Chapter
3 Project Management
DISCUSSION QUESTIONS
1. Software is an essential element for successful management of
complex projects. It can provide information on completion
performance of critical activities, highlight activities that need
additional resources, and suggest the project duration that will
minimize costs. However, whether projects are large or small, the
people who manage them or perform the activities will ultimately
determine the outcome of the project. The project manager must have
the ability to coalesce a diverse group of people into an effective
team. The organization of the firm must also be conducive to
cross-functional inputs.
2. This question is best used when it is given as an assignment
prior to class. Responses will vary, but rely on the students with
some business experience. The projects do not have to be large
ones. Stories in the headlines include natural disasters
(earthquakes, fires, tornadoes, and hurricanes), cleanup of oil
spills, and delays in the introduction of new products.
3. This question is best used when it is given as an assignment
before class so that the students will have a chance to think about
it before discussion. Most everyone should be able to describe some
project they have been a part of. Common ones include preparing a
high-school yearbook, planning a major party, building a new home,
and organizing a banquet for a club or student group. Take time to
elicit examples of activities and their interrelatedness. Press the
students for the reasons behind their rating of the project
manager. If the student is the project manager, ask the student
what s/he thinks are positive attributes for a project manager in
such an example.
Project Management CHAPTER 3 29
PROBLEMS
1. a.AON network diagram
D 2
B E G 4 1 3
Start
A F H J 2 8 5 7
Finish
C I 5 4
b. The critical path is ACFHJ with a completion time of 27
days.
c.
Activity A B C D E F G H IJ
Duration 2 4 5 2 1 8 3 5 47
EarliestLatest Start Start0 0 2 3 2 2 6 15 6 16 7 7 8 17 15 15
15 16 20 20
Earliest Finish2 6 7 8 7 15 11 20 19 27
Latest Total Finish Slack2 0 7 1 7 0 17 9 17 10 15 0 20 9 20 0
20 1 27 0
On Critical Path?Yes No Yes No No Yes No Yes No Yes
d. Free slacks: activity G has 9 days; activity H has zero days;
and activity I has 1 day.
2. a.AON diagram
BF23
DAEStart744Finish
CG45
b.The critical path is ACDEG with a completion time of 24
days.
Gantt ChartA B C D E F G H010203040TimeCriticalActivity time of
noncritical taskTotal Activity Slack30 PART 1 Using Operations to
Compete
Activity A B C D E FG
Duration 7 2 4 4 4 35
EarliestLatest Start Start0 0 7 9 7 7 11 11 15 15 19 211919
Earliest Finish7 9 11 15 19 2224
Latest
FinishSlack 7 0112 110 150 190 242240
On Critical Path? Yes No Yes Yes Yes NoYes
c. The free slacks for all activities in days are: A(0); B(2);
C(0); D(0); E(0); F(2); and G(0).
3. a.AON diagram
FinishA C 4 5
DFHStart1547
B E G 10 12 8
b.The critical path is BEGH with a completion time of 37
weeks.
Results Solver - Project Management: Single Time Estimate
Project time37
Total EarlyEarlyLateLateActivityActivity
StartFinishStartFinishSlack
A04262 B0 100 100 C496 112 D 10 25 11 261 E 10 22 10 220 F 25 29
26 301 G 22 30 22 30 0 H 30 37 30 370
Project Management CHAPTER 3 31
4. a.AON diagram
A 3
B 4
Start
C 5
D 4
E 7
G 4
F 2
H 6
I 4
J 3
Finish
K 3
b.The critical path is AEGI with a completion time of 18
days.
