CEMENT DUNE BUGGY PROJECT

Project Scenario:
You are a "fast tracker" at the A-1 Cement Company, looking for an opportunity to impress your superiors.
Management has assigned you to over-see the construction of Cement Dune Buggy for the president's son. After
consultation with a variety of builders, and in consideration of your career prospects, you decide that this project
must be completed on time and within budget, and that a proper CPM must be constructed to plan and control
the activities of the project.
After consulting one of your colleagues who has completed the McGill Executive Institute Advanced Project
Management Course, you decide that your first step will be to determine distinct "Phases" for your project. The
end of each phase will mark a project "Milestone", at which point you will conduct a formal review with
Management. You decide that a logical delineation would be Design/Procure/Construct/Test.
With planned Project Phases in place, you proceed with detailed planning of your activities, each of which will fall
within a single Phase. At this point, you choose to concentrate your planning efforts on the Construction Phase.
You therefore proceed to break down the construction activities into logical tasks, leaving the other phases to
remain as single tasks for the time being. Construction can proceed as three concurrent "mini-projects"; the
engine development, the construction of the body shell, and the frame.
The engine will be purchased, but will require assembly and testing prior to installation of the frame.
The 4 frame sub-assemblies (frame/seats, suspension, drive train, wheels/axles/steering) will be ordered complete.
The latter three items must be assembled on to the frame. The suspension must be added to the frame firstly.
Then, the drive train and wheels/axles/steering may be added concurrently.
Once the frame is totally assembled, then the engine may be installed, except that you would like to "test fit" the
body shell to the completed frame prior to installation of the engine.
The cement body shell will be cast on the premises. Hardening will take 3 days. Then, it will be sand blasted and
primed, and be available for the "test fit". Successful completion of the "test fit" will then enable final painting to
be accomplished.
Once the engine is attached to the completed frame, then the painted body may be attached. Internal accessories
may then be installed, so that a final road test may be completed, along with the project.
EXERCISE 1
Through a team planning session, you have derived a list of major activities listed on the next page, along with
durations in days. Through a wall chart exercise you have been able to identify, for each activity, the predecessor
activities which must be completed in order to begin.
How long will the project take? What is the critical path?

L.Bartlett

CEMENT DUNEBUGGY MASTER TASK LIST

ACT. ID

ACTIVITY DESCRIPTION

PREDECESORS

TIME (days)

Design:
A

Design Cement Dune Buggy

Nil

10

Order and Receive Materials

15

Procure:
B

Construct:
C

Assemble & Test Engine

Add Suspension to Frame

Add Drive Train to Frame

Add Wheels/Axles/Steering to Frame

Test Fit Body Shell

Cast Body Shell (incl. hardening)

Sand Blast & Prime Shell

Paint Body Shell

Install Engine

G,C

Attach Body

J,K

Install Accessories

L.Bartlett

I,F,E

Test:
N

L.Bartlett

Road Test

EXERCISE 2 Resource Requirements; Early Start Scenario

You now set to work to define the resources required to do the work, in order to determine peak
requirements and timeframes.. You wish to determine the total number of resources you will need at any
given time in your project, in order to plan for assignment and training of personnel. You start by
estimating the team size (number of individuals working simultaneously) for each of the tasks, as listed
below.
Using your critical path network for the cement dune buggy project, and the resource levelling worksheet
found on the next page (or equivalent found in WebCT for Topic 16), draw a time scaled network,
assuming early start for all activities.
Assume that one generic resource is required to construct the dune buggy, and that the time frame must
be respected.
Determine the peak staff required to complete the project.

ACTIVITY

TEAM SIZE

A
B
C
D
E
F
G
H
I
J
K
L
M
N

2
1
5
4
1
2
3
2
1
2
3
3
2
2

L.Bartlett

EXERCISE 3 Resource Requirements; Time Constrained

While maintaining the existing schedule completion date, you would like to determine if resources can be
used more effectively, by delaying certain non-critical tasks.
Determine if peak requirements may be reduced, and to what resource `pool size`, while maintaining the
existing project duration.
Use the attached resource levelling worksheet Time Constrained, or the equivalent Excel spreadsheet
found in WebCT Topic 16.
EXERCISE 4 - Resource Leveling; Resource Constrained
Management would like to investigate the implact on the project if no more than 6 people at one time will
be permitted to work on the dune buggy project.
How long would the project take, assuming activities cannot be "split". i.e. stopped mid-way and restarted later on.
Use the attached resource levelling worksheet Resource Constrained.
EXERCISE 5 Changes to task duration
Management has agreed to add provide your project with all the necessary resources required to complete the
project as early as possible (ie as determined in Exercise 1).
In the meantime however, your team has been investigating a key task that has been identified as carrying
considerable uncertainty, ie Task C, `Assemble & Test Engine`.
You have invited to specialized contractor to quote on this work along with an agreed delivery schedule. This
schedule spans 13 working days.
What is the impact on your project duration? Which tasks are now critical?

