Reference no: EM132242497

Assignment

1.Use the following information to answer parts a through h. Describe what the results of each calculation mean to you as a project manager. What do you propose to do?

PV $25,000

EV $30,000

AC $29,000

BAC $1,000,000

a. Schedule variance (SV)

b. Cost variance (CV)

c. Schedule performance index (SPI)

d. Cost performance index (CPI)

e. Estimate to complete (ETC-first method)

f. Estimate to complete (ETC-second method)

g. Estimate at completion (EAC)

h. To-complete performance index (TCPI)

2. For a cost savings project, you have captured data that show the following costs: delays between operations = $900; broken/missing tools = $1,200; water losses = $3,700; poor seals = $1,500; other = $2,000. Construct a Pareto chart.

What would your next course of action be?

CaSe STUDy 13.2

The Superconducting Supercollider

Conceived in the 1980s as a device to accelerate particles in high-energy physics research, the Superconducting Supercollider (SSC) was a political and technical hot potato from the beginning. The technical challenges associated with the SSC were daunting. Its purpose was to smash subatomic particles together at near the speed of light. That would require energy levels of 40 trillion electron volts. Using the physics of quantum mechanics, the goal of the project was to shed light on some of the fundamental questions about the formation of the universe.

The SSC was designed to be the largest particle accelerator ever constructed, far bigger than its counterpart at Fermi Laboratory. In order to achieve these energy levels, a set of 10,000 magnets was needed. Each of the magnets, cylindrical in shape (1 foot in diameter and 57 feet long), would need to operate at peak levels if the accelerator were to achieve the necessary energy levels for proton collision. The expected price tag just for the construction of the magnets was estimated at $1.5 billion.

The technical difficulties were only part of the overall scope of the project. Construction of the SSC would be an undertaking of unique proportions. Scientists determined that the accelerator required a racetrack-shaped form, buried underground for easier use. The overall circumference of the planned SSC required 54 miles of tunnel to be bored 165 to 200 feet underground. The initial budget estimate for completing the project was $5 billion, and the estimated schedule would require eight years to finish the construction and technical assemblies.

The SSC's problems began almost immediately after President Reagan's 1988 kickoff of the project. First, the public (including Congress) had little understanding of the purpose of the project. A goal as nebulous as "particle acceleration" for high-energy physics was not one easily embraced by a majority of citizens. The original operating consortium, URA, consisted of 80 public and private American research centers and universities, but it was expected that European and Asian scientists also would wish to conduct experiments with the SSC.

Consequently, the U.S. Department of Energy hoped to offset some of the cost through other countries. While initially receptive to the idea of participating in the project, these countries became vague about their levels of contribution and time frame for payment.

Another huge problem was finding a suitable location for the site of the SSC. At its peak, work on the SSC was expected to employ 4,500 workers. Further, once in full-time operation, the SSC would require a permanent staff of 2,500 employees and an annual operating budget of $270 million. Clearly, it was to almost every state's interest to lure the SSC. The result was a political nightmare as the National Research Council appointed a site review committee to evaluate proposals from 43 states. After making their judgments based on a series of performance and capability criteria, the committee narrowed their list to eight states. Finally, in late 1988, the contract for the SSC was awarded to Waxahachie, Texas, on a 16,000-acre tract south of Dallas. While Texas was thrilled with the award, the decision meant ruffled feathers for a number of other states and their disappointed congressional representatives.

The final problem with the SSC almost from the beginning was the mounting federal budget deficit, which caused more and more politicians to question the decision to allocate money at a time when Congress was looking for ways to cut more than $30 billion from the budget. This concern ended up being a long-term problem, as the SSC was allocated only $100 million for 1989, less than one third of its initial $348 million funding request. Budget battles would be a constant refrain throughout the SSC's short life.

Work proceeded slowly on the Waxahachie site throughout the early 1990s. Meanwhile, European financial  support for the project was not forthcoming. The various governments privately suspected that the project would never be completed. Their fears were becoming increasingly justified as the cost of the project continued to rise. By 1993, the original $5 billion estimate had ballooned to $11 billion. Meanwhile, less than 20% of the construction had been completed. The process was further slowed when Congress began investigating expenditures and determined that accounting procedures were inadequate. Clearly, control of the project's budget and schedule had become a serious concern. In a last desperate move to save SSC funding, Energy Secretary Hazel O'Leary fired URA as prime contractor for the construction project. There was talk of replacing URA with a proven contractor-Martin Marietta and Bechtel were the two leading candidates.

By then, however, it was a case of too little, too late. Costs continued to climb and work proceeded at such a snail's pace that when the 1994 federal budget was put together, funding for the SSC had been removed entirely. The project was dead. The nonrecoverable costs to the U.S. taxpayer from the aborted project have been estimated at anywhere between $1 billion and $2 billion. Few questioned the government's capability to construct such a facility. The technology, though leadingedge, had been used previously in other research laboratories. The problem was that the pro- and anti- SSC camps tended to split between proponents of pure research and those who argued (increasingly swaying political support their way) that multibillion- dollar research having no immediate discernible impact on society was a luxury we could not afford, particularly in an era of federal budget cuts and hard choices. The SSC position was further weakened by the activities of the research consortium supervising the project, URA. Its behavior was termed increasingly arrogant by congressional oversight groups that began asking legitimate questions about expenditures and skyrocketing budget requests. In place of evidence of definable progress, the project offered only a sense of out-of-control costs and poor oversight-clearly not the message to send when American taxpayers were questioning their decision to foot a multibillion-dollar bill.17

Questions

1. Suppose you were a consultant called into the project by the federal government in 1990, when it still seemed viable. Given the start to the project, what steps would you have taken to reintroduce some positive "spin" on the Superconducting Supercollider?

