1. Estimate the final construction budget. CAS Friendly Assisted Living Facility Case-8 It was a beautiful day in mid-May 20X8. The Friendly Medical Center Assisted Living Facility project was near- ing completion. As usual, the construction project man ager, Kyle Nanno, was thinking about the construction project's schedule. It seemed to him that work on finishing the interior of the building was slowing down a bit. He knew that the final weeks of a project always seemed to take forever, but he also knew that the project was running almost 2 weeks late as a result of a problem encountered during the excavation phase of the construction project. During March and April, it appeared that they were catching up. Kyle had discussed with the construction contractor that Friendly Medical Center would pay over- time to catch up, but the speed-up was temporary, and the job continued to be late. Kyle was not quite sure why. Progress just seemed to be in slow motion. He decided to meet with Fred Splient, the President and CEO of Friendly Medical Center, to discuss the problems. Fred suggested that Kyle call in someone to audit the project, in particular to examine the project schedule care- fully. Fred also wanted the auditor to look at the project expenses to date. Fred had just received a crude spread- sheet from the CFO, and it did not reflect the progress he thought should have been made as this project was coming to an end. CASE .285 ALF Program Expenses as of 5/24X8 Actual as of 5/24/X8 Budgeted Remaining 5 $6,743,000.00 674.300.00 600,000.00 405,000.00 $6,743,000.00 453,277.00 600,000.00 354.332.00 $0.00 221,023.00 0.00 50,668.00 400,000.00 249.679.00 150,321.00 Construction Costs: Building Contingency Land Program development & equipment costs Furniture A&E fees Financing costs Capitalised interest Site improvements Phone & IS system Kitchen equipment Subtotal Organizational Costs: Legal and accounting Initial marketing Project consultant Follow-up market survey Subtotal 202,000.00 135.000.00 125,000.00 30,000.00 30,000.00 $9.691,300.00 202,000.00 135,000.00 147,655.00 22.438.00 23.776.00 $9.278,157.00 0.00 0.00 -22,655.00 7.562.00 6,224.00 $413.143.00 $25,000.00 250,000.00 80,000.00 20,000.00 $375,000.0 $10,066,300.00 $0.00 0.00 0.00 0.00 $0.00 $25,000.00 250,000.00 80,000.00 20,000.00 $375,000.00 Total $9.278,157.00 $788,143.00 Fred asked Kyle to find out if anyone in the hospital's accounting department had experience with projects and project management software, Kyle knew instantly who to call. Caroline Stevens had once helped him on other hos pital projects. Kyle trusted her to act impartially and to be able to figure out what was happening, Caroline agreed to function as the Project Auditor. She began by examining the most recent project schedule from the construction company. She then created a progress-to- date report with MSP. She also did a complete analysis of the CFO's report. The expense report she reviewed and updated is found below. Using MSP, Caroline created a graphical progress report on the project as of May 24. She marked the actual progress of each unfinished activity by placing a diamond embedded in a circle on the project's Gantt chart. If the symbol was to the left of the May 24 line, that activity was late; the amount of lateness was indicated by the distance of the symbol to the May 24 line. The symbol for on-time activities rested on the May 24 line. If there had been early activities, their symbols would have been to the right of the May 24 line. Caroline's chart is shown above. Caroline then scheduled a meeting with Kyle and Fred Splient. She reported that she did see a work slowdown. She conducted interviews with the construction team, and it appeared that they were concerned about their next work assignment. They told her that in the past as projects were coming to a close they were told of their next scheduled job. They had not heard anything yet, and they were worried. She also reported that the interior designer had added seven extra days to complete the interiors (Task 6 of the project) because the carpet and wall covering might arrive a week late from the manufacturer. They actually arrived on schedule. The estimated remaining duration for the interioes to be completed was 34.6 days. The designer did tell her that the furniture had not all arrived, so they were withholding about 30 percent of the payment until it all arrived. Caroline also reported to Fred that it appeared that the expenses that were allocated to pay back Friendly Medical Center for such things as preliminary marketing efforts, legal support, and so on had not yet been expensed to the project budget. The only thing that was expensed was the original project construction budget. That budget seemed to be right on track. Kyle reported that he intended to spend the rest of the contingency budget for overtime work by the construction crews. He also intended to use the rest of the IS budget to purchase computers for the common areas of the facility and to wire those areas for access to the Internet. In addition, he was waiting for bills Assisted Living Fucility