L.Bartlett

EXERCISE 6 - Project `Crashing`

While Management is impressed with your analytical skills in "flushing-out" potential problems in the engine assembly,
they would like you to look at ways in which you could reduce the total project duration (i.e. from that determined
from Exercise 5). Of course they would like to minimizing the cost impact of any reduction in project duration.
You have therefore interviewed your supervisors, and obtained estimates related to the normal and "crash" costs for
each of the Cement Dune Buggy Project activities. (Note - all `normal durations` are as per Exercise 5 scenario.)
Costs shown below are in 'thousands' of dollars.
Step 1 - Determine the `cost slope` and ` maximum (time) reduction ` for each task.

________________________________________________________________
ACTIVITY

------ NORMAL ------

----- CRASH -------

TIME

TIME DIRECT $

DIRECT $

COST
SLOPE

MAX
REDUCTION

10

10

10

10

_______

________

15

05

12

08

_______

________

13

08

12

10

_______

________

06

30

03

60

_______

________

03

07

01

11

_______

________

04

10

02

20

_______

________

01

03

01

03

_______

________

05

12

04

16

_______

________

03

03

02

04

_______

________

03

06

02

12

_______

________

05

01

05

01

_______

________

02

06

01

08

_______

________

03

10

01

16

_______

________

02

02

01

03

_______

________

113

182

Now, recognizing the large impact on costs if all the work was to be crashed in order to be reduce the
project duration, you employ the logic embedded in your Critical Path Network, in order to reduce
duration in a cost-effective manner.

L.Bartlett

Step 2 - Given the Normal and Crash Direct Costs you have determined above, determine the total direct
costs for the Cement Dune Buggy Project, for each unit reduction of time. Examine the cost impact of
reducing the time of the project, investigating each project duration scenario down to a value of 42 days.
(Begin the exercise assuming the project duration calculated from Exercise 5.)
Use the following worksheet template for your solution:
STEP #

ACTIVITY ID

INCR. COSTS

--------

TOTAL

PROJECT --------DIRECT COST

DURATION

____ ______________ ___________ ____________

__________

____ ______________ ___________ ____________

__________

____ ______________ ___________ ____________

__________

____ ______________ ___________ ____________

__________

____ ______________ ___________ ____________

__________

____ ______________ ___________ ____________

__________

____ ______________ ___________ ____________

__________

____ ______________ ___________ ____________

__________

____ ______________ ___________ ____________

__________

____ ______________ ___________ ____________

__________

____ ______________ ___________ ____________

__________

____ ______________ ___________ ____________

__________

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____ ______________ ___________ ____________

L.Bartlett

__________

Step 3 Indirect Costs

Offsetting the increased direct costs will be a savings in indirect costs, particularly for expensive
supervisory staff that had been assigned to your project. You have worked out the following indirect
costs. Corresponding to each respective project duration scenario.
Duration
50
49
48
47
46
45
44
43
42

Indirect Costs
$ 110
$ 100
$ 93
$ 88
$ 85
$ 82
$ 79
$ 77
$ 75

Using the above indirect costs, and the direct costs established from Step 2 above, determine the optimum
schedule and minimum cost for this project. (Again, begin the exercise assuming the project duration
calculated from Exercise 5.)
STEP #

PROJECT
DIRECT
DURATION
COST
(ABOVE)
(ABOVE)

INDIRECT COST
COST
(ABOVE)

_______

_____________

__________

_____________

____________

_______

_____________

__________

_____________

____________

_______

_____________

__________

_____________

____________

_______

_____________

__________

_____________

____________

_______

_____________

__________

_____________

____________

_______

_____________

__________

_____________

____________

_______

_____________

__________

_____________

____________

_______

_____________

__________

_____________

____________

_______

_____________

__________

_____________

____________

_______

_____________

__________

_____________

____________

L.Bartlett

TOTAL
COST

Step 3 Indirect Costs (cont`d)

Q1 - What is the duration of this `optimal schedule`?
Q2 - What is the corresponding total cost?
Q3 - What lump sum incentive would be required to reduce the project by 2 additional days
(i.e. finish the project 2 days earlier than the "optimum' date)?

L.Bartlett

EXERCISE 7 - Estimating
Stimulated by the commercial interest in the Cement Dune Buggy, Management has decided to develop a
complete bottom-up estimate, factoring not only labour and indirect (overhead) costs, but also material
costs, contingencies, and profits in order to determine a complete competitive price for the Cement Dune
Buggy.
The goal of this exercise is to determine a (single) base price for the Dune Buggy.
Employ the schedule and resource assignment data found on the following page. This schedule has been
modified to reflect further adjustments, and spanning 54 days total.
Apply the following information:
Profit
Overhead
Labour Rates

: 10 % of all-up costs
: 35 % of all labour charges
: 10 % of all material costs
: skill level 1 - $ 80/day
: skill level 2 - $ 100/day
: skill level 3 - $ 120/ day
Note - rates for skill levels 1 & 2 will increase by
5% starting on day 41 of the project.

