Mini-Cases • Chapter 17 1
Mini-Cases
Chapter 17: PROJECT MANAGEMENT
Donna Davin & Associates, CPA
After graduating from college and passing the CPA exam, Donna Davin went into accounting practice. Today, her practice has grown to include five other accountants and an office staff of eight. Much of her company's business has come from doing tax returns.
Being a small operation, her company has not been heavily computerized. However, it was recently decided that productivity could be improved by beginning to use some tax-related software and by taking advantage of the IRS electronic system for filing returns.
One of Donna's employees has developed a list of activities and estimated times, in weeks, to implement the computerized system.
ImmediateActivity / Predecessor(s)
A. Select software / ––
B. Select equipment / A
C. Obtain software / A
D. Obtain equipment / B
E. Install equipment / D
F. Hold classroom training / C
G. Test equipment / E
H. Install software / C,G
I. Test software / H
J. Give hands-on training / F,I
K. Implement pilot / J
L. Implement full system / K
Optimistic / Most Likely / Pessimistic
Activity / Time / Time / Time
A / 1 / 3 / 4
B / 2 / 3 / 4
C / 4 / 8 / 15
D / 3 / 4 / 5
E / 1.2 / 1.5 / 2
F / 1 / 1 / 1
G / 0.2 / 0.5 / 1
H / 0.5 / 0.7 / 1
I / 0.3 / 1 / 3
J / 2 / 3 / 4
K / 2 / 3 / 5
L / 3 / 4 / 5
Donna is concerned because she would like to have the new system ready by the end of the year, which is six months away. As she looks at these times, she notices that the time to obtain software could vary considerably. This is because one software package they are considering is not yet on the market in final form. Depending on how long that takes, the whole implementation might be delayed. Donna wonders whether it would be safer to go with another software package that could definitely be obtained within four weeks. However, that package does not have as many features as the new one.
1. Which activities are on the critical path for this project?
2. How could variation in the time to obtain software affect completion of the project?
3. What is the probability of completing the project within 26 weeks?
4. How does variation in the time to obtain software affect the probability of completing the project within 26 weeks?
Custom Metal Products Company
Custom Metal Products Company is a job shop specializing in a full range of services from design to fabrication. Recently the company accepted an order to design and manufacture the prototype of a new high-performance clutch. The activities that must be performed are shown, along with the normal and crash times (in days) and the costs.
ImmediateActivity / Predecessor(s)
A. Design prototype / ––
B. Develop BOM / A
C. Develop routing / A
D. Develop tooling / A
E. Obtain materials / B
F. Produce tooling / D
G. Make prototype / C,E.F
Normal / Crash
Activity / Time / Cost / Time / Cost
A / 12 / $3,000 / 8 / $8,000
B / 4 / 1,000 / 2 / 2,000
C / 5 / 2,000 / 3 / 3,500
D / 9 / 5,000 / 6 / 9,000
E / 10 / –– / 10 / ––
F / 4 / 2,000 / 2 / 3,000
G / 5 / 6,000 / 3 / 9,000
According to the company's contract, the prototype is to be delivered within twenty-eight days, or a penalty of $1,000 per day will be incurred. Custom Metal Products would like to minimize its costs on this project.
1. Based on normal times how long will the project take to complete?
2. How can the project time be shortened for least cost?
3. What is the shortest possible time for the project?
4. At what point are savings in penalty costs offset by costs of reducing the project completion time?
Vonderembse and White • Operations Managment