Suggested Answers msc756

Suggested
Answers to review questions

MSC756 Project Management

Table of Content

TOPIC 1 ........................................................................................................................................................ 2
QUESTION 15 .................................................................................................................................................................. 2
QUESTION 212 ............................................................................................................................................................... 2
TOPIC 2 ........................................................................................................................................................ 2
QUESTION 312 ............................................................................................................................................................... 2
QUESTION 414 ............................................................................................................................................................... 2
TOPIC 3 ........................................................................................................................................................ 3
QUESTION 5-61 ................................................................................................................................................................ 3
QUESTION 714 ............................................................................................................................................................... 3
TOPIC 4 ........................................................................................................................................................ 4
QUESTION 8-4 ................................................................................................................................................................... 4
QUESTION 10-17 .............................................................................................................................................................. 4
TOPIC 5 ........................................................................................................................................................ 5
QUESTION 11-26 .............................................................................................................................................................. 5
QUESTION 12-16 .............................................................................................................................................................. 6
END OF LECTURE EXERCISE TOPIC 5 ................................................................................................. 7
TOPIC 6 ........................................................................................................................................................ 7
QUESTION 189 ............................................................................................................................................................... 7
QUESTION 15-24 .............................................................................................................................................................. 8
TOPIC 7 ........................................................................................................................................................ 8
QUESTION 172 ............................................................................................................................................................... 8
QUESTION 173 ............................................................................................................................................................... 9
TOPIC 8 ........................................................................................................................................................ 9
QUESTION 11 .................................................................................................................................................................. 9
ANSWERS TO MCQS ARE PROVIDED IN THE TEXTBOOK. ........................................................................................... 9
ADDITIONAL QUESTIONS WORKSHOP THURSDAY .................................................................... 10
PAYTON CORPORATION ................................................................................................................................................. 10
CASE SCENARIO BLUEBERRY TEC ................................................................................................................................ 11
RESOURCE CONSTRAINTS .............................................................................................................................................. 12

Deakin University CRICOS Provider Code: 00113B
School of Information and Business Analytics

Faculty of Business and Law
Melbourne Burwood C ampus, 221 Burwood Highway, Burwood, VIC 3125
bardo.fraunholz@deakin.edu.au www.deakin.edu.au/SIBA
Topic 1
Question 15
Project management is designed for industries which have complex (as opposed to simple) tasks
and which operate in an ever changing, dynamic (as opposed to static) environment. These
include aerospace, defense, construction, computers, high technology, electrical instrumentation,
etc. ... Companies that have highly repetitive tasks, such as low technology manufacturing
companies, do not need formal project management but can use informal project management
for activities such as capital equipment projects. Furthermore, project management works best in
situations where activities require the involvement of more than one functional group.
Question 212
Because the project manager is under time, cost, and performance constraints, he often has to
take risks and cut corners in order to get the task accomplished.

Topic 2
Question 312
The company has been very successful in the past using informal project management where
people appear to be talking to one an- other and making decisions that are in the best interest of
the project. This type of structure cannot work effectively for large organizations or large projects
which span several departments. However, many companies find this organizational structure
effective because they get the advantages of formal project management without the
disadvantages of the necessity for formally defined authority and a massive flow of paperwork.
Personnel resent organizational change unless they are convinced that the new structure will give
them more authority, responsibility, opportunity for advancement, ability to build an empire,
more status, more pay, and other such arguments.
Question 414
Determining the how and who is a functional responsibility. Determining when is a joint
responsibility in that the project manager determines the gross milestones and the functional
managers determine the intermediate, detailed milestones. Mobilizing the resources is a project
office responsibility.


Topic 3
Question 5-61
Management by inaction: Grows out of fear and anxiety.
Management by detail: Needs every conceivable fact. Methodical, orderly. Often is inappropriate
or late.
Management by invisibility: Is not around. Has good subordinates. Works in office, offstage.
Management by consensus: Can be important in uncertain areas. Subordinates are independent
and powerful. Could be a substitute for decision-making. Important for setting policy.
Management by manipulation: Can be fair or unfair, effective or ineffective, legitimate or
illegitimate. Some people are manipulators of others for power feeling. People are not puppets.
Management by rejection: The roughly negative style. Always has ideas. Devils advocate. Well-
prepared proponents can winso such a boss can be stimulating.
Management by survival: Executive will do anything to survive. The jungle fighter. Done
constructively. The executive will build instead of destroy.
Management by despotism: Totalitarian. No clashes of ideas. The organization moves. Creative
people flee. Always know who is boss.
Management by creativity: Good, so long as its based on reality. Has a trained instinct.
Management by leadership: The executive who manages with flair, wisdom, and vision. He listens
to his men, prods them and leads them.
Question 714
Here, it might be best if the project manager uses his formal authority and has both people
removed from the project. Re- moving only one person will create problems by showing
favoritism for the second person.
Manufacturing must be involved in the early stages of a project. This is to prevent the situation
where engineering writes the specifications but manufacturing cannot live with it.
Since the project manager cannot have functional managers removed from the project, he
should simply withdraw until that time when the managers can no longer work out the
differences themselves.


