AP/ADMS 3353: Project Management

Final Information

Date: Friday, December 11, 2009

Time: 7:00 pm

Location:

All sections according to surnames:

ABD-HAL: Curtis Lecture Halls C

HAQ-NYS: Curtis Lecture Halls D
OJO-ZHA: Curtis Lecture Halls E

All those who need to take the make-up midterm, the room is Curtis Lecture Halls E, regardless of your
surname.

Duration: 2 hours – 2 hours and 15 minutes

Important Notes:
• To bring: Student ID (photo ID is required), pen, PENCIL, non-programmable calculator (no graphing
or storage calculators). No cell-phones will be allowed.
• Closed-books and notes. A formula sheet will be provided in the exam.

Style:
• 65-70%
o 30-35 True/False questions
o 20-35 Multiple choice questions
• 30-35%
o 3-4 Exercises/questions

Scope

Chapter 6

• Critical Path Method only; there will not be conceptual questions

Chapter 7

• Appendix is not covered

• Review questions 1-7
• Exercise 3
• Cases at the end are recommended

Chapter 8

• Appendix is not covered

• Parallel method (pp 241-244) is not emphasized
• Resource leveling is excluded from the final.
• Review questions 1-6
• Exercises 6, 7 and 8 (although first two are trivial and the last one is the class example)
• There will be additional exercises below.

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Chapter 9

• Review questions 1-7

• Exercises 1-6

Chapter 13

• Appendix 13.2 is not covered.

• Review questions 1-6
• Exercises 1-6
• Read Appendix 13.1

Chapter 14

• Review questions 1-6

Chapter 16

• Review questions 1, 3, and 4

The following formulas wil be provided with the exam. You are not allowed to bring any formula paper.

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Additional exercises

Note: All the exercises, review questions, and cases provided at the end of the chapters are valuable to improve
the understanding of the material, and therefore are recommended.

Also study the additional exercises in quiz2_info and assignment_1 solution.

Chapter 13

Question A: Consider the following project network. The task ID and times (in weeks) and other
information is given below. Scheduled cost per week for the tasks A, B, C, D, and E are given as 30,
40, 100, 50, and 60 (all in $K).

0 A 4 4 C 5 5 E 9

0 4 4 4 1 5 5 4 9

Start End

0 B 4 4 D 7

0 4 4 6 3 9 ES ID EF

LS DUR LF

a) Develop a baseline budget assuming tasks are planned to start at their earliest possible starting
times.

PV 1 2 3 4 5 6 7 8 9
A 120 30 30 30 30
B 160 40 40 40 40
C 100 100
D 150 50 50 50
E 240 60 60 60 60
Total 70 70 70 70 150 110 110 60 60
Cumulative 70 140 210 280 430 540 650 710 770

b) At the end of week 6, a review concluded that 90% of A, 100% of B, and 80% of D is
completed. C and E are not started yet. The project manager reports that a total of $400K is
already spent since the beginning. Compute EV, PV, CV, and SV for the overall project (you
are not required to compute them for each activity).

Project
EV = (0.9)(120)+(1.0)(160)+(.80)(150) = 108 + 160 + 120 = 388
PV = 540
AC = 400
CV = 388 -400 = -12
SV = 388 – 540 = -152

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c) Based on your answer in part (b), how far off the project cost will be at completion from its
budget?

First compute
EACf = AC + [(BAC - EV) / CPI] = 400 + [(770-388)/(388/400)]
= 400 + 393.8
= 793.8

VAC = BAC – EACf = 770 -793.8 = -23.8

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Answers or solutions to Selected Exercises

Chapter 9

2. Assume the network and data that

follow. Compute the total direct
cost for each project duration. If
the indirect costs for each project
duration are $400 (19 time units),
$350 (18), $300 (17), and $250
(16), compute the total project
cost for each duration. Plot the
total direct, indirect, and project
costs for each of these durations
on a cost-time graph. What is the
optimum cost-time schedule for
the project? What is this cost?

In this exercise, in fact in

all of the book’s exercises,
the direct and indirect costs
are calculated explicitly.
But we emphasized on marginal
cost versus marginal benefit
analysis or total budget as a
stopping criteria. All of the
book’s exercises are
equivalent to the marginal
cost vs marginal benefit
analysis.

For example in this problem, for each time unit the project is shortened,
the indirect costs reduce by 50. Therefore, the you might infer that for
each time unit the project is shortened the benefit is 50. As a result,
you continue crashing as long as cost of doing so is less than 50.

In this exercise, first “A” is crashed and then “E”. After that it is not
possible to crash it economically, so stopped.