Contingencies:

Design:
7 % of total project direct cost
(i.e. lab and materials)

Estimating:
3 % of activity labour & material costs that involve
concrete casting, finishing & painting (i.e. H, I, J)
7 % of activity labour costs of assembly tasks
(i.e. D,E,F,K,L,M)
100 % of labour for major testing activities
(i.e. G,N,C)
Material:
3 project days worth of total project labour costs

L.Bartlett

CEMENT DUNE BUGGY PROJECT

ACTIVITY DURATIONS & HUMAN RESOURCE REQUIREMENTS
Description

A-Design Dune Buggy

B-Order, Receive Mat`s
C-Test, Prepare Engine
D-Add Suspension
E-Add Drive Train
F-Add W/A/S to Frame
G-Test Fit Body Shell
H-Cast Body Shell
I-Sand & Prime Shell
J-Paint Body Shell
K-Install Engine
L-Attach Body
M-Install Accessories
N-Road Test

Durn

10
12
11
06
03
04
01
05
03
03
05
01
03
02

Start

01
11
23
24
34
31
43
35
40
44
44
49
50
53

Finish

10
22
33
29
36
34
43
39
42
46
48
49
52
54

Man-days
Res 1

Res 2

Res 3

00
05
04
06
06
08
02
08
06
09
03
02
01
00

05
00
20
06
02
03
00
01
00
02
07
01
06
02

20
00
02
00
00
00
00
00
00
00
02
00
00
02

MATERIAL REQUIREMENTS & COSTS

CONCRETE
ENGINE KIT
FRAME,AXELS, ETC
SUSPENSION
DRIVE TRAIN
PAINT & TRAIN
CONCRETE FORMS

L.Bartlett

- 1000 Kg
-1
-1
-1
-1
- 40 litres
-3

(ACTIVITIES
AFFECTED)
;$ 1 / Kg
;$ 550
;$ 250
;$ 300
;$ 300
;$ 2.50 /litre
;$ 325 (total)

H
C
E
D
E
I,J(half &half)
H

EXERCISE 8 Earned Value - `Planned Costs`

As the first days of work on the Dune Buggy progress, you are concerned that information provided to you from
your seconded supervisors, in terms of work completed, may not be accurate. As a result you may be
experiencing problems which will only surface much later, when it will be to late for corrective action.
To remedy the problem, you decide to implement the same system of rigid controls that A-1 is being forced to
apply on its military contracts, ie. Earned Value.
As a first step, using the following pricing data developed for the Cement Dune Buggy Project augmented with
overhead costs, determine a cost/schedule baseline, by calculating the Planned Value (PV) for each of days 10, 25
and 40 .
Assume that all activity costs are distributed evenly on a daily basis.
What is the Budget at Completion (BAC)?

A
B
C
D
E
F
G
H
I
J
K
L
M
N

Description

Durn

Start

Finish

Cost

Design Dune Buggy

Order, Receive Materials
Test, Prepare Engine
Add Suspension
Add Drive Train
Add W/A/S to Frame
Test Fit Body Shell
Cast Body Shell
Sand & Prime Shell
Paint Body Shell
Install Engine
Attach Body
Install Accessories
Road Test

10
12
11
06
03
04
01
05
03
03
05
01
03
02

01
11
23
25
34
31
43
35
40
44
44
49
50
53

10
22
33
30
36
34
43
39
42
46
48
49
52
54

3915
540
4061
2063
1248
1269
227
2457
725
1359
1673
369
964
608
21,478

L.Bartlett

EXERCISE 9 Earned Value - `Earned and Actual Costs`

You have compiled the following cost statistics at the end of days 10, 25 and 40.
I.D

--PERIOD 2--

% COMPLETED

ACTUAL
COSTS

5,630

100 %

--PERIOD 8-ACTUAL
COSTS

3,915

5,630

100 %

100 %

540

446

10 %

406

300

TOTAL
BUDGET

3,915

5,630

3,915

100 %

540

446

540

100 %

4,061

3,700

4,061

100 %

2,063

1,800

2,063

100 %

1,248

1,200

1,248

100 %

1,269

950

1,269

100 %

227

120

227

100 %

2,457

2,100

2,457

33 %

242

900

725

0%

1,359

0%

1,673

0%

369

0%

964

0%

608

100 %

0%

3,915

TTL

3,915

5,630

EV

TOTAL
ACTUAL
COSTS

EV

--PERIOD 5--

4,861

6,376

EV

16,022

16,846

1. To each of Days 10, 25 and 40 calculate the following for the project:
EV
AC
ETC
EAC
COST VARIANCE
SCHEDULE VARIANCE
2. For each of Days 10, 25 and 40, where does the project stand with respect to costs, and schedule?
3. What is the trend pattern?
L.Bartlett

21,478

L.Bartlett