Activity A B C D E F G H I JK
Duration 3 4 5 4 7 2 4 6 4 33
EarliestLatest Start Start0 0 0 3 0 2 0 3 3 3 5 7 10 10 7 9 14
14 14 151315
Earliest Finish3 4 5 4 10 7 14 13 18 1716
Latest Total Finish Slack3 0 7 3 7 2 7 3 10 0 9 2 14 0 15 2 18 0
18 1182
On Critical Path? Yes No No No Yes No Yes No Yes NoNo
32 PART 1 Using Operations to Compete
5. a.The AON network is:
StartFinishES ID EF 11 C 20LS DUR LF 11 9 20 0 A 4 4 B 11 20 F
30 30 G 41 0 4 4 4 7 11 20 10 30 30 11 4111 D 14 14 E 28 13 3 16 16
14 30b.Activity slacks for the project:
Start ActivityEarliestLatest
Finish EarliestLatest
TotalCritical Slack Path?
A 0 0 4 4 0 Yes B 4 4 11 11 0 Yes C 11 11 20 20 0 Yes D 11 13 14
16 2 No E 14 16 28 30 2 No F 20 20 30 30 0 Yes G 30 30 41 41 0
Yes
Critical path is ABCFG, and the project completion date is week
41.
c.Free slacks: activity D has zero weeks and activity E has 2
weeks.
Project Management CHAPTER 3 33
6. a.The AON diagram is:
Start
0 A 4 6 4 10
4 D 7 ES ID EF 10 3 13 LS DUR LF
0 B 3 0 3 3
3E 9Finish 369
0 C 57F 11
45913 4 17
9 G 17 17 H 29 9 8 17 17 12 29
b.The critical path is: BEGH, which takes 29 weeks. c.The total
slack for activity A = 10 4 = 6 weeks.The total slack for activity
D = 13 7 = 6 weeks.
d.If A takes 5 weeks, then D will have 10 5 = 5 weeks slack.
e.Activity F has the most free slack at 6 weeks.
7. Web Ventures Inc.
ActivityOptimistic (a)
Most Likely (m)
Pessimistic (b)
Activity Statistics
Expected TimeVariance (te ) (2 )
A381997.11 B 12 1518 151.00 C261675.44 D 4 9 20 10 7.11 E 1 4 7
41.00
a.te A348196 54 6 9 days teB 12415186 90 6 15 days teC 246166 42
6 7 days teD 449206 60 6 10 days teE 14476 24 6 4 days
34 PART 1 Using Operations to Compete
b.2 A19362 7.11
2B 181262 1.00 2C 16262 5.44 2D 20462 7.11 2E 7162 1.00
8. a.The expected activity times (in days) are:
Activity
A B C D E
Optimistic
5 4 5 2 4
Most Likely
8 8 6 4 7
Pessimisticte2 11 8.00 1.00 11 7.83 1.36
7 6.00 0.11 6 4.00 0.44107.001.00
PathTotal Expected Time AC 8 + 6 = 14.00ADE 8 + 4 + 7 = 19.00 BE
7.83 + 7 = 14.83
The critical path is ADE because it has the longest time
duration. The expected completion time is 19 days.
2b.z T TE
Where T = 21 days, TE = 19 days, and the sum of the variances
for critical path ADE is (1.00 + 0.44 + 1.00) = 2.44.
z 1.2821192
2.441.562
Assuming the normal distribution applies (which is questionable
for a sample of three activities), we use the table for the normal
probability distribution. Given z = 1.28, the probability that the
project can be completed in 21 days is 0.8997, or about 90%.
c. Because the normal distribution is symmetrical, the
probability the project can be completed in 17 days is (1 0. 8997)
= 0. 1003, or about 10%.
Project Management CHAPTER 3 35
29. z T TE
Where T = 20 weeks, TE = (5.5 + 9.0 + 4.5) = 19 weeks, and the
sum of the variances for critical path BFG is (0.69 + 2.78 + 0.69)
= 4.16.
191z 204.16 2.0396 0.4903
Assuming the normal distribution applies, we use the table for
the normal probability distribution. Given z = 0.49, the
probability for activities BFG taking longer than 20 weeks is (1
0.6879), or 31.21%.
