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Project Scheduling Case Study

Once project planning is completed, the next step is to schedule the project according to some timeline. This requires knowledge of the activities, the necessary depth of the activities, the dependencies between the activities, and the duration of the activities.

Effective scheduling allows us to perform what-if exercises, develop contingency plans, determine the risks in the schedule, perform trade-offs, and minimize paperwork during customer review meetings. Although there are four basic scheduling techniques, they all utilize the same basic principles and common terminology.

Crosby Manufacturing Corporation

“I’ve called this meeting to resolve a major problem with our management cost and control system (MCCS),” remarked Wilfred Livingston, president. “We’re having one hell of a time trying to meet competition with our antiquated MCCS reporting procedures. Last year we were considered nonresponsive to three large government contracts because we could not adhere to the customer’s financial reporting requirements. The government has recently shown a renewed interest in Crosby Manufacturing Corporation. If we can computerize our project financial reporting procedure, we’ll be in great shape to meet the competition head-on. The customer might even waive the financial reporting requirements if we show our immediate intent to convert.”

Crosby Manufacturing was a $250-million-a-year electronics component manufacturing firm in 2005, at which time Wilfred “Willy” Livingston became president. His first major act was to reorganize the 700 employees into a modified matrix structure. This reorganization was the first step in Livingston’s long-range plan to obtain large government contracts. The matrix provided the customer focal point policy that government agencies prefer. After three years, the matrix seemed to be working. Now they could begin the second phase, an improved MCCS policy.

On October 20, 2007, Livingston called a meeting with department managers from project management, cost accounting, MIS, data processing, and planning.

Livingston: “We have to replace our present computer with a more advanced model so as to update our MCCS reporting procedures. In order for us to grow, we’ll have to develop capabilities for keeping two or even three different sets of books for our customers. Our present computer does not have this capability. We’re talking about a sizable cash outlay, not necessarily to impress our customers, but to increase our business base and grow. We need weekly, or even daily, cost data so as to better control our projects.”

MIS manager: “I guess the first step in the design, development, and implementation process would be the feasibility study. I have prepared a list of the major topics which are normally included in a feasibility study of this sort” (see Exhibit I). Livingston: “What kind of costs are you considering in the feasibility study?”

MIS manager: “The major cost items include input–output demands; processing; storage capacity; rental, purchase or lease of a system; nonrecurring expenditures; recurring expenditures; cost of supplies; facility requirements; and training requirements. We’ll have to get a lot of this information from the EDP department.”

EDP manager: “You must remember that, for a short period of time, we’ll end up with two computer systems in operation at the same time. This cannot be helped. However, I have prepared a typical (abbreviated) schedule of my own (see Exhibit II). You’ll notice from the right-hand column that I’m somewhat optimistic as to how long it should take us.”

Livingston: “Have we prepared a checklist on how to evaluate a vendor?”

EDP manager: “Besides the benchmark test, I have prepared a list of topics that we must include in evaluation of any vendor (see Exhibit III). We should plan to call on or visit other installations that have purchased the same equipment and see the system in action. Unfortunately, we may have to commit real early and begin

Exhibit I. Feasibility study

  • Objectives of the study
  • Costs
  • Benefits
  • Manual or computer-based solution?
  • Objectives of the system
  • Input requirements
  • Output requirements
  • Processing requirements
  • Preliminary system description
  • Evaluation of bids from vendors
  • Financial analysis
  • Conclusions

Exhibit II. Typical schedule (in months)

Normal

Time to

Crash Time

Activity

Complete

to Complete

Management go-ahead

0

0

Release of preliminary system specs.

6

2

Receipt of bids on specs.

2

1

Order hardware and systems software

2

1

Flow charts completed

2

2

Applications programs completed

3

6

Receipt of hardware and systems software

3

3

Testing and debugging done

2

2

Documentation, if required

2

2

*This assumes that some of the activities can be run in parallel, instead of series.

developing software packages. As a matter of fact, using the principle of concurrency, we should begin developing our software packages right now.”

Livingston: “Because of the importance of this project, I’m going to violate our normal structure and appoint Tim Emary from our planning group as project leader. He’s not as knowledgeable as you people are in regard to computers, but he does know how to lay out a schedule and get the job done. I’m sure your people will give him all the necessary support he needs. Remember, I’ll be behind this project all the way. We’re going to convene again one week from today, at which time I expect to see a detailed schedule with all major milestones, team meetings, design review meetings, etc., shown and identified. I’d like the project to be complete in eighteen months, if possible. If there are risks in the schedule, identify them. Any questions?”

