Project Management: The Managerial Process (Mcgraw-hill Series Operations and Decision Sciences)
7th Edition
ISBN: 9781259666094
Author: Erik W. Larson, Clifford F. Gray
Publisher: McGraw-Hill Education
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Chapter 2, Problem 3E
A five-year project has a projected net cash flow of $15,000, $25,000, $30,000, $20,000, and $15,000 in the next five years. It will cost $50,000 to implement the project. If the required
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Your firm MS MACKAY LTD. won a contract of €1,785,000 to construct a 161kV/33kV sub-station. You have been selected as the project manager to lead the project team for the successful execution of the project. You are the project manager, there are a total of 8,400 hours of work schedule on the project. You made your checks with the accounting department, and they told you that you have spent a total of €1,144,000. According to the schedule, your team should have worked 5000 hours, but your foreman says that the team was allowed to work some overtime, and they have actually put in 5600 hours of work.
(i) Write the scope of the project
(ii) Provide the WBS for the project.
After six months of work on the project’s site, your company collected the following information relating to work done so far on the project BAC=$156,478.00, planned value=$95,565.24, Earned value =$92, 985.56, Actual cost =$95986.60.
Calculate the cost and schedule performance indices and interpret your results
Project Typhoon has a net present value of $10,000 and a profitability index of 1.01. Project Cyclone has a net present value of $10,000 and a profitability index of 1.10. Project SurfsUp has a net present value of $10,000 and a profitability index of 1.05. If only one project could be undertaken, what should the oraganiztion select?
Chapter 2 Solutions
Project Management: The Managerial Process (Mcgraw-hill Series Operations and Decision Sciences)
Ch. 2 - Describe the major components of the strategic...Ch. 2 - Explain the role projects play in the strategic...Ch. 2 - How are projects linked to the strategic plan?Ch. 2 - The portfolio of projects is typically represented...Ch. 2 - Why does the priority system described in this...Ch. 2 - Why should an organization not rely only on ROI to...Ch. 2 - Discuss the pros and cons of the checklist versus...Ch. 2 - You manage a hotel resort located on the South...Ch. 2 - Two new software projects are proposed to a young,...Ch. 2 - A five-year project has a projected net cash flow...
Ch. 2 - You work for the 3T company, which expects to earn...Ch. 2 - You are the head of the project selection team at...Ch. 2 - You are the head of the project selection team at...Ch. 2 - The Custom Bike Company has set up a weighted...Ch. 2 - What is our major problem?Ch. 2 - Identify some symptoms of the problem.Ch. 2 - What is the major cause of the problem?
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- The following information has been computed from a project: Expected total project time = T = 62 weeks Project variance = 81 1- What is the probability that the project will be completed 18 weeks before its expected completion date? 2- Draw Normal Curve & Analysis your solution with conclusionarrow_forwardYou are the head of the project selection team at Broken Arrow Records. Your team is considering two different recording projects. Based on past history, Broken Arrow expects at least a rate of return of 20 percent. Given the follwoing information for each project, which one should be Broken Arrow's first priority? Should Broken Arrow fund any of the other projects? If so, what should be the order of priority based on return on investment?arrow_forwardOn June 12, 2013, the Delta Corporation was awarded a $160,000 contract for testing a product. The contract consisted of $143,000 for labor and materials, the remaining $17,000 was profit. The contract had a scheduled start date of July 3. The network logic, as defined by the project manager and approved by the customer is the following: NETWORK LOGIC / ACTIVITY TIME (Weeks) AB 7 AC 10 AD 8 BC 4 BE 2 CF 3 DF 5 EF 2 FG 1 On August 27, 2013, the executive steering committee received the following report indicating the status of the project as of this time (end of week 8) ACTIVITY % COMPLETE ACTUAL COST TIME REMAINING (Weeks) AB 100 $23,500 0 AC 60 $19,200 4 AD 87.5 $37,500 1 BC 50 $8,000 2 BE 50 $5,500 1 Is the project ahead of schedule or behind schedule and over budget or under budget? What recommendations would you make for this project?arrow_forward
