please see the document at page 3&4 , the tutorial question.

THE UNIVERSITY OF NEW SOUTH WALES SCHOOL OF ACCOUNTING ACCT2522 Management Accounting 1 Session 1, 2016 Tutorial Week 12 - Project Planning and Analysis Overall Theme This week we consider the importance of project planning and implementation, and discuss how project cost, time and quality can be managed. In particular, we explore how Gantt Charts and AOA network diagrams (using CPM/PERT methodologies) are used to model and manage projects. We also consider how resource loading and levelling techniques can be used to manage variability in projects' resource requirements. Desired Learning Outcomes and Essential Reading TOPIC 11 PROJECT PLANNING AND ANALYSIS After completing this topic, you should be able to: 1. Understand the nature of projects, and the common steps, issues and people involved in their analysis and management. Text book Materials: Stevenson, Chapter 17 2. Understand and apply GANTT charts for planning and scheduling. BDMM Chapter 6 3. Utilise CPM/PERT techniques in developing AOA network diagrams for (excerpt) project management, and be able to explain the advantages and disadvantages of these techniques. Both readings available on Moodle 4. Explain concepts of resource loading and levelling. 1 Self Study Questions (complete in your own time) 1. Stevenson Ch.17, Problems 15 on pp.765771. Worked solutions are provided in the text. Problem 1: Practice with AOA diagrams Problem 2: Practice with early and late start and finishes, slack time. Problem 3 & 4: Practice with PERT calculations Problem 5 part (a) only: Practice with project crashing 2. Consider the following CPM/PERT diagram. Among other resources, each activity (A, B, C and D) requires a certain number of skilled supervisors to oversee the work. The number of weeks to complete each activity is shown, along with the number of skilled supervisors needed, in brackets. D 6 (4) A 4 (5) AC24(3) (3) B 4 (7) a. Show in Gantt chart format (weeks on the horizontal axis and number of supervisors on the vertical axis), the resource loading week by week, assuming that each activity starts as soon as possible. b. Your task is to reduce variability in supervisory requirements without increasing project duration. Show in Gantt chart format how one should use resource levelling to achieve this. Tutorial Questions (must be prepared prior to the tutorial) Question 1: Advantager University This question can be found on the following pages. 2 Question 1: Advantager University Advantager University is a top ranked university that has experienced huge and growing demand from potential students for several years. To cope with this increased demand, several managers have been hired by the university to facilitate expansion projects. The School of Accounting is just one of the successful schools at Advantager that urgently needs to expand. To better serve students and staff, the University administration has provided the School with a choice of several underutilised buildings on campus that would meet the School's expansion needs. After several committee meetings, eight major expansion project activities have been identified, and the University has agreed to provide project managers to support these activities. The project needs to be completed in 16 weeks at latest, in time for the next Semester. People involved in the expansion were interviewed to gather information for the following table: Table 1: Activity Immediately Number of Activity Description Time Estimates (weeks) Optimistic Likely Pessimistic preceding Managers activities required* A 4 Select building 1 2 3 B 2 Interview staff applicants 1 2 9 C A 3 Develop remodelling plans 1 2 3 D B 2 Select staff applicants 2 4 6 E C 3 Remodel 1 3 11 F C 3 New staff training 1 3 5 G D, E 2 Install facilities 2 5 8 H F, G 3 Move in 1 2 3 * Managers are qualified to work on all activities relating to the University's expansion projects, and can be interchanged between activities and projects. Required: 1. Draw a detailed network diagram for the project (there is a skeleton diagram on the next page to get you started if you're really stuck, but it would be better if you tried to work this out on your own first). 1 2. What is the critical path? What does it tell you, and why is it important? 3. (a) Which activities have slack? (b) Using your answer to (a), explain the concept of shared slack, and where it does/does not exist for this project. 4. (a) Advantager University has hired several managers to facilitate its expansion plans. Using the data in Table 1, show in Gantt chart format (weeks on the horizontal axis and number of 1 Please note, when you draw up the last activity in your network diagram, you should set your late finish time to equal your early finish time. So even though the project needs to be completed in 16 weeks, please don't set 16 to be your late finish time, unless 16 also happens to be your early finish time. When drawing up these diagrams you should assume we don't want a project to take any longer than it has to - remember, on the critical path there is no slack! Activities examined in isolation may have slack, but the critical path should not. 3 managers on the vertical axis), the resource loading for this project week by week, assuming that each activity starts as soon as possible. (b) Show in Gantt chart format how you would use resource levelling to achieve a reduction in variability in management requirements without increasing project duration. (c) Explain how your answer to (b) can help Advantager University, given that it is undergoing several expansion projects simultaneously. 5. Calculate the path variance of ACFH. What is the value in calculating path variances? 6. A worldrenowned Nobel Prize winning accounting academic will be visiting the university in 12 weeks. If the project can be completed in 12 weeks, she will be able to give a speech at the opening ceremony for the building, attracting valuable news coverage of the event. (a) Using the additional information in Table 2 below, ascertain the smallest total additional cost incurred for finishing the entire project in 12 weeks. (b) What factors would you consider in deciding whether to crash the project? Table 2: Activity Normal time (weeks) A 2 B 3 C 2 D 4 E 4 F 3 G 5 H 2 Normal cost $ 100,000 30,000 250,000 30,000 1,200,000 60,000 800,000 350,000 Crash time (weeks) 2 2 1 3 2 3 3 1 Crash cost $ 40,000 310,000 35,000 1,800,000 1,100,000 600,000 Hint This can help you get started on Question 1, if you're really stuck ..... 2 4 6 1 5 3 4 7 Self Study Questions (complete in your own time) 1. Stevenson, Ch 17, Problems 1- 5 on pp. 765-771. Worked solutions are provided in the text. Problem 1: Practice with AOA diagrams Problem 2: Practice with early and late start and finishes, slack time. Problem 3 & 4: Practice with PERT calculations Problem 5 part (a) only: Practice with project crashing 2. Consider the following CPM/PERT diagram. Among other resources, each activity (A, B, C and D) requires a certain number of skilled supervisors to oversee the work. The number of weeks to complete each activity is shown, along with the number of skilled supervisors needed, in brackets. D 6 (4) A 4 (5) AC24(3) (3) B 4 (7) a. Show in Gantt chart format (weeks on the horizontal axis and number of supervisors on the vertical axis), the resource loading week by week, assuming that each activity starts as soon as possible. b. Your task is to reduce variability in supervisory requirements without increasing project duration. Show in Gantt chart format how one should use resource levelling to achieve this. No. of Supervisors 13 12 11 10 A 9 8 7 6 5 4 B 3 2 1 Weeks 1 2 D C 3 4 5 6 7 8 5 9 10 11 12 13 14 2. No. of Supervisors 13 12 11 10 9 8 7 6 5 4 3 2 1 Weeks A B D C 1 2 3 4 5 6 7 8 6 9 10 11 12 13 14