The Sharon Construction Corporation has been awarded a contract for the construction of a 20,000-seat stadium. The construction starts on Monday, February 15, 2016andmustbe completed within 52 weeks. A penalty clause of $15,000 per week for each full or partial of delay beyond this date was written into the contract. Jim Brown, the president of the company, called a planning meeting. In the meeting he expressed great satisfaction at obtaining the contract and revealed that the company could net as much as $300,000on the project. He was confident that the project could be completed on time with an allowance made for the usual delays anticipated in such a large project. Bonnie Green, the director of personnel, agreed that in a normal year only slight delays might develop due to a shortage of labor. However, she reminded the president that for such a large project, the company would have to use unionized employees and that the construction industry labor agreements were to expire on November 27. Past experience indicated a fiftyfifty chance of a strike. Jim Brown agreed that a strike might cause a problem. Unfortunately, there was no way to change the contract. He inquired about the prospective length of a strike. Bonnie figured that such a strike would last either eight weeks (70 percent chance) or possibly 12 weeks (30 percent chance). Jim was not pleased with these prospects. However, before he had a chance to discuss contingency plans he was interrupted by Jack White, the vice-president for engineering. Jack commented that a colder December than had been assumed was now being predicted. This factor had not been taken into consideration during earlier estimates since previous forecasts called for milder weather. Concrete pouring in December might thus require in one out of every three cases (depending on the temperature) special heating that costs $500 per week. This additional information did not please Jim at all. The chances for delay were mounting. And an overhead expense of $500 per week would be incurred in case of any delay that exceeds the baseline schedule as defined in Appendix. The technical details of the project are given in the appendix to this case. The management team was asked to consider alternatives for coping with the situation. At the end of the week, four proposals were submitted:

1. Expedite the pouring of seat gallery supports. This would cost $20,000 and cut the duration of the activity to six weeks.

2. Put a double shift on the filling of the field. A cost of $10,000 would result in a five-week time reduction.

3. The roof is very important since it precedes several activities. The use of three shifts and some overtime could cut six weeks off the roofing at an additional cost of only $9,000.

4. Do nothingAppendix: Technical Details of the StadiumThe stadium is an indoor structure with a seating capacity of 20,000.

The project begins with clearing the site, an activity that lasts eight weeks. Once the site is clear, the work can start simultaneously on the structure itself and on the field. The work in the field involves subsurface drainage which lasts eight weeks, followed by filling for the playing field and track. Only with the completion of the filling (14 weeks) can the installation of the artificial playing turf take place, an activity that consumes 12 weeks. The work on the structure itself starts with excavation followed by the pouring of concrete footings. Each of these activities takes four weeks. Next comes the pouring of supports for seat galleries (12 weeks), followed by erecting pre-cast galleries (13 weeks). The seats can then be poured (4 weeks) and are ready for painting. However, the painting (3 weeks) cannot begin until the dressing rooms are completed (4 weeks). The dressing rooms can be completed only after the roof is erected (8 weeks). The roof must be erected on a steel structure which takes 4 weeks to install. This activity can start only after the concrete footings are poured. Once the roof is erected, work can start simultaneously on the lights (5 weeks) and on the scoreboard and other facilities (4 weeks). Note: The schedule can be developed using Microsoft Project or Excel -See "Chapter 8 Sharon Case Study Template.xlsx" in the Tools folder in D2L. Assume 5-day work week and calendar units are in weeks. No overtime is allowed.

It was determined that proposal #1 was the best option to chose from during the initial case study analysis. However, the cost of pouring the seat gallery has increased from $20,000to $30,000for proposal #1.

In addition, management has identified a fifth proposal:

5.You can expedite (i.e., crash) any activity that has not started after a strike at the cost of$3,000 per week. However, the most you can expedite any activity is 1/3 of its normal duration. Furthermore, the only cost to the project during the strike is the overhead -workers do not get paid.

Your goal to develop a project schedule and budget that takes into consideration your risks. Meaning, you are being evaluated on managing the project so that you are within planned schedule completion date and within planned baseline budget. In this case, you are protecting the $300,000 profit margin to the best of your ability.

Even though the president has made the agreement to complete the project within 52 weeks and that date cannot move, determine the realistic baseline that best takes into account the risks the project is facing?

Explain how you would adjust the project budget baseline for actively managing risk based on your analysis of your cost for actively managing risks and what is your risk reserve budget as a contingency?

Explain how you would adjust the project schedule baseline for actively managing risk based on your analysis of you risk reserve schedule for actively managing risks and what is your schedule reserve as a contingency?

Your analysis is based on being risk neutral, meaning balancing impacts of all risks with the probability of risks occurring and the associated cost for mitigating the risks.

Note: You need to show the decision tree and EMV analysis for each viable mitigation strategy.