Chapter 5 Question 2 Scope Creep is the continued reassessment and change of a projects original specification.

Scope creep can be both useful and dangerous. Scope creep is useful when: 1. Scope creep can allow new ideas to be included in the project resulting in a better final project
2. Scope creep can help the project produce results better than what the customer had

anticipated Scope creep is dangerous when: 1. Scope creep ends up delaying projects, throwing off time lines and eventually cancelling a project 2. Scope creep can run a project way over budget 3. Scope creep can turn a workable project into ciaos In the Bradley Fighting Vehicle case scope creep was very evident. The original specifications of the Bradley design were much different than the final vehicle the army received. For example the original specifications included the capability to transport an entire infantry squad which is 12 people while the vehicle produced could only transport six personnel. There were several changes over the course of the production of the Bradley vehicle because there was failure within the army to come to a definitive agreement on the role the Bradley was to play. When there is confusion within a project and no general consensus on the project goal scope creep can appear. Organizations may refuse to freeze design specifications for valid reasons because they could have invested too much time and money into the project already. The organization could also believe in their design specs and feel the product will be approved by the customers and meet customer needs.

Question 6 An argument for scope reporting mechanisms: 1. Scope reporting mechanisms encourage solid communication between all parties on a project
2. They provide cost status with updates on budget and performance through the means of

an S-curve, EV report, or variance or exception report 3. They provide schedule status on a project and 4. The provide technical performance status reports

The types of reports necessary for document control are all reports as document control is a way of making sure anything contractual or legal is documented and distributed to the appropriate people. For example such reports as schedule status, technical performance and cost status with updates on budget performance would be important to project clients, members of the project team, top management and other groups in the organization affected by the project. These reports would also be of interest to stakeholders who have interest in the project development.

Chapter 5 Case Study Question 1 In this particular case funding is a key element. Without the adequate funding there is no statement of work. Once funding was obtained I would review bids of engineering designs that would best suit the budget, be completed within an acceptable timeline with the least amount of disturbances to the local citizens. The statement of work in this case should contain the following components: Background: Calcutta needed a metro station to service the needs of the citizens

Tasks: To have possession of the site, method to divert traffic, master plan to show location of underground cables lines and utilities, have adequate funding and providing shop access while nearby roads were under construction. Objective: To complete Calcuttas Metro on time, within budget with little disturbance to locals Approach: Construct a plan on how our objectives will be pursued and all resources that will be needed. Input Source: Identify all personnel that will be needed to complete the tasks. These personnel would include thousands of labourers, electricians, power companies, engineers, managers, traffic control etc.

Question 2 The problems faced in the metro project were entirely due to poor project scope. The scope of a project includes everything about a project such as any expected outcomes. It should include project goals, constraints, and outcomes. The railway project in Calcutta included the project goals but no real concrete plan on how to achieve them. They never took into account possible constraints and contingency plans to deal with these constraints. It seems as though they just started digging and would plan to deal with problems as they came. Without well thought out plans to include all aspects of a project the project becomes way over budget, way over time and eventually turns into a mess. In the case of Calcuttas metro there was very poor project planning.

Chapter 7 Question 5 The types of risk you are likely to encounter in this case would be financial risk and technical risk. Financial risk because you would require a large number of subcontractors to complete the design and development of the project

Technical risk because this is a highly complex project based on new technology that has never been directly proven in the market place The company of this highly complex project would deal with the types of risk they are likely to encounter by minimizing the risk. This new technology that will be new to market cannot be late to market in fear of exposing the company. They have several subcontractors hired to make sure the job is finished on time. When selecting these subcontractors they would minimize risk by taking the selection very seriously by only selecting and ensuring quality performance subcontractors. The company would also minimize risk by insisting that all subcontractors maintain continuous direct contact with the companys project team. The company could also reserve the right to intervene in the subcontractors production if the product doesnot meet the quality of standard the company had requested.

Question 6 Price and risk are equally important but opposite issues. They are opposite issues because companys hope to maximize their return or profits while minimizing any risks. Many companies have risk mitigation strategies and teams to determine risks associated with a particular project or investment opportunity. Risk cannot be eliminated but it can be transferred to another party, reduced by having good internal controls, avoided if you decide the business venture may have too much risk, retained or shared. Usually price and risk go hand in hand. Sometimes with a low price or bid comes high risk and with high price or bid comes low risk. The lowest price does not always mean the best offer to accept. Low price can lead to high risk because the company could be taking short cuts, or have not factored in possible delays. Low price could lead to high risk because timelines would be extended past due and budget would then be affected. High cost low risk is favourable if the money is available however many companies are attracted to cheaper deals.

Chapter 7- Case Study

Question 1 Scope management is the function of controlling a project in terms of its goals and objectives through the process of conceptual development, full definition, execution and termination. Reviewing the elements in project scope management I dont believe the problem planning and scope management in the case of the Tacoma suspension bridge was appropriate. I do not see any evidence of: 1. Conceptual development no info gathering or constraints discussed 2. Scope statement no goal or criteria
3. Scope reporting no work breakdown structure, schedule, cost or technical performance

status 4. Control systems none in place 5. Work Authorization was contractual requirement but no valid consideration or terms 6. Project closeout no official post project analysis The planners began taking unknown/unnecessary risks from the beginning of the project. They never assessed what the risks would be or came up with alternatives to the risks. The project had constraints. A bridge was constructed with a small width-to-length ratio which was smaller than any other suspension bridge of its type in the world. This would be risky considering this particular type of bridge had never been proven to work. Another risk was taken when the engineer changed the original plans and used solid girders instead of open girders allowing the wind to be trapped rather than pass through. Another risk was deciding to build a narrow bridge in an open area prone to high winds. The risks of a narrow bridge in a high wind area could not have been taken into serious consideration because the bridge would have been designed differently if consideration was given. There was no testing of different types of girders to see which ones would best suit the suspension bridge and the engineer changed the plans seemingly without approval. No one

questioned the change and as a result the wrong girders were used which helped lead to the deterioration of the bridge.