10. a.The AON diagram is:
0A55C78E 12
45992 1111 4 15
ES ID EF
LS DUR LF
StartFinish
0 B 3 3 D 8 8 F 15 0 3 3 3 5 8 8 7 15
b. Critical path is BDF. Expected duration of the project is 15
weeks.
c. Activity slacks for the project are:
Start ActivityEarliestLatest
Finish EarliestLatest
TotalCritical Slack Path?
A 0 4 5 9 4 No B 0 0 3 3 0 Yes C 5 9 7 11 4 No D 3 3 8 8 0 Yes E
8 11 12 15 3 No F 8 8 15 15 0 Yes
36 PART 1 Using Operations to Compete
11. Bluebird University. Calculation of activity statistics (in
days):
The AON diagram is:
FinishA D G J 6.83 17.33 7.5 4
Start
B E I 8.33 10 11.5
C F H 4 4 7
The critical path is ADGI, and the expected completion time is
43.17 days.
T = 47 days, TE = 43.17 days, and the sum of the variances for
the critical activities is: (0.25 + 5.44 + 0.69 + 2.25) = 8.63.
z 1.30T TE4743.173.83
28.632.94
Assuming the normal distribution applies, we use the table for
the normal probability distribution. Given z = 1.30, the
probability that activities ADGI can be completed in 47 days or
less is 0.9032.
Project Management CHAPTER 3 37
12.
7C 14 ES ID EF7 7 14 LS DUR LF
0 A 7 14 F 15 15 H 18 0 7 7 14 1 15 15 3 18
Start
7D 13
76 13
Finish
0 B 12 13 G 16 16 I 18 0 12 12 13 3 16 16 2 18
12 E 13 12 1 13
Crash TrialActivity0
1A, G
2C, G
3B, H
Resulting Critical Path ACFH ADGI BEGI ACFH BEGI ACFH ADFH BEGI
ACFH ADFH ADGIBEGI
Time Reduction (weeks)
1
1
1
Project
Duration Crash (weeks) Cost180
17$400
16$450
15$600
Total crash costs = $1450
To use OM Explorer for this problem, you need to modify the
input data a little. The problem already gives the cost to crash
per week for each activity. Since OM Explorer assumes it must
calculate these values, multiply the number of weeks the
38 PART 1 Using Operations to Compete
activity can be crashed by the cost per week given in the
problem statement. The input sheet and the resulting crash schedule
should look like the exhibits below.
NOTE: For the Crash Costs Excel DID divide the entered per week
$ by number of allowable days. Thus it crashed B and A first, then
kept crashing B. The Solver solution does NOT match the (correct)
manual solution
Project Management CHAPTER 3 39
13. a.The AON diagram is:
5 C 7 6 2 8
0 A 513 F 15
15619 2 21
ES ID EF
LS DUR LF
Start
8E 13
85 13
Finish
0 B 5 5 D 8 13 G 16 16 H 21 0 5 5 5 3 8 13 3 16 16 5 21
The critical path is BDEGH, and the project duration is 21
days.
b.Direct cost and time data for the activities:
Activity A B C D E F GH
Crash Cost/Day 200 600 300 500 150 1000
200
Maximum Crash Time (days) 1 2 1 1 2 1 02
A summary of the cost analysis follows. The recommended
completion date is day 17 by crashing activity E by 2 days and
activity H by 2 days.
Crash Trial Activity0 1 E2H
Resulting Critical Paths BDEGH BDEGHBDEGH
Reduc-ProjectCosts tion Duration Last(days)(days)Trial 21
$7,500219$7,500
217$7,800
CrashTotal Cost IndirectAddedCosts $5,250$300$4,750
$400$4,250
Total Penalty Costs $700 $500$300
Total Project Costs $13,450 $13,050$12,750
Further reductions will cost more than the savings in indirect
costs and penalties.
c.The critical path is BDEGH for minimum cost schedule..