Topic 4
Question 8-4
Question 10-17
Brainstorming cannot work unless there exists a good environment with free flow of information.
Brainstorming can produce beneficial results if properly controlled.

Arguments for brainstorming include:
Not an ongoing method for solving problems.
It is a technique for stimulating ideas.
Provides a structure for creative thinking.
Provides an atmosphere of free expression.

Arguments against brainstorming include:
Does not work where trial and error (instead of judgment) are needed.
Does not allow for growth of ideas.
Attacks only superficial problems.
Does not recognize or reward creators.
How about people who are more creative by themselves?
Does harm by forcing good ideas to come out prematurely.


Topic 5
Question 11-26
Several possible answers, the below is one possible way to structure your answer:

Program: New Product Introduction
Project 1: Sales Promotion/Advertising
Task 1: Layout artwork
Task 2: Approve artwork
Task 3: Sales manual
Task 4: Sales promotion
Task 5: Trade advertising
Task 6: Introduce at trade show

Project 2: Pricing
Task 1: Analyze selling costs
Task 2: Analyze customer reactions
Task 3: Storage and shipping costs
Task 4: Review plant costs
Task 5: Review cost of production
Task 6: Revise cost of production
Task 7: Revise selling costs
Task 8: Establish billing procedures
Task 9: Establish credit procedures

Project 3: Market testing


Project 4: Manufacturing
Task 1: Final specifications
Task 2: Production layout
Task 3: Material requisitions

Project 5: Training
Task 1: Select salesman
Task 2: Select distributors
Task 3: Train salesmen
Task 4: Train distributors
Task 5: Print literature
Task 6: Literature to salesmen
Task 7: Literature to distributors
Question 12-16
(a) Critical path activities = a c d i k l m o, nodes = 1 2 4 5 6 7 9 10
Total slack - 20 days
a or c can be removed from the critical path but the duration of the project does not change as
node 1 is still on the critical path
The critical path has less activities/nodes but the duration extends


End of lecture exercise topic 5
Topic 6
Question 189
This question goes beyond the level of knowledge required for the take home test and is not
examinable!
First of all, 800 units on an 80% learning curve requires 468154 hours, with the first 200 units
requiring 182891 hours. Therefore, units 201-800 require 285263 hours.

Installing new equipment, the last 600 units will require 107038 hours.
285263 - 107038 = 178225 hours of savings.
At $70/hour, savings = 178225 x 70 = $12,475,750.
If this is simply one years depreciation, then the break-even point is $62,378,750 for the
equipment. This assumes that the machinery will be used in years 2-5.

Question 15-24
For A, SV = +200 and CV = -100
For B, SV = -200 and CV = +100
For C, SV = +200 and CV = +300
For D, SV= -200 and CV = -100
For E, SV = 0 and CV = +200
There are several possible answers for each scenario
Totaling up the variances, the summary schedule variance is 0 (i.e. on schedule) and the summary
cost variance is +400, which is under budget. Things appear to look good.
Since B and D are on the critical path, it appears that we are really behind schedule even though
the summary schedule variance indicates we are on schedule.

Topic 7
Question 172
EVs1 = (16K)
EVs2 = (6K)
EVs3 = (11K)
EVs4 = (55K)
EVs5 = 0
a) Do not develop product; i.e. S5
b) S4
c) S2 (under risk)
d) S5


Question 173
Multiple possible ways of completing this but the below shows a proper payoff table:
Expected
Value
Make
6,000
50,000
360,000
Total
Make
Purchase
6,000
410,000
50,000
360,000
8,700
418,700
50,000
360,000
17,400
427,400
50,000
360,000
26,100
436,100
50,000
360,000
34,800
444,800
419,048
399,000
399,000
399,000
399,000
399,000
399,000
Defective
Better to purchase and save $20,048

Topic 8
Question 11
Each of the causes can produce each of the effects. You could comment that these cause and
effect relationships look like their last project. This is the reason why project managers must
continuously re-plan projects.