3.
In this exercise, the reduction in indirect costs is not constant. So, it
is a bit involved. Next question is also similar, which is a nice
illustration to see the order of the activities to crash.

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4. If the indirect costs for each duration are $1,200 for 16 weeks, $1,130 for 15 weeks, $1,000
for 14 weeks, $900 for 13 weeks, $860 for 12 weeks, $820 for 11 weeks and $790 for 10
weeks, compute the total costs for each duration. Plot these costs on a graph. What is the
optimum cost-time schedule?

Note: The duration for this schedule is weeks and students should be told only to crash the
network one week at a time

Step Critical Path Alternatives Task(s) to crash Cost Completion Time

1 B-E-H-I B, E, H H 40 15
2 B-E-H-I B, D&E, G&E B 70 14
B-D-G-I
3 B-E-H-I B, D&E, G&E B 70 13
B-D-G-I
4 B-E-H-I D&E, G&E D&E 70 12
B-D-G-I
5 All paths several but none economical

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6. Use the information contained below to compress one time unit per move using the least cost
method. Reduce the schedule until you reach the crash point of the network. For each move
identify what activity(s) was crashed, the adjusted total cost, and explain your choice if you
have to choose between activities that cost the same.
Note: Crash point of the network is the point in which the duration cannot be reduced
any further.

Direct Costs
Activity Maximum Normal Crash
ID Slope Crash Time Time Cost Time Cost
A - 0 4 $50 0 -
B $40 3 5 70 2 $190
C 40 1 5 80 4 120
D 40 2 4 40 2 120
E 40 2 5 60 3 140
F 40 1 5 50 4 90
G 30 1 4 70 3 160
H 30 1 4 80 3 110
I - 0 3 50 0 -
Total direct normal costs— $550

Caution: There is an error in the text – the “crash” cost for Activity C should be 120, not 40.

Step Critical Path Alternatives Task(s) to crash Cost Completion Time

1 ABFGH G&H 60 20
ACEHI

2 ABFGH B&C 80 19
ACEHI

3 ABFGH B&E 120 17

ACEHI

4 B&D&E 120 18

CRASH POINT

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Chapter 13

2. On day 51 a project has an earned value of $600, an actual cost of $650, and a planned cost
of $560. Compute the SV, CV, and CPI for the project. What is your assessment of the
project on day 51?

CV = EV – AC = 600 – 650 = -50

SV = EV – PV = 600 – 560 = +40
CPI = EV / AC = 600 / 650 = .92

4. Given the following project network, baseline, and status information, develop status reports
for periods 1-4 and complete the project summary graph (or a similar one). Report the final
SV, CV, CPI and PCIB. Based on your data, what is your assessment of the current status
of the project? At completion?

After 4 time periods the project is roughly 77% (PCIB) complete and is current getting only 83
cents worth of work for each dollar spent. The project is currently $10,000 over budget. There is
$3,000 worth of work on critical Activity 5 that has not been completed as planned so the project
is behind schedule. Since so much of the project has been completed the project is expected to
come in over budget. The forecast cost at completion is $78,000 which is $13,000 over budget.
Whether the project will be completed on schedule will depend upon whether Activity 5 can make
up for lost time.

Status Report: Ending Period 1 ($000)

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Task % Complete EV AC PV CV SV
1 50% 6 6 4 0 +2
2 40% 6 8 3 -2 +3
3 25% 2 3 4 -1 -2
Cumulative Totals 14 17 11 -3 +3

Status Report: Ending Period 2 ($000)

Task % Complete EV AC PV CV SV
1 Finished 12 13 12 -1 0
2 80% 12 14 10 -2 +2
3 75% 6 8 8 -2 -2
Cumulative Totals 30 35 30 -5 0

Status Report: Ending Period 3 ($000)

Task % Complete EV AC PV CV SV
1 Finished 12 13 12 -1 0
2 80% 12 15 15 -3 -3
3 Finished 8 10 8 -2 0
4 50% 3 4 3 -1 0
5 0% 0 0 0 0 0
6 33.3% 3 4 3 -1 0
Cumulative Totals 38 46 41 -8 -3

Status Report: Ending Period 4 ($000)

Task % Complete EV AC PV CV SV
1 Finished 12 13 12 -1 0
2 Finished 15 18 15 -3 0
3 Finished 8 10 8 -2 0
4 Finished 6 8 6 -2 0
5 30% 3 3 6 0 -3
6 66.7% 6 8 6 -2 0
7 0% 0 0 0 0 0
Cumulative Totals 50 60 53 -10 -3