Exhibit III. Vendor support evaluation factors

  • Availability of hardware and software packages
  • Hardware performance, delivery, and past track record
  • Vendor proximity and service-and-support record
  • Emergency backup procedure
  • Availability of applications programs and their compatibility with our other systems
  • Capacity for expansion
  • Documentation
  • Availability of consultants for systems programming and general training
  • Who burdens training cost?
  • Risk of obsolescence
  • Ease of use

The Scheduling Dilemma

BACKGROUND

Sarah’s project had now become more complex than she had anticipated. Sarah’s company had a philosophy that the project manager would be assigned during proposal preparation, assist in the preparation of the proposal, and take on the role of the project manager after contract award, assuming the company would be awarded the contract.

Usually, contract go-ahead would take place within a week or two after contract award. That made project staffing relatively easy for most of the project managers. It also allowed the company to include in the proposal a detailed schedule based upon resources that would be assigned upon contract award and go-ahead. During proposal preparation, the functional managers would anticipate who would be available for assignment to this project over the next few weeks. The functional managers could then estimate with reasonable accuracy the duration and effort required based upon the grade level of the resources to be assigned. Since the go-ahead date was usually within two weeks of contract award and the contract award was usually within a week or so after proposal submittal, the

©2010 by Harold Kerzner. Reproduced by permission. All rights reserved.

Approaching Go-Ahead Date

schedule that appeared in the proposal was usually the same schedule for the actual project with very few changes. This entire process was based upon the actual availability of resources rather than the functional managers assuming unlimited resources and using various estimating techniques.

While this approach worked well on most projects, Sarah’s new project had a goahead date of three months after contract award. For the functional managers, this created a problem estimating the effort and duration. Estimating now had to be made based upon the assumption of unlimited availability rather than the availability of limited resources. Functional managers were unsure as to who would be available three or four months from now, yet some type of schedule had to appear in the proposal.

Sarah knew the risks. When the proposal was being prepared for Sarah’s proposal, the functional managers assumed that the average worker in the department would be available and assigned to the project after go-ahead. The effort and duration estimates were then made based upon the average employee. If, after goahead, above-average employees would be assigned to her project, she could possibly see the schedule accelerated but had to make sure that cost overruns did not happen because the fully loaded salary of the workers may be higher that what was estimated in the proposal. If below-average workers are assigned, a schedule slippage might occur and Sarah would have to look at possible schedule compression techniques, hopefully without incurring added costs.

AWARD OF CONTRACT

Sarah’s company was awarded the contract. Sarah had silently hoped that the company would not get the contract, but it did. As expected, the go-ahead date was three months from now. This created a problem for Sarah because she was unsure as to when to begin the preparation of the detailed schedule. The functional managers told her that they could not commit to an effort and duration based upon actual limited resource availability until somewhere around two to three weeks prior to the actual go-ahead date. The resources were already spread thin across several projects and many of the projects were having trouble. Sarah was afraid that the worse case scenario would come true and that the actual completion date would be longer than what was in the proposal. Sarah was certainly not happy about explaining this to the client should it be necessary to do so.

APPROACHING GO-AHEAD DATE

As the go-ahead date neared, Sarah negotiated with the functional managers for resources. Unfortunately, her worst fears came true when, for the most part, she was provided with only average or above-average resources. The best resources were in demand elsewhere and it was obvious that they would not be available for her project.

Using the efforts and durations provided by the functional managers, Sarah prepared the new schedule. Much to her chagrin, she would be at least two weeks late on the four-month project. The client would have to be told about this. But before telling the client, Sarah decided to look at ways to compress the schedule. Working overtime was a possibility, but Sarah knew that overtime could lead to burned-out workers and the possibility of mistakes being made would increase. Also, Sarah knew that the workers really did not want to work overtime. Crashing the project by adding more resources was impossible because there were no other resources available. Outsourcing some of the work was not possible as well because of the statement of work identified proprietary information provided by the client and that the contract would not allow any outsourcing of the work to a third party. Because of the nature of the work, doing some of the work in parallel rather than series was not possible. There was always a chance that the assigned resources could get the job done ahead of schedule but Sarah believed that a schedule delay was inevitable.

TIME FOR A DECISION

Sarah had to make a decision about when and how to inform the client of the impending schedule delay. If she told the truth to the client right now, the client might understand but might also believe that her company lied in the proposal. That would be an embarrassment for her company. If she delayed informing the client, there might a chance that the original schedule in the proposal would be adhered to, however slim. If the client is informed at the last minute about the delay, it could be costly for the client and equally embarrassing for her company.

QUESTIONS

  1. Is this a common situation for most companies or an exception to the rule?
  2. Can policies be established as part of competitive bidding to alleviate the pain of this occurring on other possible contracts where contract go-ahead date is several months after contract award?
  3. Is it possible to convince a client that the schedule (and possibly the budget) is just a rough guess during competitive bidding and finalization of the schedule (and budget) can be made only after go-ahead?
  1. What schedule compression techniques were considered in the case? Were there any techniques she did not consider?
  2. Was Sarah correct in her analysis that these techniques probably would not work on her project?
  3. If one of these techniques were to be used, which one has the greatest likelihood for possible schedule compression?

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