BU375 Assignment 2 - Spring 2024

Due: Friday July 26th at 11:59pm

Instructions: This assignment is an individual assignment. Each student

must submit their own work. It is acceptable to discuss approaches with
other students, but you should not be looking at another student’s work
while preparing your own.

Submit your assignment on the MyLearningSpace course site at the dropbox

ASSIGNMENT2. Your report should include the requested graphs, calculations
and short written responses to the questions below. It should fit on about 3-4
pages.

Cutting Edge Systems (CES) designs and distributes a variety of

management software products online and through various retail outlets
located across Canada. CES is considering the development of an Internet-
based forecasting system that is specifically designed for new start-up and
small businesses and has entrusted you to assume the role of project
manager.

After consulting with technical staff and reviewing archival data from similar
projects completed in the past, Table 1 was constructed to summarize the
time estimates and precedence relationships of the tasks.

Table 1: Project Time Estimates (in Weeks)

Task Optimistic Likely Pessimistic Predecessor
A 2 3 4 None
B 2 6 10 A
C 4 6 8 A
D 6 7 8 B
E 2 4 12 B, C
F 4 5 6 D
G 1 3 5 C
H 1 3 5 E
I 1 3 11 G, H
J 1 2 3 G
K 4 4 4 J
L 1 4 7 F, I, K

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CES plans to use existing software components during the development
phase as a means of keeping project costs and overall timeframe within
bounds. Nevertheless, multiple task time estimates are formulated to better
account for the inherent uncertainties associated with software
development.
CES’ management team has established a completion target of 24 weeks for
this project. A preliminary assessment indicates that some of the project
tasks would need to be shortened to meet this desired project deadline.
Accordingly, a set of task-crashing estimates (shown in Table 2) has been
prepared.
You know that this is an important project to manage and that you must do a
thorough analysis to estimate the project’s completion time and budget
before presenting your findings/recommendations in a business report.

Table 2: Project Crash Data

Task Normal Cost Crash Cost Allowable Crash
($000) ($000) Time (Weeks)
A 10 10 0
B 20 25 1
C 15 25 1
D 45 65 1
E 10 25 1
F 15 18 3
G 20 40 2
H 10 15 1
I 5 10 1
J 5 20 1
K 40 50 1
L 10 45 1

Note: If multiple critical paths exist, select the path with the highest variance
(standard deviation) to use in probability calculations so that uncertainty is
better accounted for.

ASSIGNMENT QUESTION #1

For the “Normal” scenario,

a) (7 marks) What is the critical path(s) and estimated completion time
for this project?

Calculating Expected time for each activity:

Mean/Expected Time: tE = (a + 4m + b)/6 = [Optimistic + 4*(Likely) + Pessimistic]/6

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 Task Optimistic (a) Likely (m) Pessimistic (b) Mean/Expected Time (tE)
A 2 3 4 3
B 2 6 10 6
C 4 6 8 6
D 6 7 8 7
E 2 4 12 5
F 4 5 6 5
G 1 3 5 3
H 1 3 5 3
I 1 3 11 4
J 1 2 3 2
K 4 4 4 4
L 1 4 7 4

Listing all possible paths with their expected path lengths or completion time:
Path 1: A → B → D → F → L
Expected length = 3 + 6 + 7 + 5 + 4
= 25
Path 2: A → B → E → H → I → L
Expected length = 3 + 6 + 5 + 3 + 4
+ 4 = 25
Path 3: A → C → E → H → I → L
Expected length = 3 + 6 + 5 + 3 + 4
+ 4 = 25
Path 4: A → C → G → I → L
Expected length = 3 + 6 + 3 + 4 + 4
= 20
Path 5: A → C → G → J → K → L
Expected length = 3 + 6 + 3 + 2 + 4
+ 4 = 22

There are three critical paths with same completion time:

Path 1: A → B → D → F → L
Path 2: A → B → E → H → I → L
Path 3: A → C → E → H → I → L
The estimated completion time for all these paths is 25 weeks, so they are all critical paths.

b) (3 marks) What is the estimated project cost?

Estimated Project Cost for all three paths in the normal scenario is:
Path 1: A → B → D → F → L

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10,000 + 20,000 + 45,000 + 15,000 + 10,000 = $100,000
Path 2: A → B → E → H → I → L
10,000 + 20,000 + 10,000 + 10,000 + 5,000 + 10,000 = $65,000
Path 3: A → C → E → H → I → L
10,000 + 15,000 + 10,000 + 10,000 + 5,000 + 10,000 = $60,000

c) (5 marks) What is the probability that the project can be completed in

24 weeks with this project plan?
From above part a) tCP = 25. Now calculating the variance for each activity on the path σ 2 = (b -
a/6)2:

Task Variance (σ 2)
A 0.11
B 1.78
C 0.44
D 0.11
E 2.78
F 0.11
G 0.44
H 0.44
I 2.78
J 0.11
K 0.00
L 1.00