40 PART 1 Using Operations to Compete
14.
a.The critical path at the start is B-D-F at a duration of 18
weeks. We proceed as follows: (1) Crash Activity B to its maximum
reduction because it is the cheapest activity on the critical path
to crash per week and costs less than $2,800, the sum of the
indirect and penalty costs. The savings is $3,600. The critical
path is still B-D-F at a length of 16 weeks. (2) Reduce Activity D
by 3 weeks for an additional savings of $2,400. The critical path
is still B-D-F at a duration of 13 weeks. No further reductions
will lower total costs because the cost to crash the other
activities (that is, Activity F) exceeds the potential reduction in
indirect costs. Therefore, the minimum-cost schedule is 13
weeks.b.The normal direct cost is $31,000, the normal indirect
costs are $28,800, the penalty costs are $7,200, and the total for
the normal schedule is $67,000. The cost for the schedule in part a
is $31,000 + $8,000 (crash costs) + $20,800 (indirect costs) +
$1200 (penalty) = $61,000. The total savings is $6,000.
15.
a.The shortest project duration time would be 7 weeks, using the
crash times. b.Since the normal project time is 12 weeks, the total
normal direct cost is$56,000. There would also be indirect costs of
$120,000 over the 12-week period. The penalty cost would be $30,000
for the three weeks past week 9. The grand total is $206,000.c.The
minimum-cost schedule would take 9 weeks. This can be found in the
following way: (1) the starting critical path is A-C-E-F at 12
weeks. Since Activity A is the cheapest to crash per week, crash it
one week for an additional cost of $3000. The savings is $10,000
(indirect costs) + $10,000 (penalty costs) - $3,000 = $17,000. The
project duration is now 11 weeks. (2) Since Activity A cannot be
crashed further, the next cheapest activity to crash that is on the
critical path is Activity F. Crash F for its maximum of two weeks
at an additional cost of $10,000. The savings would be $20,000
(indirect costs) + $20,000 (penalty costs) - $10,000 = $30,000.
The critical path is now 9 weeks in duration. Since the penalty
costs are zero for further reductions, there are no other options
to reduce the project time that are less costly than the indirect
costs per week. Therefore, we stop.
z 1.20Project Management CHAPTER 3 41
16. Gumball Foods
a.Calculation of the activity statistics:
Activity A B C D E F GH
Expected Time 48 10 2 5 4 12
Variance 0.44 1.00 2.77 0.11 2.77 0.00 0.000.00
The AON diagram for the hiring project is:
0 A 4 4 D 6 6 G 7 7 4 11 11 2 13 13 1 14
Start
0B88E 1314 H 16
18995 1414 2 16
Finish
0 C 10 10 F 14 ES ID EF 0 10 10 10 4 14 LS DUR LF
b.
c.
The critical path is CFH and the project is expected to take 16
weeks. T TE1416222.771.66
Using the normal distribution table, the probability that the
project can be completed in only 14 weeks is (1 0.8849) or
0.1151.
No additional expenditures are recommended. Reducing activity A
would not help because it is not on the critical path. Reducing
activity B would not shorten the project by two weeks because it is
also not on the critical path, and even if it were, it would cost
more than the lease costs for two weeks.
42 PART 1 Using Operations to Compete
17. An AON diagram using the Alternative 1 (or normal) times
follows.
D 9
A E G 12 12 8
Start
BFHFinish 13 8 2
C I 18 4
The critical path is ADG, and the project duration is 29 days.