2. What were the warning signs of impending failure as the project progressed? Could these signs have been recognized so that problems could have been foreseen and addressed or, in your opinion, was the project simply impossible to achieve? Take a position and argue its merits.

3. Search for "superconducting supercollider" on the Internet. How do the majority of stories about the project present it? Given the negative perspective, what are the top three lessons to be learned from this project?

CaSe STuDy 14.1 New Jersey Kills Hudson River Tunnel Project

When dignitaries broke ground on the Access to the Region's Core (ARC) project in northern New Jersey in 2009, it was supposed to be a celebration to signal the start of a bright new future. Creating a commuter rail tunnel under the Hudson River was not a particularly new or difficult idea, but it was viewed as a critical need. The project was first proposed in 1995, and every New Jersey governor after that time had publicly supported the need for the tunnel. The reasons were compelling:

The entire commuter rail system connecting New York and New Jersey was supported by only one congested 100-year-old, two-track railroad tunnel into an overcrowded Penn Station in midtown Manhattan; both tracks had reached capacity and could no longer accommodate growth. Passengers were making more than 500,000 trips through Penn Station every day, with station congestion and overcrowding the norm. The project was especially critical for New Jersey residents because their commuter ridership to New York had more than quadrupled in the past 20 years from (continued) 10 million annual trips to more than 46 million annual passenger trips. In the peak hours, the New Jersey Transit Authority operated 20 of the 23 trains heading into or out of New York. Building the ARC would double the number of New Jersey Transit commuter trains, from 45 to about 90, that could come into Manhattan every morning at rush hour.

In the face of such congestion and perceived need, the ARC project was conceived to include the following elements:

• Two new tracks under the Hudson River and the New Jersey Palisades

• A new six-track passenger station, to be known as "New York Pennsylvania Station Extension" (NYPSE) under 34th Street, with passenger connection to Penn Station

• A new rail loop near the Lautenberg Secaucus Junction station to allow two northern New Jersey line trains access to New York City

• A midday rail storage yard in Kearny, New Jersey Proponents also argued the environmental advantages of the project, noting that the ARC project would eliminate 30,000 daily personal automobile trips, taking 22,000 cars off the roads and resulting in 600,000 fewer daily vehicle miles traveled. The project was expected to thus reduce greenhouse gas emissions by nearly 66,000 tons each year.

The ARC project was anticipated to take eight years to complete, coming into service in 2017. The cost of the project was significant, as the Federal Transit Administration (FTA) reported the project cost as $8.7 billion in their Annual Report. In order to share the burden of the project costs, the funding as originally proposed included the following sources:

• Federal government: $4.5 billion

• Port Authority of New York and New Jersey: $3.0 billion

• New Jersey Turnpike Authority: $1.25 billion A final important feature of the funding plan limited the exposure of the federal government for any project overruns, meaning that the government was locked into its original commitment amount only. Any cost overruns or project slippages would have to be covered exclusively by the state of New Jersey.

The contracts for various parts of the project began to be awarded following competitive bidding in June 2009, and the first tunneling contract was awarded in May 2010. Within little more than three months, rumbles began being heard from the New Jersey governor's office on the viability of the project. Governor Chris Christie ran and was elected on the promise of reining in what many viewed as outof- control spending by the state's legislature, coupled with some of the highest property and business taxes in the country. As a self-described "budget hawk," Christie was increasingly troubled by rumors of cost overruns in the ARC project. Worse, all projections for completion of the project pointed to a much higher final price tag than the original $8.7 billion estimate.

In early September 2010, Governor Christie ordered a temporary halt in awarding new contracts for the project until his office had a chance to study project cost projections more thoroughly. This issue was highlighted when U.S. Transportation Secretary Ray LaHood, though a supporter of the tunnel, publicly admitted that federal estimates showed the project could go between $1 billion and $4 billion over budget. Christie suspected that even those estimates might be low, putting his state on the hook for a potentially huge new debt, at a time when the economy was sour and the state was already desperately seeking means to trim runaway spending. As additional evidence of highly suspect initial cost estimates, Christie's supporters pointed to the recently completed "Big Dig" project in Boston, which started with an initial price tag of $2.5 billion and ultimately ended up costing well over $14 billion to complete.

Governor Christie first canceled the contract on October 7, 2010, citing cost overruns for which he said the state had no way to pay. The following day, he agreed to temporarily suspend his cancellation order so that he could try to resolve the funding dilemma with federal transportation officials and other project stakeholders. After a two-week period to analyze all their options, the governor made the cancellation official. Christie said that given the impact of the recession and the probability of continuing cost overruns, the state could no longer afford the tunnel's escalating costs. More than a half-billion dollars had already been spent on construction, engineering, and land acquisition for a project that was budgeted at $8.7 billion, but which the governor said could go as high as $14 billion.

"The only prudent move is to end this project," Governor Christie said at a Trenton news conference. "I can't put taxpayers on a never-ending hook."

Questions

1. How would you respond to the argument that it is impossible to judge how successful a project like this one would have been unless you actually do it?

2. Take a position, either pro or con, on Christie's decision to kill the ARC. Develop arguments to support your point of view.

3. In your opinion, how clearly must a large infrastructure project like ARC have determined its need, costs, and so forth before being approved? If the criteria are too stringent, what is the implication for future projects of this type? Would any ever be built?

Students should incorporate outside resources into their paper. A minimum of five (5) outside sources will need to be referenced. The Final Course Paper should be approximately 10-12 pages with at least five (5) outside references.