Construction Project Update as of 5/34/X8 Tak Name line Dunsti Remaining D u ration Vince Ver Sep Oct Nov Dec la Festa Mas Apepaya Construction & furnishing 307.47 days 7663 days Facility 329 days 314.49 days 28.61 days Phase 1 - Fu n & scavation 95 days 110 days 15 days Pharre 111 Oda Ph -Enco 134 120 d. Odars 100% 187.2 days 46. days 45 (lightwisted units turneler Tots Part 45 units ready for residents Swks Owls Remaining 5 units licht & hewy) tumedov Od Ods 10 traction complete Iuding ready for residente Mile B Ontdaten % Complete is of harline time divided by time used to date Baseline summary line mary Progress Raline milestone Summary Project Man KN *Please note MSP calculates the duration variance for each step of the action plan by subtracting the actual from the baseline. The summary task baseline and actual duration are then rolled up to the summary tasks' baseline and actual duration figures. The summary tasks' duration variance is then calculated by adding the summary task actual duration plus the remaining duration and then subtracting that sum from the baseline duration CASE . 287 from some of the companies that supplied the required medical equipment. He was planning to spend all that was allocated for that budgeted item. He was over budget on the site improvements and under budget for the kitchen equipment Caroline and Fred praised Kyle for his management of the Construction budget As soon as Caroline and Kyle left Fred's office, Fred called his CFO to find out why the other items were still not reflected in the project budget QUESTIONS 1. Estimate the final construction budget. 2. What should they do about the work slowdown? 3. Create a Gantt chart with the revisions to the dura tion of the interiors step When will the project be completed! 4. What is the importance of the fact that the Hospital staff expenses were not reported under the project budget! 5. Write a one-page audit report of this project CASE Datatech Steve Bawson joined Datatech's engineering department upon obtaining his B.S. in Electrical Engineering almost 6 years ago. He soon established himself as an expert in analog signal processing and was promoted to Senior Design Engineer just 2 years after joining the firm. After serving as a Senior Design Engineer for 2 years, he was promoted to Project Manager and asked to oversee a prod. uct development project involving a relatively minor product line extension As Steve was clearing his desk to make room for a cup of coffee, his computer dinged indicating the arrival of yet another email message. Steve usually paid little attention to the arrival of new email messages, but for some reason this message caught his attention. Swiveling in his chair to face the computer on the credenza behind his desk, he read the subject line of the messages Notebook Computer Development Project Audit Report. Steve then noticed that the message was addressed to the Vice-President of Product Development and wasce: to him. He immediately opened and read the message Datatech had recently adopted a policy requiring that all ongoing projects be periodically audited. Last week this policy was implemented and Steve was informed that his project would be the first one audited by a team consisting of internal and external experts Datatech Inc. is a full-line producer of desktop and notebook computers that are distributed through a network of value-added resellers. After completing the desktop product line extension project about 9 months age, Steve was asked to serve as the project manager for a project to develop a new line of ultrathin notebook computers In asking Steve to serve as the project manager for the notebook computer development project, the Vice President of Product Development conveyed to Steve the importance of completing the project within a year. To emphasise this point, the Vice-President noted that he personally made the decision to go forward with this project and had not taken the project through the normal project selection and approwal process in order to save time. Steve had successfully completed the desktop project in a similar timeframe, and told the Vice-President that this target was quite reasonable. Steve added that he was confident that the project would be completed on time and on budget. Steve wasted no time in planning the project. Based on the success of the desktop project, he decided to modify the work breakdown structure he had developed for the desktop project and apply it to this new project. He recalled the weeks of planning that went into developing the work break down structure for the desktop project. The entire project team had been involved, and that was a rela tively straightforward product line extension. The current project was more complicated, and there simply was not sufficient time to involve all team members. What was the point of wasting valuable time and resources to re-invent the wheel? After modifying the work breakdown structure, Steve scheduled a meeting with the Vice-President of Product Development to discuss staffing the project. As was typical of other product development e s t Datech Q Result 4 of 23 > 