The Standard Deviation for the critical path ABDFL is: σ CP= √ ∑ σ 2 = √ 3.11 = 1.76
T −t CP 24−25
Now, calculating z-score: z = = = - 0.57  This is a probability of 0.2843 =
σ CP 1.76
28.43%
Therefore, the probability that the project can be completed in 24 weeks with this project plan is
28.43%

The Standard Deviation for the critical path ABEHIL is: σ CP= √ ∑ σ 2 = √ 8.89 = 2.98
T −t CP 24−25
Now, calculating z-score: z = = = - 0.34  This is a probability of 0.3669 =
σ CP 2.98
36.69%
Therefore, the probability that the project can be completed in 24 weeks with this project plan is
36.69%

The Standard Deviation for the critical path ACEHIL is: σ CP= √ ∑ σ 2 = √ 7.56 = 2.75

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 T −t CP 24−25
Now, calculating z-score: z = = = - 0.36  This is a probability of 0.3594 =
σ CP 2.75
35.94%
Therefore, the probability that the project can be completed in 24 weeks with this project plan is
35.94%

ASSIGNMENT QUESTION #2

Suppose that the cost of being late to the market is estimated to be $30,000
per week if the project completion time exceeds 24 weeks. Determine the
most “Cost-Effective” project completion time.
a) (9 marks) Which task(s) would you recommend crashing (and how) to
achieve this cheapest completion time and why?

Crash Cost per Week = (Crash Cost – Normal cost)/Total Allowable Crash Time

Task Normal Cost Crash Cost Allowable Crash Crash Cost

($000s) ($000s) Time (Weeks) (($000s) per week)
A 10 10 0 0 (cannot be crashed)
B 20 25 1 5
C 15 25 1 10
D 45 65 1 20
E 10 25 1 15
F 15 18 3 1
G 20 40 2 10
H 10 15 1 5
I 5 10 1 5
J 5 20 1 15
K 40 50 1 10
L 10 45 1 35

Precedence Network:

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Listing all possible paths in the network and their lengths:
Path 1: A → B → D → F → L
Expected length = 25
Path 2: A → B → E → H → I → L
Expected length = 25
Path 3: A → C → E → H → I → L
Expected length = 25
Path 4: A → C → G → I → L
Expected length = 20
Path 5: A → C → G → J → K → L
Expected length = 22

Critical Paths:
Path 1: A → B → D → F → L
Path 2: A → B → E → H → I → L
Path 3: A → C → E → H → I → L

The most cost-effective option is to crash task F by 1 week at a cost of $1,000/week. This will
reduce the length of critical path 1 to 24 weeks.

After crashing F, the new critical paths are:

Path 1: A → B → D → F → L (24 weeks)
Path 2: A → B → E → H → I → L (25 weeks)
Path 3: A → C → E → H → I → L (25 weeks)
Cost to crash (so far) = 1*1000 = $1000

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To further reduce paths 2 and 3, the most cost-effective option is to crash either H or I by 1 week
at a cost of $5,000.

After crashing F by 1 week and either H or I by 1 week, the new critical paths will be:
Path 1: A → B → D → F → L (24 weeks)
Path 2: A → B → E → H → I → L (24 weeks)
Path 3: A → C → E → H → I → L (24 weeks)
Cost to crash (so far) = (1*1000) + (1*5000) + (1*5000) = $11,000

Therefore, I would recommend crashing task F from path 1, and either H or I from Path 2 & 3.
All for 1 week to achieve cheapest completion time.

b) (8 marks) What is the total cost of crashing the project to complete the
project in 24 weeks and is it worth it and why?

As analyzed in part a) above, the total cost of crashing the project to complete the project in 24
weeks would be:
Corrected total crashing cost: $1,000 (F) + $5,000 (H or I) + $5,000 (H or I) = $11,000

The cost effectiveness:

Cost of being late = $30,000 per week
Cost of crashing: $11,000

Considering the cost of being late is $30,000 per week, meaning if the project exceeds 24 weeks
by 1 week, the penalty is $30,000. By crashing, the total additional cost is $11,000, which is
significantly less than the penalty cost.

Therefore, it is worth crashing the project to save potential penalty costs and ensure timely
market entry.

c) (3 marks) What is the probability of completing the project in 24 weeks

with this project plan?

After crashing, the critical path is now 24 weeks long.

σ 2 = 0.11 + 1.78 + 0.11 + 0.11 + 1.00 = 3.11 (for path A  B  D  F  L)
σ CP= √3.11 = 1.76
T −t CP 24−24
Now, calculating z-score: z = = = 0 = probability of 0.50 i.e. 50%
σ CP 1.76
Since the expected completion time (24 weeks) is now equal to the target time (24 weeks), the z-
score is 0.

Therefore the probability of completing the project in 24 weeks is 50%.