Direct cost and time data:
Activity A B C D E F G H I
Cost analysis for the project:
Crash Cost/Day $600.00112.50 750.00 250.00 225.00 350.00 200.00
200.00900.00
Maximum Crash Time (days) 1 4 2 4 2 1 2 12
Crash TrialActivity0
1G
2D
3D, H
Resulting Critical Path ADG
ADG
ADG AEH
ADG AEH
Time Reduction (weeks)
2
1
1
Project
Duration Crash (weeks) Cost29
27400
26250
25450
The total cost for this project is:
$13,050 + $400 + $250 + $450 = $14,150.00 The activity times
with crashing are:A: 12B: 13C: 18D: 7E: 12 F: 8G: 6H: 1I: 4
Project Management CHAPTER 3 43
18. Sculptures International
a.The AON diagram for this project is:
0 A 4 4 C 7 0 4 4 4 3 7
Start
7E 10
73 10
Finish
0 B 1 1 D 3 4 1 5 5 2 7
b.The critical path is ACE, and the project duration is 10
days.
c.Activity AB C D
E
Activity Slack 05 1 = 4 07 3 = 4
0
19. Reliable Garage
a.The AON diagram is:
Finish12 D 17 17 5 22
Start
0 A 22 B 88 C 1212 E 1922 H 25
02226884 1215 7 2222 3 25
12 F 17 17 G 22 12 5 17 17 5 22
44 PART 1 Using Operations to Compete
b.Critical Path is ABCFGH, and the duration is 25 days.
c.Activity A
B C D E F GH
Activity Slack
0 0 022 17 = 5 22 19 = 3 0 0 0
20. a.
The AON diagram for the hiring project is shown below.
DIKA C F 10 9 13Start5611FinishB G H 11 5 10E J 8 9b. The
critical path is BCGHJK, and the expected project duration is 55
days.
21. a. Calculation of the activity statistics:
Project Management CHAPTER 3 45
The AON diagram for the advertising campaign is shown below.
20 G 23 23 I 27 23 3 26 32.33 4 36.33
0B99D 11
99 1818 2 20
20 F 2626 H 31
20 6 2626 5 31
31 J 36.33
31 5.3336.33
Finish
Start
0 A 1010 E 20
0 10 1010 10 20
31 K 33
34.33 2 36.33
0 C 8 2 8 10
b.
c.
The critical path is AEFHJ, the expected project duration is
36.33 days, and the sum of the variances of the critical path
activities is(0.44 + 0.44 + 0.11 + 1.00 + 0.44) 2.43
z1.07T TE 3836.33 1.67 2 2.43 1.56
The probability that the project will take more than 38 days is
1 0.8577 or 0.1423
2276The path AEGHJ has a duration of 33.33 weeks with variance
of 2.76. Therefore, z T TE 36.33 . 33.33 1.81
The probability that the path AEGHJ exceeds 36.33 weeks is 1
0.9649, or 0.0351.
46 PART 1 Using Operations to Compete
22. Michaelson Construction. One of many possible arrangements
for the project activities is shown below:
UQN
PTJ
BFGHIDOCRAL
MVX
W
E
U Q Window Siding
S
K
N OutsidePrinting
P T Roof Doors
J KitchenCabinets
B F G H Building Foundation Framing HVACPermit
ID Insulation DryWall
O C R Interior Carpets and FinalPainting FlooringTrim
A ApplianceInstallation
L Moving-in
E ElectricalWiring
M Rough-inPlumbing
V BathFixtures
W LawnSprinkler
X Landscaping
S Sidewalks
K LightingFixtures
Project Management CHAPTER 3 47
YCCID2BLOBloodLicensewedding
partyplanningFinishVNAHCCIPKMJQDDED1D3D4ZSBBWEERFCOG
YD2XUTBLAAVNAerveNewspaperAnnouncementsrchannouncementHHoneymoonRegister
InvitationsPfor china mailed PhotographerK M Caterer MenuJQDD Guest
Reception DancelisthallbandE D1 D3 D4 Z S BB W EE Establish Wedding
Bride's Groom's Rehearsal Bachelor Bride's Wedding
Thank-youbudgetdressmother's mother'spartynervous ceremony
notesRdressdressbreakdown RingsFCFlowersColorsOrdercake, mintsG
Select Bridesmaids Gifts forbridesmaids dressesXUT Select Ushers
TuxedosgroomsmenAA PrenuptialtestsagreementStartRes chuStart Accept
proposal23. Will, Bea Wright-Bach Wedding One of many possible
arrangements for the project activities is shown.