1. Estimate the final construction budget. CAS Friendly Assisted Living Facility Case-8 It was a beautiful day in mid-May 20X8. The Friendly Medical Center Assisted Living Facility project was near- ing completion. As usual, the construction project man ager, Kyle Nanno, was thinking about the construction project's schedule. It seemed to him that work on finishing the interior of the building was slowing down a bit. He knew that the final weeks of a project always seemed to take forever, but he also knew that the project was running almost 2 weeks late as a result of a problem encountered during the excavation phase of the construction project. During March and April, it appeared that they were catching up. Kyle had discussed with the construction contractor that Friendly Medical Center would pay over- time to catch up, but the speed-up was temporary, and the job continued to be late. Kyle was not quite sure why. Progress just seemed to be in slow motion. He decided to meet with Fred Splient, the President and CEO of Friendly Medical Center, to discuss the problems. Fred suggested that Kyle call in someone to audit the project, in particular to examine the project schedule care- fully. Fred also wanted the auditor to look at the project expenses to date. Fred had just received a crude spread- sheet from the CFO, and it did not reflect the progress he thought should have been made as this project was coming to an end. CASE .285 ALF Program Expenses as of 5/24X8 Actual as of 5/24/X8 Budgeted Remaining 5 $6,743,000.00 674.300.00 600,000.00 405,000.00 $6,743,000.00 453,277.00 600,000.00 354.332.00 $0.00 221,023.00 0.00 50,668.00 400,000.00 249.679.00 150,321.00 Construction Costs: Building Contingency Land Program development & equipment costs Furniture A&E fees Financing costs Capitalised interest Site improvements Phone & IS system Kitchen equipment Subtotal Organizational Costs: Legal and accounting Initial marketing Project consultant Follow-up market survey Subtotal 202,000.00 135.000.00 125,000.00 30,000.00 30,000.00 $9.691,300.00 202,000.00 135,000.00 147,655.00 22.438.00 23.776.00 $9.278,157.00 0.00 0.00 -22,655.00 7.562.00 6,224.00 $413.143.00 $25,000.00 250,000.00 80,000.00 20,000.00 $375,000.0 $10,066,300.00 $0.00 0.00 0.00 0.00 $0.00 $25,000.00 250,000.00 80,000.00 20,000.00 $375,000.00 Total $9.278,157.00 $788,143.00 Fred asked Kyle to find out if anyone in the hospital's accounting department had experience with projects and project management software, Kyle knew instantly who to call. Caroline Stevens had once helped him on other hos pital projects. Kyle trusted her to act impartially and to be able to figure out what was happening, Caroline agreed to function as the Project Auditor. She began by examining the most recent project schedule from the construction company. She then created a progress-to- date report with MSP. She also did a complete analysis of the CFO's report. The expense report she reviewed and updated is found below. Using MSP, Caroline created a graphical progress report on the project as of May 24. She marked the actual progress of each unfinished activity by placing a diamond embedded in a circle on the project's Gantt chart. If the symbol was to the left of the May 24 line, that activity was late; the amount of lateness was indicated by the distance of the symbol to the May 24 line. The symbol for on-time activities rested on the May 24 line. If there had been early activities, their symbols would have been to the right of the May 24 line. Caroline's chart is shown above. Caroline then scheduled a meeting with Kyle and Fred Splient. She reported that she did see a work slowdown. She conducted interviews with the construction team, and it appeared that they were concerned about their next work assignment. They told her that in the past as projects were coming to a close they were told of their next scheduled job. They had not heard anything yet, and they were worried. She also reported that the interior designer had added seven extra days to complete the interiors (Task 6 of the project) because the carpet and wall covering might arrive a week late from the manufacturer. They actually arrived on schedule. The estimated remaining duration for the interioes to be completed was 34.6 days. The designer did tell her that the furniture had not all arrived, so they were withholding about 30 percent of the payment until it all arrived. Caroline also reported to Fred that it appeared that the expenses that were allocated to pay back Friendly Medical Center for such things as preliminary marketing efforts, legal support, and so on had not yet been expensed to the project budget. The only thing that was expensed was the original project construction budget. That budget seemed to be right on track. Kyle reported that he intended to spend the rest of the contingency budget for overtime work by the construction crews. He also intended to use the rest of the IS budget to purchase computers for the common areas of the facility and to wire those areas for access to the Internet. In addition, he was waiting for bills Assisted Living Fucility