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Bob Phillips, director of operations at B&W Systems, was put in charge of an important project. This assignment was the result of a recent B&eW

Bob Phillips, director of operations at B&W Systems, was put in charge of an important project. This assignment was the result of a recent B&eW board meeting in which Grace Johnson, the vice-president of marketing, had presented a new product concept - Forecasto. This cloud computing forecasting system was specifically designed to meet the needs of small- and medium-sized organizations. Johnson indicated a price point in the $200 range. Her primary concern was timing. Specifically, once the competition found out about the product there could be several additional entrants into this potentially lucrative market. The board meeting concluded with the chief executive officer tasking Phillips to look into the implementation of Forecasto in a timely manner and report his findings to the board at the next meeting

BACKGROUND

B&W Systems designed and distributed a variety of management software products through the Internet and retail outlets like Best Buy. The company was considering the development of an Internet-based forecasting system. This system was designed specifically for the new start-up and small business owner.

Phillips, after consulting with the technical staff and reviewing historical efforts, had developed the task descriptions, time estimates and immediate predecessor (IP) relations fee Exhibit 1). Phillips planned to use existing software components during the development phase as a means of keeping project costs and the overall time frame within bounds. Nevertheless, multiple task time estimates were formulated due, in part, to the inherent uncertainties associated with software development.

B&W's management team had established a 35-week completion time for this effort. A preliminary assessment by Phillips indicated that some of the project tasks would need to be shortened to meet the management deadline of 35 weeks. Accordingly, the project manager had prepared a set of task-crashing estimates (see Exhibit 2). Phillips knew that this was an important project to manage and that he would have to do a thorough analysis for the board. He needed to estimate the completion time and budget for the project. Furthermore, he knew that he would need to determine the probability that the project could be completed within the deadline of 35 weeks.

Actity Optimistic Most Likely Pessimistic Expected Time Variance
A 2 3 4 3.00 0.11
B 4 7 10 7.00 1.00
C 5 6 9 6.33 0.44
D 6 7 16 8.33 2.78
E 7 9 10 8.83 0.25
F 4 5 6 5.00 0.11
G 3 6 10 6.17 1.36
H 2 4 7 4.17 0.69
I 2 2 2 2.00 0.00
J 3 4 14 5.50 3.36
K 2 3 4 3.00 0.11

Task Normal Cost ($) Crash Time (Weeks) Crash Costs ($)
A $10,000.00 3 $10,000.00
B $20,000.00 6 $25,000.00
C $15,000.00 5 $30,000.00
D $45,000.00 6 $65,000.00
E $10,000.00 8 $20,000.00
F $15,000.00 4 $18,000.00
G $20,000.00 4 $30,000.00
H $10,000.00 3 $15,000.00
I $5,000.00 2 $5,000.00
J $40,000.00 5 $50,000.00
K $15,000.00 2 $25,000.00
SUM $205,000.00 $293,000.00

Case Study Questions

1. What is the estimated completion time for this project? What is the estimated budget? What is the probability that the critical path can be completed in 37 weeks?

2. What is the minimum expected time in which this project can be completed?

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