DHLP48 PART 1 Using Operations to Compete
23. a.AON diagram
F 4
CGKN A2 6 3 43StartB5235Finish 4 EI M O3121
J 4
Activity slacks for the project:Results Solver - Project
Budgeting
Project time25Project Budget$2,125
Total EarlyEarlyLateLateActivityActivity
StartFinishStartFinishSlack
A 0 3 2 5 2 B 0 4 0 4 0 C 3 5 5 7 2 D 4 9 4 9 0 E 4 7 7 10 3 F 9
13 9 13 0 G 5 11 7 13 2 H 9 11 15 17 6 I 7 8 13 14 6 J 9 13 10 14 1
K 13 16 13 16 0 L 11 14 17 20 6 M 13 15 14 16 1 N 16 20 16 20 0 O
15 16 19 20 4 P 20 25 20 25 0
The critical path is BDFKNP, and the expected completion time is
25 days.
Project Management CHAPTER 3 49
b. Project cost with the earliest start time for each
activity:
Results
Solver - Project Budgeting
Project
Project time25Budget$ 2,125
Period TotalABCDEFGHIJKLMNOP 170.83 33.33 37.502 70.83 33.33
37.50 3 70.83 33.33 37.50
4 100.00 5 147.50 6 97.50 7 97.50 8 147.50947.50
37.50 62.50
62.50 35.0050.00 35.0050.00 35.0050.00 35.0035.00
12.50 12.5012.50100.00
12.50
10 106.25 11 106.25
12118.75
13118.75
50.00 12.50 25.0018.75
50.00 12.50 25.0018.7550.0 50.0018.75050.050.0018.750
50.0 50.0 50.0 14150.00000
15100.00
16250.00
50.0 50.0 0 050.0200.000
43.7 1743.75543.7 1843.75543.7 1943.75543.7 2043.75530.0
2130.00030.0 2230.00030.0 2330.00030.0 2430.00030.0 2530.000
50 PART 1 Using Operations to Compete
Project cost with the latest start times for each activity:
Results
Solver - Project Budgeting
Project time25Project Budget $ 2,125
Period TotalABCDEFGHIJKLMNOP 137.50 37.50237.5037.50 370.83
33.33 37.50 470.83 33.33 37.50568.33 33.3335.00
6 97.50 7 97.50 8 97.50 9 97.50 10 112.50 11 81.25 12 81.25 13
81.25 14 168.7515100.00
62.50 35.00 62.50 35.00 35.0035.00
50.00 12.50 50.00 12.50 50.00 50.00 12.50 50.00 12.5050.00
12.50
50.00 12.50
18.75 18.75 18.75100.00 18.75 50.00
50.0050.00
16125.00
1768.75
25.0050.0050.00
25.0043.75
18 93.75 19 93.75 20 293.75 21 30.00 22 30.00 23 30.00 24
30.002530.00
50.00 43.75 50.00 43.7550.0043.75 200.00
30.00 30.00 30.00 30.0030.00
Project Management CHAPTER 3 51
Cost by day is plotted for Early Start and Late Start
Schedules.
OM Explorer Solver - Project Budgeting
Cost by Period 350
300
250
Cost200
150
100
50
0
123456789 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Period
Early StartLate start
These two plots indicate the patterns of cash flow associated
with the two different project schedules. Management can select the
schedule that fits better with its financial status. Notice that
the latest start dates delay cash flow requirements to the later
time periods of the project.
CASE: THE PERT STUDEBAKER *
A. Synopsis
The owner of the Roberts Auto Sales and Service Company is
interested in restoring a 1963 Studebaker Avanti for advertising a
new restoration business she wants to start. The restoration
project involves 22 activities and needs to be completed in 45 days
so that the car can be displayed in an auto show. The owner wants
an assessment of how the restoration business fits with the other
businesses the company engages in, a report on the activities that
need to be completed and their interrelationships, an assessment of
whether the project can be completed on time, and a budget.