Question 2 Qualitative risk assessment Likely Risk Factors 1. Completion of the bridge takes longer than anticipated
2. The bridge is to narrow to withstand the high winds

3. No tests for different girders used 4. Engineering team may lose employees 5. The budget for the bridge may be cut back 6. Safety issues need to be addressed 7. Materials needed must be shipped from elsewhere Probability
L ow Medium H h ig H h ig 3 Medium 5a 6 nd L ow 4a 7 nd

2 1

Consequences

Question 3 Mitigation Strategy

1. Use project management tools to ensure project stays on the projected timeline

2. Construct an alternate bridge design

3. Assign time to have sufficient time testing of all girder types

4. Train company employees in field expertise and pool resources from your own organization if need be 5. Maintain contact with management and the project team to ensure the project is staying on schedule and no foreseen problems 6. Schedule safety checks routinely 7. Maintain a list of all materials needed and ensure they can be purchased locally or allow enough time in project timeline for the shipment of materials.

Chapter 3 Question 13 1. Cash flow = 0.4(1,000,000) + 0.6(100,000) Cash flow = 400,000 + 60,000 Cash flow = 460,000 2. NPV = -5,000,000 + (460,000/(1.1)^t NPV = -5,000,000 + 460,000/0.15 NPV = - 5,000,000 + 3,066,666 NPV = - 1,933,334 The NPV for the first year is negative so I would reject the project

1. Cash flow = 0.7(1,000,000) + 0.3(100,000) Cash flow = 700,000 + 30,000 Cash flow = 730,000 2. NPV = 5,000,000/1.15 + 730,000/1.15 NPV = 4,347,826 + 4,866,667 NPV = 518, 841 The NPV is positive of we waited one year so that is the best choice to make.

Question 14 The following is a list of benefits and drawbacks associated with the potential expansion of crowns project portfolio.

The advantages would be: 1. The opportunity exists for a big payout 2. Crown would be staying current with new technology 3. Taking on this project would prove Crown was a diverse company 4. Could mean huge profits for crown 5. Investing in new technology would mean reinforcement of strategic goals. 6. Investing in the new project would mean expansion of their project portfolio which could lead to other business ventures in the energy sector 7. The home fuel cells would strategically fit because it is a complimentary project The drawbacks would be: 1. Potential loss in money if fuel energy cell demand declined 2. The cost to invest in new technology may be to great and carry to much risk 3. They dont specialize in this new technology leaving them at a disadvantage 4. To become serious players in fuel cell heating Crown would have to hire more employees with training in home fuel cells or train existing employees to specialize in the area 5. The cost of fuel cell market could fluctuate turning people away from this source of heating 6. They could spend too much time and money expanding their project portfolio for a project that contains many risks. The project would not have lower development costs therefore the risk upfront would be greater. With this being said I dont believe the risks outweigh the advantages. The project of home fuel energy cells fits into Crowns corporate project portfolio. There is great potential for a huge payout especially if the demand is as great as crown believes. Investing in home fuel cells would keep crown up to date on new technology while expanding their project portfolio.

Question 15

STAGE 1

STAGE 2

STAGE 3

The elements I would include have been provided in the tables above. I would recommend six steps in the introduction process and a series of stages in the companys flow map to evaluate the stages of each new project and the progress the project is making until completion. Gates should be installed whenever the project is about to enter the next stage to assess any risks to be encountered.

Chapter 8 Question 2 Hourly rate x hours needed x overhead charge x personal time = Total direct labour cost Sandy = 17x40x1.35x1.12 = 1028.16 Chuck = 31x100x1.80x1.12 = 6249.60 Bob = 9x80x1.35x0 = 972.00 Penny = 34x65x1.80x1.12 = 4455.36 Total direct labour cost = 1028.16+6249.60+972.00+4455.36 = 12705.12

Question 4 TN = 100,000 x 0.596 TN 59,600 x 35/hr $2,086,000 I would expect to pay for the fifth unit.

Chapter 8 Case Study Question 1 Estimating project cost is a challenging process that can either be an art or a science. Two important principles are used when estimating a projects cost. The first is the more clearly you define the projects various costs in the beginning the less chance there is for making estimating errors. Secondly, the more accurate you initial cost estimations, the greater the likelihood of preparing a budget that represents the reality of the project. Estimating project cost is difficult in harsh geographical locations because there are so many uncertainties. In the case of the Dulhasti power plant, the plant was located in a disputed area. This provoked nationalist groups using terriosm as their opposition. The need for increased security quickly became an issue therefore creating extra expenses that you could not have projected. The Dulhasti power plant was also located in a region devoid of infrastructure. All supplies needed had to be brought in by air

transportation costing an exorbitant amount of money. These costs would be difficult to estimate initially due to the numerous amount of supplies needed and how often supplies would need to be air lifted in.

Question 2 When entering a fixed price contract the buyer and seller are agreeing to the final cost of the project. The advantages of the Indian government using the fixed price bidding process are few in this case because the cost estimation of the project was grossly underbid. The Indian government went with the company that bid the least which in turn created a great amount of risk for the Indian government. The project was not estimated to take as long as it did and material costs were not taken into as much consideration as they should have been. The overall project was poorly planned and poorly estimated. This poor planning and estimation led the Indian Government to pay 25 times the original quoted price of the project and lasted for 20 years. The cost escalated constantly due to the inadequate project estimations