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a) Calculated activity times are:
Activity Expected Duration
A 4 B 6 C 4 D 12 E 7 F 9 G 5 b)
3 A 0 4 1 4 5 1 B 6 0 6 0 6 0 C 4 6 10 6 10 0 D 12 4 16 5 17 1 G 5 17 22 17 22 0 F 9 6 15 8 17 2 E 7 17 10 17 0 10
The total project length is 22 weeks.
c) The critical path is: B – C – E – G
Other paths are: A – D – G 2 days
A – E – G 1 day
d) Burst Activities: A and B Merge Activities: E and G
e) Burst Activities: A and B Merge Activities: E and G
5 Question 2: (15 marks) a) What are the benefits and drawbacks of project checklists for screening alternatives?(4 marks) Answer: Project Checklists are easy to use, based on a simplistic visual model with a basic scoring system. Using a checklist enhances the input and discussion during the screening process. Unfortunately, the model also has its shortcomings. The two most significant are the subjectivity of the rating system and the lack of a weighting system. The weighting system is important in establishing trade‐offs between criterion. b) You are a member of the senior management staff at XYZ Corporation. You have historically been using a functional structure set up with five departments: finance, human resources, marketing, production, and engineering. a. Create a drawing of your simplified functional structure, identifying the five departments. (2 marks) Answer: Board of Directors CEO
VP of Finance VP of HR VP of Marketing VP of Production VP of Engineering
-- Accounting -- Contracting -- Employment -- Training/ Development -- Marketing Research -- Sales -- Logistics --Manufacturing -- Product Development -- Testing b. Assume you have decided to move to a project structure. What might be some of the environmental pressures that would contribute to your belief that it is necessary to alter the structure? (4 marks) Answer:
Pressure may come from within the organization or from environmental or external sources. There may be pressure to be innovative or pressure from a rapidly changing market. Increased consumer demands or competition also put strain on a functional organization. These factors require quick response time, high innovation, speedy development and risk‐ taking. Functional organizations may have difficulty meeting these needs, but project management can meet them by decreasing the chain of command and decision‐making. Project management is then able to decrease time to make decisions, enable employee freedom to be innovative and take risks and get products/services to market quicker. c) Distinguish between the Traditional, Behavioral, and Interactionist views of team conflict. How might each explain and treat a project team conflict episode? (3 marks) Answer:
The traditional view sees conflict as negative. Those who prescribe to this line of
thinking try to avoid conflict. When it does arrive, they believe in resolving it as swiftly as
possible. The behavioral view is that conflict is natural. Under this thinking, conflict is not
avoided, but managed. Instead of suppressing, conflict it is allowed to exist in a controlled
atmosphere. Interactionists encourage conflict. They believe there is an optimal level of conflict
that drives innovation and productivity. Therefore, conflict is allowed to exist unchecked until it
surpasses the optimal level.
d) Put yourself in the position of a project customer. Would you accept the cost adjustments associated with learning curve effects or not? Under what circumstances would learning curve costs be appropriately budgeted into a project? (2 marks) Answer:
7 As a customer, I would not accept fees when the repetitive work (that accounts for the learning curve) is a routine job for the supplier. The reason for this is that I would be paying for learning effects that others would reap the benefit from. Also, learning effects associated with new employees would be unreasonable to include in project billing. On the other hand, if the repetitive work/learning curve effects were project or customer specific, then budgeting the costs into the project would be appropriate. Other answers with proper justifications will be accepted as discussed in class. Question3 : (5 marks) Your Vice President for MIS informs you that she has researched the possibility of automating your organization’s order‐entry system. She has projected that the new system will reduce labor costs by $25,000 each year over the next five years. The purchase price (including installation and testing) of the new system is $105,250. The system is expected to have a useful life of 5 years, after which time (in year 6) it can be sold in the secondary computer systems market for $10,250. What is the Net Present Value of this investment if the discount rate is 8.5% per year? Answer:
Year Inflows Outflows Net flow Discount Factor NPV
0 105,250 (105,250) 1.000 (105,250)
1 25,000 25,000 0.92 23,000
2 25,000 25,000 0.85 21,250
3 25,000 25,000 0.78 19,500
5 25,000 25,000 0.67 16,750 6 10,250 10,250 0.61 6,253 Total $(497) Conclusion: Based on this analysis, the NPV for the project is negative ($‐497), suggesting that the project would not be a good investment.