- The decision was made by JMP management that a certain critical development in the overall project will be subcontracted-out to a vendor. JMP has issued a six-month cost plus fixed fee contract for that development, and you are the vendor's project manager. The approved JMP budget for your development is $500,000. A recent Earned Value Analysis that your firm (the vendor) has done shows that you will complete the project four weeks ahead of time, thus depriving your firm of $80,000 of billable time. Among your options are: 1. Since it was the approved budget, go ahead and bill JMP for the entire $500.000. 2. Inform JMP of the project status and completion date, and ask if they'd like to add any features to account for the monies spent. 3. Inform JMP of the project status and completion date. 4. Bill JMP for the $500,000 by adding more work at the end of the project.arrow_forwardProject B is the development of a facility in a remote area, of about GHS 5 million in value, of approximately 18 months’ planned duration. It is 30 per cent completed. Earned Value analysis shows that the project is not achieving its planned cost or progress targets. The project is also not achieving quality requirements. Some of the specialized components used for this project are only oSbtainable from overseas suppliers and are difficult to transport over the rough terrain near the project site. There has been a delay on ordering these components. The transportation of these components, which must be booked several months ahead, has not been arranged, and there is also difficulty with obtaining tradespeople with the requisite set of skills to install them. There are also several other risks associated with this project, including a quite basic business case, rudimentary project charter, poor definition of expected project outcomes, exchange rate risks and the potential for…arrow_forwardEarned Value Management (EVM) is a method or an approach in measuring the project performance throughout the project at any point of time that integrates the variances of cost and schedule in assisting organizations to decide either to continue or terminate the project. Within 200 days, the equipment supplier has agreed to supply 100 units of spare equipment at the price of RM500 per unit. However, 50 days later, the supplier can only supply 21 units with an actual total cost of RM11,400. c. Indicate the cost performance of the supply (in percentage)d. Indicate the performance of the supply in term of schedule (in percentage)arrow_forward
- Earned Value Management (EVM) is a method or an approach in measuring the project performance throughout the project at any point of time that integrates the variances of cost and schedule in assisting organizations to decide either to continue or terminate the project. Within 200 days, the equipment supplier has agreed to supply 100 units of spare equipment at the price of RM500 per unit. However, 50 days later, the supplier can only supply 21 units with an actual total cost of RM11,400. a. Indicate either the supply is ahead or behind the schedule (in days).b. Indicate either the supply is under or exceed the budget (in amount).c. Indicate the cost performance of the supply (in percentage)d. Indicate the performance of the supply in term of schedule (in percentage)arrow_forwardWhat does a project’s NPV of $1,500 mean?arrow_forwardA project is scheduled to complete in six months duration. There are two activities in the project. The actual cost of Activity 1 is SAR 300,000 and that of Activity 2 is SAR 200,000. The planned value of these activities is SAR 280,000 and 150,000 respectively. On reviewing, the current project status is Activity 1 is 100% completed and Activity 2 is only 75% completed. (i) Perform the earned value calculations of the above project scenario and fill the given table. (ii) What do you infer about the project schedule and cost based on your calculations? Earned Value Planned Value Actual Cost Cost Variance Activity Scheduled Variance Cost performance Index Schedule performance Index Month 1arrow_forward
- A project is scheduled to complete in six months duration. There are two activities in the project. The actual cost of Activity 1 is SAR 300,000 and that of Activity 2 is SAR 200,000. The planned value of these activities is SAR 280,000 and 150,000 respectively. On reviewing, the current project status is Activity 1 is 100% completed and Activity 2 is only 75% completed. (i) Perform the earned value calculations of the above project scenario and fill the given table. Activity Month 1 Earned Value Planned Value Actual Cost Cost Variance Scheduled Variance Cost performance Index Schedule performance Index (ii) What do you infer about the project schedule and cost based on your calculations?arrow_forwardThe Peabody Coal Corporation recently completed the final feasibility report for a new general ledger accounting system. It has hired a consulting firm to program and install the new system. The consulting firm is charging $350,000 for the remaining tasks to be performed. These tasks are to be performed over the next 10 months as detailed in the Gantt chart in the diagram. The consulting firm is extremely concerned with the project staying on schedule because it is receiving a flat fee. The release of the final payment is contingent upon the system performing as stated in the contract and upon Peabody receiving appropriate documentation of the system.Requireda. Prepare a PERT diagram and indicate the critical path.b. What happens to the time frame of the implementation of the project if the manufacturer is 4 weeks late shipping the hardware?c. What happens if the data conversion does not go smoothly and takes an additional 3 weeks? d. Who should conduct the postimplementation review?…arrow_forwardAssuming that the project is performed by an outside contractor, what is the role of the customer's employees in the planning stages of the project life cycle?arrow_forward
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