Reference no: EM131216363 , Length:

In 2015, Reynolds Construction Company received a contract to construct a water purification system for the city of Oakmont. By January of 2016,work was nearly complete on the main system; however, it was apparent that work on a special remote control building would have to be finished earlier than originally planned if the main system was to be completed on time.

Mr. James Alison, field construction supervisor for Reynolds had arranged a meeting with Mr. Henry Phillips, project engineer, to restudy the arrow diagram of their critical path schedule for the construction of the remote control building in an effort to determine the shortest possible time in which the job could be done without spending more money than necessary.

Reynolds uses PERT as a tool to assist in project planning and control. A list of the activities and predecessors for the remote control site are shown in Exhibit 1. The cost table, Exhibit 2, lists the activities, their normal costs and their expected durations (te), optimistic (min required) durations (to), and pessimistic durations (t_p).

The sequence of consecutive activities requiring the longest time to complete before the end of the project is known as the "critical path" for that project. The path is considered "critical" because any delay in that particular sequence will delay the completion of the entire project.

Exhibit1.

Exhibit 2: Cost and Time Table for Remote Control Building Project

Total cost of completing the entire project is $61,000, assuming no activities are crashed. Any crash costs must be added to that amount. Note that Activity E cannot be expedited.

Part 1

1. Draw a PERT diagram of this building project. Label all nodes and indicate all activity duration times.

2. What is the critical path?

3. How long will it take to complete the project without crashing?

4. What is the associated cost of the entire project?

5. Revise the schedule in order to complete the project within 10 weeks.

6. Indicate the new cost and critical path (or paths).

Part 2

Suppose Reynolds is proceeding on the 10-week cost schedule (that you determined in parts 1e and 1f above). [To meet the 10-week schedule in Part 1e, you had to crash one or more activities. Here, you start with that schedule that you determined after you crashed these activities - or activity. You can NOT go back and ‘uncrash' activities. Once you pay the money to shorten an activity, you can't go back and ‘unshorten' it.] It becomes obvious that it will take not two but five weeks to prepare the necessary data for the request for Oakmont approval and that this step alone will now cost $7,000. (Assume that activity C cannot be crashed down from 5 weeks for parts a, b or c.)

1. What steps would you take to keep on the 10-week schedule ?

2. What would be your new critical path or paths?

3. What would happen to project costs?

Part 3

You've got the project expedited to 10 weeks and then, in usual fashion, the higher-ups tell you to get it down to 6 weeks *.

1. Is it possible to expedite the project to finish it in 6 weeks? Show why or why not.

2. If there is a penalty cost of $10,000 per week for every week the project is late beyond 6 weeks, what action would you take? Be specific. What activities would you crash - how many weeks would you crash them and/or for how many weeks would you incur a penalty? What is the associated cost of the entire project given your actions? If you provide just generalizations here, you will receive no credit.

*Activity C, the preparation for approval, will take two weeks as described in the case and can be crashed for this question.

Part 4

Go back to Question 1b - before you revised the schedule to complete the job in 10 weeks (meaning you've not crashed any activities to finish the job in 10 weeks). What is the probability of completing this building project in 9 weeks?