Case Study # 2

Moore Housing Contractors is negotiating a deal with Countryside Realtors to build six houses in a new development. Countryside wants Moore Contractors to start in late winter or early spring when the weather begins to moderate and build through the summer into the fall. The summer months are a busy time for the realty company, and it believes it can sell the houses almost as soon as they are ready” sometimes before. The houses all have similar floor plans and are of approximately equal size; only the exteriors are noticeably different. The completion time is so critical for Countryside Realtors that it is insisting a project management network accompany the contractor’s bid for the job with an estimate of the completion time for a house. The realtor also needs to be able to plan its offerings and marketing for the summer. The realtor wants each house to be completed within 45 days after it is started. If a house is not completed within this time frame, the realtor wants to be able to charge the contractor a penalty. Mary and Sandy Moore, the president and vice president of Moore Housing Contractors, are concerned about the prospect of a penalty. They want to be confident they can meet the deadline for a house before entering into any agreement with a penalty involved. (If there is a reasonable likelihood they cannot finish a house within 45 days, they want to increase their bid to cover potential penalty charges.) The Moores have experienced home builders, so it was not difficult for them to list the activities involved in building a house or to estimate activity times. However, they made their estimates conservatively and tended to increase their pessimistic estimates to compensate for the possibility of bad weather and variations in their workforce. Following is a list of the activities for building a house and the activity time estimates: Time (days) Activity Description Predecessor a m b a Excavation, pour footers “” 3 4 6 b Lay foundation a 2 3 5 c Frame and roof b 2 4 5 d Lay drain tiles b 1 2 4 e Sewer (floor) drains b 1 2 3 f Install insulation c 2 4 5 g Pour basement floor e 2 3 5 h Rough plumbing, pipes e 2 4 7 i Install windows f 1 3 4 j Rough electrical wiring f 1 2 4 k Install furnace, air conditioner c, g 3 5 8 l Exterior brickwork i 5 6 10 m Install plasterboard, mud, plaster j, h, k 6 8 12 n Roof shingles, flashing l 2 3 6 o Attach gutter, downspouts n 1 2 5 p Grading d, o 2 3 7 q Lay subflooring m 3 4 6 r Lay driveway, walks, landscape p 4 6 10 s Finish carpentry q 3 5 12 t Kitchen cabinetry, sink, and appliances q 2 4 8 u Bathroom cabinetry, fixtures q 2 3 6 v Painting (interior and exterior) t, u 4 6 10 w Finish wood floors, lay carpet v, s 2 5 8 x Final electrical, light fixtures v 1 3 4 1. Develop a CPM/PERT network for Moore House Contractors and determine the probability that the contractors can complete a house within 45 days. Does it appear that the Moores might need to increase their bid to compensate for potential penalties? 2. Indicate which project activities Moore Contractors should be particularly diligent to keep on schedule by making sure workers and materials are always available. Also, indicate which activities the company might shift workers from as the need arises. Provide cost analysis chart of penalties, vs completing on time, etc. Provide cost analysis of adding more workers to finish on time vs paying penalties.

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