Southwestern University (SWU), a large state college in Stephenville, Texas, 30 miles south of the Dallas/Fort Worth metroplex, enrolls close to 20,000 students. To bolster its chances of reaching number-one ranking in the Big Eleven Conference, in 2003, SWU hired the legendary Pitterno as its head coach. One of Pitterno’s demands on joining SWU had been a new stadium. After the 6 months of SWU administrators’ study, Dr. Joel Wisner, president of SWU, had reached a decision to expand the capacity at its on-campus stadium.
The contractor, Hill Construction (Bob Hill) was given a 270 days deadline for the project. There will be a contract penalty of $10,000 per day for running late. Hill again reviewed the data and noted that the optimistic time estimates can be used as crash times. He gathered his foremen and told them, “Folks, if we’re not 75% sure we’ll finish this stadium in less than 270 days, I want this project crashed! Give me the cost figures for a target date of 250 days— also for 240 days.
I want to be early, not just on time!”Problem:
If it is needed to crash the project to 250 or 240 days, how would Hill do so, and at what costs?
Objectives:
•Complete the project.
-Be 75% sure to finish the project in 270 days, or else
-Crash the project to 250 or 240 days if necessary.
-Find the best way to accomplish goal at the least cost.
• Do not miss the deadline.
-Avoid the contract penalty of $10,000 per day.
-Maintain the good reputation of Hill Construction.
Point of View: Hill construction (Bob Hill), the contractor of the project.
Time Frame: 2009- 2010 (Construction would immediately start after 2009 season ended, which would allow exactly 270 days until the 2010 season football opening game.)
Areas of Consideration:
•Duration of time that the project will be finished.
•Probability that the project be completed on a specific date.
•Critical activities
•Non-critical activities
•Additional costs
•Downsides of missing the deadline: contract penalty and a bad reputation Analysis and Discussion:
The original critical path from the project’s network is A-C-D-G-H-I-L. The project is expected to be finished in 260 days (from Activity L LF). Having a total project variance of (11.11 + 69.44 + 136.11 + 2.78 + 11.11 + 44.44 + 44.44=) 319.43 and a project standard deviation of 17.87, the group arrives in the value of z which is ( 0.56. Using the normal distribution table, we get 0.7123 as the value of z. Thus, the probability of finishing the project in 270 days is 71.23%.
Because the probability is less than 75%, we consider Hill to crash the project to 250 days or 240 days. (a) To crash project to 250 days, Hill must crash activity A by 10 days. This will result to an additional cost of ($1,500 x 10=) $15,000, and a new critical path of A-B-E-F-G-H-J-K-L. Original critical path remains. (b) And to further crash project to 240 days, Hill must crash activity D by 10 days. This will result to another additional cost of ($1,900 x 10=) $19,000. Total additional cost will be $34,000. The original and the new critical path remain.
Alternative Courses of Action:
Alternative 1:Hill won’t crash the project.
Pros: a) The expected time to finish the entire project (260 days) is still less than the target date (270 days), and yields a good probability of finishing the project in 270 days (71.23%).
b) There is only one critical path, meaning, less activities will delay the project if they will run late.
c) Hill construction won’t need to add costs to its operations. Cons:a) The probability of finishing the project in 270 days is just 71.23%, this is less than the desired 75%.
b) This alternative is 28.77% risky.
Alternative 2:Hill would crash the project to 250 days.
Pros:a) Shortened activity durations will enable Hill to finish the project
by the due date.
b) Most likely, the probability of finishing the project will increase, making it less risky. Cons: a) There will be an additional cost of $15,000.
b) There will be a new critical path, meaning, all activities may delay the project if they will run late. Alternative 3:Hill would crash the project to 240 days.
Pros:a) Shortened activity durations will enable Hill to finish the project by the due date.
b) If missing it is about missing the deadline, this would be the least risky alternative. Cons:
a) There will be an additional cost of $34,000.
b) There will be a new critical path, meaning, all activities may delay the project if they will run late.
Recommendation:
Hill wants the project to finish early, and not just on time. Hence, it will be necessary for the project to be crashed, if he expects 75% of probability that the project will finish in 270 days. Crashing the activities would surely speed up the expected time the project will take. Meaning, the probability that the project will finish on the desired date would be higher.
The group takes the second alternative as a recommendation. Crashing the project to 250 days would most likely yield a higher probability than having the target of 270 days (Alternative 1). Finishing the project earlier than the deadline will more prevent Hill construction to pay a contract penalty and avoid getting mud. Another good thing is that the additional cost in the second alternative is much lower than Alternative 3. Alternative 2 is the less risky and less costly alternative of all three.
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