Answers to MCQs are provided in the textbook.


Additional questions Workshop Thursday

Payton Corporation
1. What is the basis for the problem? After the first weekly labour report, an over budget
condition was observed. The report indicated that the development lab was spending at a
$28.50 per hour rate versus the $19.50 per hour average used to bid the contract. The
resulting meeting between the functional and project managers verified that the charges
were and will continue to be necessary to meet the completion date deadline.
2. Who is at fault? Nobody is at fault. This is a systems problem.
3. Can the present situation be corrected? The present situation can be corrected if the
employee can perform at a higher position on the learning curve and do the work in less
time so as to make up for the cost difference.
4. Is there any way that this situation can be prevented from recurring? Using average
costs on long duration activities is effective because, in the long run, the costs should
average out. But, on short duration projects where high priced people would be
employed, it is best to price out the work at the actual salary of the employees who are
to do the work.
5. How would you handle this situation on longer duration projects? On longer duration
projects, trade-offs can usually be made to compensate for high-priced personnel.
6. Should a customer be willing to accept monetary responsibility for this problem? This
would be ideal, but it is doubtful if it would ever happen.


Case scenario Blueberry Tec

1. What would you do in Jenny's position?

Current state:
The phone is a high-profile, strategic project to increase revenue.
Time to market is critical.
Bottom-up estimates are usually more accurate than initial macro estimates.
Immediate actions:
Jenny needs to quickly communicate the issue (WBS) to top management.
Jenny should have alternatives and especially a preferred plan of action to offer.
Suggestions:
Change the scope of the project. Since little information is provided, this is an easy solution to
avoid the harder questions.
Partnering with expert organization to reduce cost. This is a very good and viable approach.
Cancel the project. Not really an alternative.
In the end senior management must deal with the constraints and accept time and cost variation.
Only is management is not going to reduce scope or increase cost, cancelling the project becomes
an option.

2. Did the senior executive make any mistakes?

Senior management appears to have made a judgment call based on inadequate or faulty
information. Senior management should not be in the business of estimating.

3. What estimating techniques would you suggest?

Depending on the time constraints estimates to the work package level are preferable when
accuracy is required. If cost can be controlled and time is of the essence top-down estimates are
useful and acceptable. Sometimes cost control is abandoned in time critical project
environments. However generally a bottom-up estimate is hard to beat when cost is important.

Resource Constraints
7
7
10
10
3
3
2T
10
10
12
12
10
Loading schedule for each resource

Programmer
Technician
0
SL
9 10 11 12 13
14 15
#/Res ES LS EF LF SL
Times for
the Resource
Activity Schedule
1/P
2/P
3/P
4/T
12
12
ES
5/2T
SL
Re
6/P
12
12
14
14
LS
Du
Legend
EF
LF


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Suggested Answers msc756

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Suggested

Answers to review questions

Deakin University CRICOS Provider Code: 00113B

School of Information and Business Analytics

Deakin University CRICOS Provider Code: 00113B

School of Information and Business Analytics

Deakin University CRICOS Provider Code: 00113B

School of Information and Business Analytics

Deakin University CRICOS Provider Code: 00113B

School of Information and Business Analytics

Deakin University CRICOS Provider Code: 00113B

School of Information and Business Analytics

Deakin University CRICOS Provider Code: 00113B

School of Information and Business Analytics

End of lecture exercise topic 5

Deakin University CRICOS Provider Code: 00113B

School of Information and Business Analytics

Deakin University CRICOS Provider Code: 00113B

School of Information and Business Analytics

Better to purchase and save $20,048

Answers to MCQs are provided in the textbook.

Deakin University CRICOS Provider Code: 00113B

School of Information and Business Analytics

Additional questions Workshop Thursday

Deakin University CRICOS Provider Code: 00113B

School of Information and Business Analytics

Case scenario Blueberry Tec

The phone is a high-profile, strategic project to increase revenue.

Time to market is critical.

Jenny needs to quickly communicate the issue (WBS) to top management.

Deakin University CRICOS Provider Code: 00113B

School of Information and Business Analytics

Loading schedule for each resource

Deakin University CRICOS Provider Code: 00113B

School of Information and Business Analytics

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