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Question & Answer: Office Products plc have developed a proposal for introducing a new computerised office system that will…

Office Products plc have developed a proposal for introducing a new computerised office system that will improve word processing and inter office communications for a particular company. Contained in the proposal is a list of activities that must be accomplished in order to complete the new office system project. Information about the activities is shown in the following table: Show the network for the project Calculate the earliest start and latest finish for each activity. What are the critical activities and what is the expected project completion time? Calculate the overall budgeted cost for the project. If the company wished to complete the project within 26 weeks, what crashing decisions would you recommend for meeting the completion date at the least possible cost and what is the revised project cost to meet this 26 weeks schedule?
Office Products plc have developed a proposal for

Expert Answer

Network of the project along with their normal time mentioned within “()” as follows:

                                                                                     A (10)
                                          B (8)                                          D (7)
                                          C (10)                                         E (10)
                                                                                      F (3)

Early start / Late start/ Early finish / Late Finish for each activity as follows:

Activity Early Start Early Finish Late Start Late finish
A 0 10 0 10
B 10 18 10 18
C 18 28 18 28
D 10 17 10 17
E 17 27 17 27
F 27 30 28 31

Determination of critical activity:

Duration of activity A – D – E: 27 weeks

Duration of activity A – B – C: 28 weeks

Since F can start after completion of activity C as well as activity E and since C completes later than E,

The Critical path will be: A – B – C – F with duration of critical path = 28 + 3 = 31 weeks

Therefore, expected project completion time = 31 weeks

Overall budgeted cost for the project:

                         Activity Normal Cost (GBP ‘000)
                          A     30
                          B 120
                          C 100
                          D     40
                           E   50
                           F     60
Total Cost (i.e. sum of Normal costs of all activities): 400

Therefore, total budgeted cost for the project = GBP 400,000

Crashing decision to complete the project within 26 weeks at least cost :

Completion of project within 26 weeks means reducing project duration by 31 – 26 = 5 weeks which will be done in following manner:

Activity Reduction of duration by Crashing cost ( GBP ‘000)
F 3 0
A 2 70
Total Crashing Cost ( Sum of all Crashing costs ) 70

Revised Project cost

= Total budgeted cost of the project + Total crashing cost

= GBP 400,000 + GBP 70,000

= GBP 470,000

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