B. Purpose
This case provides enough data for the student to develop a
PERT/CPM network for a project involving 22 activities. With this
case, the class can:
* This case was prepared by Dr. Sue Perrott Siferd, Arizona
State University, as a basis for classroom discussion.
52 PART 1 Using Operations to Compete
Discuss how well a new market segment can be satisfied with an
existing operation. Gain experience in identifying the
relationships between activities in a large project. Relate cost to
the development of a project.
C. Analysis
1. The restoration business, although entailing much of the
skills and resources needed for the other market segments the
company serves, needs to be evaluated carefully before making a
commitment. Currently, the company has three car dealerships, two
auto parts stores, one body/paint shop, and one auto storage yard.
These operations would be useful for the restoration business.
However, the nature of the markets served by these operations is
not made explicit in the case. Some questions come to mind:a. Are
the auto parts stores equipped to provide customers with
one-of-a-kind parts? Restoration parts are hard to find and require
access and familiarity with different information systems.b. Does
the body/paint shop have the ability to do custom, high-quality
work, with restoration of rusty parts, or is it a high-volume
operation with minimal capability to restore any car to its
original condition?c. Does the machine shop have the capability to
machine one part at a time to unique specifications if the
restoration part cannot be purchased from a supplier?d. How useful
will the salvage yard be for the restoration business? There must
be a broad mix of vintage age autos in the yard in order to support
the new business. The competitive priorities for the restoration
business most likely will be high-performance quality and
customization in a low-volume environment. It would seem that these
competitive priorities could conflict with other market segments
the company serves.
2. The project activities and the precedence relationships are
given in TN.1.
3. A PERT/CPM diagram is shown in TN.2. The latest finish data
are set for 45 days from present, which would be the day before the
car must be in the show. The critical path is ABTV, and the
expected project duration is 41 days. The slack of each event along
the critical path is 4 days, suggesting no problem in completing
the project on time.
4. A project budget is shown in TN.3.
5. A cash-flow report is shown in TN.4. It is aggregated by
weekly time periods. If an activity is scheduled to start in the
middle of a week, the total cost is prorated for that week and
following weeks. If MS Project is used for this analysis, the
calendar date the students use for the start of the project may
affect the weeks in whichcertain costs may accrue. Also, MS Project
assumes a five-day workweek as a default. From TN.4 it appears that
there is a cash flow problem in week 4 because the cash required
exceeds $1,700. To resolve the problem Activity S, paint car, could
be scheduled to
Project Management CHAPTER 3 53
start later so that it is completed the following week, thereby
pushing some cost to week
D. Recommendations The owner should:1. Carefully evaluate the
potential conflicts of competitive priorities for the new
restoration business.
2. Monitor the critical path of ABTV, although there is
slack.
3. Monitor the budget even though there is ample room for
unexpected contingencies.
E. Teaching Suggestions
This case should be an overnight assignment so that the students
have the opportunity to think through the construction of the
PERT/CPM diagram. This is not a difficult assignment, even though
there are 22 activities. If used for discussion in class, it should
be discussed after the PERT/CPM approach has been addressed in a
previous class. Alternatively, the case could be used as a written
assignment with no debriefing during class.The discussion should
begin with the potential conflicts with competitive priorities so
that the class understands the strategic implications of the new
restoration business. There is not enough information in the case
to make a definitive conclusion, so the emphasis should be on the
potential for conflicts and the need to do some serious
exploration.The discussion can then turn to the network diagram and
the conclusions. See Exhibits TN.2 and TN.3 for suggestions.