Construction Project Update as of 5/34/X8 Tak Name line Dunsti Remaining D u ration Vince Ver Sep Oct Nov Dec la Festa Mas Apepaya Construction & furnishing 307.47 days 7663 days Facility 329 days 314.49 days 28.61 days Phase 1 - Fu n & scavation 95 days 110 days 15 days Pharre 111 Oda Ph -Enco 134 120 d. Odars 100% 187.2 days 46. days 45 (lightwisted units turneler Tots Part 45 units ready for residents Swks Owls Remaining 5 units licht & hewy) tumedov Od Ods 10 traction complete Iuding ready for residente Mile B Ontdaten % Complete is of harline time divided by time used to date Baseline summary line mary Progress Raline milestone Summary Project Man KN *Please note MSP calculates the duration variance for each step of the action plan by subtracting the actual from the baseline. The summary task baseline and actual duration are then rolled up to the summary tasks' baseline and actual duration figures. The summary tasks' duration variance is then calculated by adding the summary task actual duration plus the remaining duration and then subtracting that sum from the baseline duration CASE . 287 from some of the companies that supplied the required medical equipment. He was planning to spend all that was allocated for that budgeted item. He was over budget on the site improvements and under budget for the kitchen equipment Caroline and Fred praised Kyle for his management of the Construction budget As soon as Caroline and Kyle left Fred's office, Fred called his CFO to find out why the other items were still not reflected in the project budget QUESTIONS 1. Estimate the final construction budget. 2. What should they do about the work slowdown? 3. Create a Gantt chart with the revisions to the dura tion of the interiors step When will the project be completed! 4. What is the importance of the fact that the Hospital staff expenses were not reported under the project budget! 5. Write a one-page audit report of this project CASE Datatech Steve Bawson joined Datatech's engineering department upon obtaining his B.S. in Electrical Engineering almost 6 years ago. He soon established himself as an expert in analog signal processing and was promoted to Senior Design Engineer just 2 years after joining the firm. After serving as a Senior Design Engineer for 2 years, he was promoted to Project Manager and asked to oversee a prod. uct development project involving a relatively minor product line extension As Steve was clearing his desk to make room for a cup of coffee, his computer dinged indicating the arrival of yet another email message. Steve usually paid little attention to the arrival of new email messages, but for some reason this message caught his attention. Swiveling in his chair to face the computer on the credenza behind his desk, he read the subject line of the messages Notebook Computer Development Project Audit Report. Steve then noticed that the message was addressed to the Vice-President of Product Development and wasce: to him. He immediately opened and read the message Datatech had recently adopted a policy requiring that all ongoing projects be periodically audited. Last week this policy was implemented and Steve was informed that his project would be the first one audited by a team consisting of internal and external experts Datatech Inc. is a full-line producer of desktop and notebook computers that are distributed through a network of value-added resellers. After completing the desktop product line extension project about 9 months age, Steve was asked to serve as the project manager for a project to develop a new line of ultrathin notebook computers In asking Steve to serve as the project manager for the notebook computer development project, the Vice President of Product Development conveyed to Steve the importance of completing the project within a year. To emphasise this point, the Vice-President noted that he personally made the decision to go forward with this project and had not taken the project through the normal project selection and approwal process in order to save time. Steve had successfully completed the desktop project in a similar timeframe, and told the Vice-President that this target was quite reasonable. Steve added that he was confident that the project would be completed on time and on budget. Steve wasted no time in planning the project. Based on the success of the desktop project, he decided to modify the work breakdown structure he had developed for the desktop project and apply it to this new project. He recalled the weeks of planning that went into developing the work break down structure for the desktop project. The entire project team had been involved, and that was a rela tively straightforward product line extension. The current project was more complicated, and there simply was not sufficient time to involve all team members. What was the point of wasting valuable time and resources to re-invent the wheel? After modifying the work breakdown structure, Steve scheduled a meeting with the Vice-President of Product Development to discuss staffing the project. As was typical of other product development e s t Datech Q Result 4 of 23 >