and interaction, both within the project team and between the team and the rest
of the firm.
3. (40%) The Van Allen Construction Company is hoping to sign a contract in the
next few months to build a new soccer stadium where the Louisiana Superdome
now stands. Hopeful of getting this contract, managers at Van Alien have
started planning the first phase of the project (i.e., demolition of the
Superdome).
The demolition project consists of nine tasks, which are indicated in the
following table. Also indicated are the normal times (in weeks) and normal costs
(in hundreds of dollars), as well as the crash times and crash costs. Indirect
charges (e.g., security fencing around the perimeter site) and overhead charges
will cost approximately $12 (hundred) per week.
Crash
Task Predecessors Time Cost A
B
C
D
E
F
G
H
I —
—
B
A
A
C,D
C,D
G
E,G 3
1
5
2
2
5
4
1
1 $60
$50
$70
$60
$50
$90
$60
$40
$50 Homework #3
Time Cost
5
5
10
7
6
11
6
5
4 $40
$30
$40
$40
$30
$60
$30
$20
$20 2 IIMT3603 PROJECT MANAGEMENT
The project manager has become aware that workers may strike during the
demolition project. If such a strike occurs, no one will cross the picket line, and
the demolition project will be stopped for the duration of the strike (overhead
and indirect charges, however, will continue to accrue during the strike). To get
more information about this potential strike, the project manager has hired a
consultant who specializes in labor relations. The consultant reported that the
probability of a strike is between 60 and 80 percent. If a strike does occur, she
estimates the duration of the strike is as follows.
Strike Duration (weeks) Probability 3 0.45 4 0.30 5 0.25 The consultant has also stated that if a strike should occur, it is equally likely
that the strike would start at any time during the demolition project, and that
there would be no more than one strike during the project’s life. Given this
information, how should the Van Alien Company manage this risk? Should
the company take any preventive actions or plan some contingency actions?
If so, what do you recommend?
a. (10%) The management consultant on the Van Allen project has discovered that
the labor contract is in effect until the beginning of week 14; that is, the strike
would occur only at the beginning of week 14, if at all. Would this change your
decisions? If so, how?
b. (10%) The project manager at the Van Allen Company now thinks that the
likelihood of a strike increases as the duration of the project increases.
Specifically, she estimates the probability of a strike during the course of the
project to be as follows:
Probability of Strike = END/(END + 4)
where END is the project duration. Would this assumption change her
preventive plans? If so, how?
c. (10%) Assume that the Van Allen Company has a deadline of twenty weeks to
complete the Superdome demolition project. In this case, the state will fine the
Van Allen Company $3.5 (hundreds) for each week the demolition project is
delayed. How does this affect your recommendation (assume that the
probability of a strike is 0.70)?
d. (10%) To get the demolition project completed as quickly as possible, the state
of Louisiana is considering adding an incentive clause to Van Allen’s contract.
Specifically, the incentive clause would reward the company with a bonus of $5
(hundreds) for each week that the project is completed before week 18. What
would you now recommend to Van Allen? Why? (Assume that the probability
of a strike is constant at 0.70.)
Homework #3