F. Board Plan
Unique Tasks for Restoration Business Find parts no longer
madeManufacture unique parts Low volumesCustom body work Custom
paint workNew information system
Competitive Priorities High-performance designCustomization
54 PART 1 Using Operations to Compete
EXHIBIT TN.1
Table of Tasks
Task
AOrder all needed material and parts BReceive upholstery
materialCReceive windshield
DReceive carburetor and oil pump ERemove chrome from bodyFRemove
body from frame GGet fenders repairedHRepair the doors, trunk, and
hood IPull engine from chassisJRemove rust from frame
KHave valves reground in engine LReplace carburetor and oil pump
M Get the chrome parts rechromed NReinstall engineOPut doors, hood,
and trunk back on frame PGet transmission rebuilt and replace brake
QReplace windshieldRPut fenders back on SGet car
paintedTReupholster interior of car UPut chrome back onVPull car to
Studebaker show in Springfield, Missouri
Immediate TimePredecessors 2 days None30 days A 10 days A 7 days
A1 dayNone 1 day E4 daysF 6 daysF 1 day F 3 days I 5 days I 1 day
D, I 3 daysE1 dayK, L 1 day H, J 4 daysN, O 1 day C 1 day G, P 4
days Q, R 7 days B, S 1 day M, S2 daysT, U
2 D 925 1 26FinishEXHIBIT TN.2PERT/CPM Network2 B 32 32 T 39 6
30 36 36 7 430 A 2 2 C 12 12 Q 13 4 2 6 21 10 31 31 1 3218 7 25 9 L
10 16 S 20 32 4 3610 N 11 26 1 273 K 821 5 26Start2 I 320 1 2111 P
1539 V 41 3 J 627 4 3143 2 45 23 3 261 F 22 H 819 1 2020 6 268 O
926 1 27 20 U 21 42 1 432 G 6 15 R 16 27 4 31 31 1 320 E 1 1 M 4 18
1 19 39 3 42Project Management CHAPTER 3 55
EXHIBIT TN.3
Project Budget for The PERT Studebaker
Task A B C D E F G H I J K L M N O P Q R S T U VTotal Cost
Estimated Cost $100250 130 180 50 150 200 300 50 300 500 50 150
150 80 700 70 601,700 1,200 50 500$6,920
56 PART 1 Using Operations to Compete
EXHIBIT TN.4
Cash Flow Report for The Pert Studebaker
1
2
3
4
5
6
7
8
9
Total
Start
A
Order needed material and parts
$100.00
$100.00
B
Receive upholstery material for seatcovers
$25.00
$41.67
$41.67
$41.67
$41.67
$41.67
$16.67
$250.02
C
Receive windshield
$39.00
$65.00
$26.00
$130.00
D
Receive carburetor and oil pump
$77.14
$102.86
$180.00
E
Remove chrome from body
$50.00
$50.00
F
Remove body from frame
$150.00
$150.00
G
Fenders repaired by body shop
$150.00
$50.00
$200.00
H
Repair doors, trunk, hood
$150.00
$150.00
$300.00
I
Pull engine from chassis
$50.00
$50.00
J
Remove rust from frame
$200.00
$100.00
$300.00
K
Regrind engine valves
$200.00
$300.00
$500.00
L
Replace carburetor and oil pump
$50.00
$50.00
M
Rechrome the chrome parts
$150.00
$150.00
N
Reinstall engine
$150.00
$150.00
O
Put doors, hood, and trunk on frame
$80.00
$80.00
P
Rebuild transmission and replace brakes
$700.00
$700.00
Q
Replace windshield
$70.00
$70.00
R
Put fenders back on
$60.00
$60.00
S
Paint car
$1,700.00
$1,700.00
T
Reupholster interior
$514.29
$685.71
$1,200.00
U
Put chrome back on
$50.00
$50.00
V
Pull car to Studebaker show
$250.00
$250.00
$500.00
Finish
Total
$1,341.14
$939.53
$987.67
$1,801.67
$91.67
$41.67
$530.96
$935.71
$250.00
$6,920.02