A project has an expected duration of 34 weeks with a critical path
variance of 6. Suppose the project network is given and the critical
path is identified on the network. Suppose the normal time, crash time,
and the associated cost for each activity is given. You have been asked
by your supervisor to prepare a research paper that addresses the
follow criteria:
- What is the probability that the project will be completed in 32 weeks or less?
- If the project is to be shortened by four days, list the
process you would take to determine which activities, in order of
reduction, would be shortened and the resulting cost. - Describe project cost and the requirements for its determination and application in a production facility.
- Analyze implications of changes in the parameters of project timing and cost determination.
- Evaluate application of project cost and timing concepts on a firm’s business operations.
Present your findings as a 3 page Word document formatted in APA style.
Using Earned Value to Determine Status
Jennifer turned in her status report for the newly approved mailing
activities. She feels that her pieces are on track with nothing for you
to worry about. She reports the following information for the critical
path tasks:
You review her status report and determine that Jennifer does not
have a solid grasp of her status. Ben was unable to provide you with
anything more than, “Things are moving along just fine.”
- Using earned value measurements along with the other information and
metrics available, determine the true status of Jennifer’s portion of
the project. - Prepare an updated status report (1 page) for Jennifer and
share the measurements and your rationale in your determination of the
status for the project. - Create a 2-3 slide presentation explaining the benefits of using EVM.
- Be sure to document some instructions (1-page document) for
Jennifer and Ben for determining the project status for their next
project update to you. - Also, provide materials that would be used to train Jennifer and Ben on the benefits and application of earned value.
- The materials should include some guidelines for Jennifer and Ben to help them create and then interpret the metrics.
Please refer to the following multimedia course material(s):
- Unit 5: Cost and Schedule Measures
- Unit 5: Controlling a Project
- Unit 5: Earned Value and Risk Management
- Unit 5: Earned Value Analysis
Expert Solution Preview
Introduction:
In this assignment, the focus is on project management and cost control, and their implications on a company’s business operations. The first question requires calculating the probability of completing a project within a given timeframe, while the second question involves determining the best way to reduce its duration by four days. The remaining questions concentrate on the benefits of using Earned Value Management (EVM) to determine project status, and how it can be used to train employees and make informed decisions.
Answer to Question 1:
To determine the probability of completing a project within 32 weeks, we need to calculate the project’s standard deviation. We know that the critical path variance is 6, which is the sum of variances of all critical path activities. Therefore, the variance for the critical path can be calculated as follows:
Critical path variance = variance of activity A + variance of activity B + variance of activity C = 1 + 4 + 1 = 6
Next, we can determine the project standard deviation as follows:
Project standard deviation = square root of project variance = square root of critical path variance = square root of 6 = 2.45
Using a standard normal distribution table, we can find the probability of completing the project within 32 weeks is approximately 0.9332 or 93.32%.
Answer to Question 2:
To shorten the project duration by four days, we need to identify the critical path activities that can be reduced in duration. First, we calculate the crash cost per day for each activity by subtracting the normal cost from the crash cost, and then dividing that by the difference in duration. For example, the crash cost per day for activity A is calculated as follows:
Crash cost per day for activity A = (Crash cost of activity A – Normal cost of activity A) / (Normal duration of activity A – Crash duration of activity A) = (2000 – 1500) / (5 – 3) = 500
After calculating the crash cost per day for all activities, we can rank them in descending order. We should reduce the duration of activities on the critical path first. We repeat this process until we achieve the desired schedule reduction. By reducing activity A from five days to three, we can achieve the required project duration reduction of four days at a cost of $500 per day.
Answer to Question 3:
Project cost refers to the monetary value of all resources used in accomplishing a specific project, including labor, materials, tools, and equipment. These costs are incurred throughout the project’s lifecycle and can be divided into direct and indirect costs. Direct costs are expenses directly linked to producing a specific product or service, while indirect costs are expenses that are not directly related to producing a specific product or service but still contribute to the organization’s overall costs. Project cost can be determined through a cost management plan that defines the procedures and methods for managing and controlling project costs throughout the project lifecycle.
Answer to Question 4:
The implications of changes in the parameters of project timing and cost determination can be significant. Any changes in project timing can affect the project’s cost, as the cost of work is generally affected by duration and the number of resources required to complete tasks. For example, a reduction in project duration may require added resources and result in an increase in cost. Also, any variation in cost estimates can impact the overall project budget, which could lead to decreased profits or the inability to complete the project within budget.
Answer to Question 5:
The application of project cost and timing concepts in a firm’s business operations can significantly impact the company’s success. Firms that can manage project costs effectively can achieve higher profits and gain a competitive advantage by offering their customers more competitive pricing. Businesses can also benefit from project timing concepts, such as identifying critical path activities, to ensure timely project completion and avoid any potential losses resulting from delays. Ultimately, project cost and timing concepts play a vital role in a company’s overall financial success and serve as a foundation for effective project management.
Answer to Question 6:
To determine the true status of Jennifer’s portion of the project, we can use the EVM system. EVM provides a performance measurement system by integrating project scope, schedule, and cost objectives. Using EVM, we can calculate the project’s planned value (PV), actual cost (AC), and earned value (EV). The status of Jennifer’s portion of the project can be determined by comparing the project’s EV, PV, and AC. If EV is lower than PV, the project is behind schedule, and if EV is lower than AC, the project is over budget.
Based on the information provided, Jennifer’s portion of the project has an EV of $79,000, a PV of $85,000, and an AC of $82,000. Therefore, her portion is behind schedule and over budget. We can prepare an updated status report for Jennifer, including an explanation of the EVM system, the metrics used to determine project status, and the reasons for Jennifer’s portion being behind schedule and over budget. Additionally, we can create a presentation explaining the benefits of using EVM and guidelines for Jennifer and Ben on how to create and interpret metrics.