1. Analyze the five proposals and make recommendations based on expected costs.
To analyze this case, I first I loaded the tasks and their durations, and then I linked them (assigned predecessors). Then I created summary tasks (highlighted). The top summary task shows total project start and finish dates and total project duration (48 weeks). Note that in order to start the project on Monday Feb. 15th, and to ensure that the month of February has 28 days, I went to the project information window (from the project drop down menu) and found that Feb 2010 fits these criteria. So I started the project on Monday Feb 15, 2010. Therefore, without any strikes or other constraints, the project is scheduled to be completed on 1/14/11, which is about 4 weeks ahead of schedule.
Then I assumed the worst case where the will be a strike lasting 12 weeks, and where heating will be required when pouring concrete in December, then the schedule will be as follows. Please note: in order to account for a 12-week strike starting on Dec 1, 2010, I made the days from Dec 1, 2010 to Feb 23, 2011 non-working days on the project calendar. Here is the result:
Note that the project now ends on 4/11/11, about 8 weeks after the required completion date of 2/15/11. The cost for this delay is:
$15000/week x 8 weeks = $120,000 (penalty clause)
$500/week x 4 weeks = $2,000 (heating cost for pouring concrete in Dec, see activity 12)
$500/week x 8 weeks = $4,000 (overhead cost per week of delay)
Total cost $126,000.
Assuming that the worst-case scenario of a strike and pouring concrete would happen, I explored the different proposals presented to see how they would remedy the schedule impact.
Proposal 1: Expedite the pouring of seat gallery supports. This would cost $20,000 and cut the duration of the activity to six weeks.
Here is what happens to the schedule when we change the duration of pouring gallery supports from 12 to 6 weeks:
The project now finishes on 2/28/11, only 2 weeks behind schedule. Here are the costs associated with this proposal:
$20,000 (expedite fees)
$15,000/week x 2 weeks = $30,000 (penalty clause)
$500/week x 2 weeks = $1,000 (additional overhead cost for delays)
Total $50,500 (note that here there is no heating costs since no concrete will be poured in Dec)
Proposal 2: Same as proposal 1, but in addition, put a double shift on the filling of the field. A cost of $10,000 would result in a five-week time reduction.
Here’s what the project would look like:
Note here, that reducing the filling of the playing field activity by 5 weeks would not result in reducing overall project duration, since it is not on the critical path.
The costs of this proposal would be:
$50,500 (same as proposal 1 costs)
$10,000 (Expedite fees for activity 5)
Total $60,500
Proposal 3: The roof is very important since it precedes several activities. The use of three shifts and some overtime could cut six weeks off the roofing at an additional cost of only $9,000.
Note that reducing the roofing activity by 6 weeks does not impact the overall schedule, since that activity id not on the critical path.
Here the costs would be the same as the worst-case scenario of a 12-week strike and heating in December.
Total $126,000 (see page 2 above)
Proposal 4: Do nothing until Dec1, and then decide. This proposal has two separate scenarios
1) Assume no strike and defer concrete pouring activities until after December
2) Assume there is a strike, let it occur, and then expedite remaining activities after strike. In this case the duration of any activity could be cut no less than one-third of its normal duration, and the additional cost per activity for any week which is cut would be $3,000
Let’s analyze each scenario separately.
Proposal 4, Scenario 1: Assume no strike and defer concrete pouring activities until after December.
Note that here we forced activity 12 to start on Jan 3, 2011 (after the December cold spell is over). This results in a 3-day slip in overall schedule from 2/15/11 to 2/18/11
The costs associated with this scenario are:
$15,000 x 3/7 = $6,249 (Prorating the weekly penalty of $15,000/week for 3 days)
$500 x 3/7 = $214
Total cost $6463
Proposal 4, Scenario 2: Assume there is a strike, let it occur, and then expedite remaining activities after strike. In this case the duration of any activity could be cut no less than one-third of its normal duration, and the additional cost per activity for any week which is cut would be $3,000.
In this scenario the two remaining critical activities that would remain after the strike are Pout seats (4 weeks) and Paint seats (3 weeks). I we reduce both activities to 1 week, the schedule will be as follows:
For a total reduction of 4 weeks from both these activities, the project would now be completed on 3/7/11, a total of 3 week slip. The costs of this scenario are:
$15,000/week x 3 weeks = $45,000 (penalty clause)
$3,000/week x 3 weeks = $9,000 (reduction of activities)
Total $18,000.
Proposal 5: Do not take any special action, that is, hope and pray that no strike and no cold December occur (no cost).
Based on the above analysis, I recommend we assume the worst-case scenario and implement proposal 1 at a cost of $50,500. Doing so would ensure project completion on 2/28/11, even if a strike occurs, and would avoid a total cost of $126,000.
2. What other basis might be used to make a decision besides expected costs? What then might the decision be?
Besides expected costs, the basis for expediting the project could be political such as public expectations, and company’s reputation for future projects. In this case, regardless of a strike, the company should invest in expediting the project, using proposal 1.
3. What other factors might enter into the decision such as behavioral, organizational, and political?
Other factors that might enter the decision to expedite the project would be the tendency of labor unions to slow the job and increase estimated durations. In addition, it is also possible that the company might lose certain key resource in the midst of the project, and be forced to slow the job down while recruiting replacements. Other political reasons might also enter the decision, such as meeting public expectations and enhancing company reputation.
4. What decision would you make as the president?
I would definitely listen the advice may staff gives me, and I would never take a chance and do nothing. I would assume the worst and risk $50,500 to implement proposal 1.