Nelson Construction Company The Nelson Construction Company is a Nevada Construction company that undertakes building projects of a medium-to-large-scale

nature based on local and statewide needs. Although the company is capable of operating outside of its native state, it usually does not bid on out-of-state business. It maintains an office with a small staff and usually has several construction projects going on at the same time. Nelson has just received the contract for construction of a new international business building on the campus of University of Las Vegas at Henderson. Although the university and the State Building Commission are pleased to have completed negotiations for the new building, a significant task lies ahead for Mr. Daniel Nelson, the president of Nelson Construction Company. He must meet with the project manager and arrange for allocation of necessary resources for construction. He has asked the project manager to develop a schedule for constructing the building in order to ensure a timely completion of the construction project. The contract states that the project should be completed within two years from the first of next month (August 1) and that for each day the project extends over the deadline, a $10,000 per day penalty will accrue. Mr. Nelson believes that the project can meet the start date of August 1, but he wants to make every possible effort to make that deadline. Tables 1 and 2 contain the data developed by the project manager (activities, immediate predecessor, optimistic, most likely, pessimistic times, normal cost, possible crash times, and cost to crash). The project manager plans to analyze these data and report to Mr. Nelson concerning projections. Format: assume role, include management summary, problem statement, alternatives, analysis of alternatives, and recommendation. As part of the report, the following particulars will help in making a final decision on the scheduling activities. Network diagrams, cash flow charts, etc. should be included in the appendices. 1. 2. 3.
4. 5.

6. 7.

Prepare a Gantt chart for the activities and explain its use. Draw the network diagram based upon the initial information described in the case. Determine the time it will take to complete the project with the times given (i.e., establish a baseline time). Based upon the baseline projections, discuss the probabilities of completing the project in the projected time, two days early, two days late, etc. This will help you with your alternatives. Discuss the possibility of expediting the project and the ramifications. Prepare a cash flow chart (by month). If the cost of money is 10%, what would you recommend with respect to early-start versus late-start? Suggest other factors which might influence your decisions.

Days Activit y ID A B C D E F G H I J K L M N O P Q R S T U V W X Y Z AA BB CC DD EE FF GG HH II Sales tax, bond, insurance Layout and excavation Move in, general conditions Grade beams Foundation, concrete footings Lower-floor concrete Lower-floor columns Lower-floor concrete framing Middle-floor concrete Middle-floor columns Middle-floor concrete framing Upper-floor concrete Upper-floor columns Upper-floor concrete framing Upper-floor door frames Roof slab, beams, and sheet metal Elevator Lath and plaster Upper-floor masonry and interior doors Penthouse steel, concrete, and masonry Ceilings Paint Millwork Site work Tile floors and carpet Clean up, inspect, and move out Ceramic tile and marble Stairwells Hardware, architectural and miscellaneous metals Lower-floor door frames Lower-floor masonry and interior doors Exterior doors Glazing and store front Middle-floor door frames Middle-floor masonry and interior doors A,B,C A,B,C D,E F G H I J K L M N N N K O,P,Q,II O,P,Q,II O,P,Q,II U S,T S,T V,W X,Y,AA,CC,FF,G G R H BB H DD H H K EE,HH Description Immediate Predecessor Optimistic Time 42 32 6 16 18 18 28 56 20 38 60 24 38 62 24 32 36 38 30 34 70 52 60 48 38 6 20 60 24 24 62 38 64 20 60 Most Likely Time 54 44 14 20 24 22 42 72 28 48 72 28 46 76 28 44 44 44 40 44 82 84 80 56 42 6 26 70 28 28 72 42 70 28 70 Pessimistic Time 78 50 22 36 30 26 56 82 36 52 96 32 54 84 32 50 52 50 62 54 100 104 106 64 46 6 44 80 32 38 76 58 88 36 80

Table 2: Activities, Normal Cost, Crash Cost and Crash Time Activit y ID A B C D E F G H I J K L M N O P Q R S T U V W X Y Z AA BB CC DD EE FF GG HH II Taxes, bond, insurance Layout and excavation Move in, general conditions Grade beams Foundation, concrete footings Lower-floor concrete Lower-floor columns Lower-floor concrete framing Middle-floor concrete Middle-floor columns Middle-floor concrete framing Upper-floor concrete Upper-floor columns Upper-floor concrete framing Upper-floor door frames Roof slab, beams, and sheet metal Elevator Lath and plaster Upper-floor masonry and interior doors Penthouse steel, concrete, and masonry Ceilings Paint Millwork Site work Tile floors and carpet Clean up, inspect, and move out Ceramic tile and marble Stairwells Hardware, architectural and miscellaneous metals Lower-floor door frames Lower-floor masonry and interior doors Exterior doors Glazing and store front Middle-floor door frames Middle-floor masonry and interior doors

Description

Normal Cost 220000 110000 250000 140000 170000 350000 80000 140000 350000 80000 140000 350000 80000 140000 40000 160000 190000 240000 375000 100000 100000 100000 340000 50000 180000 40000 150000 120000 140000 20000 375000 80000 200000 20000 375000

Crash* Cost 220000 150000 250000 155000 190000 350000 110000 200000 350000 110000 200000 350000 110000 220000 60000 240000 250000 270000 400000 125000 140000 160000 340000 75000 200000 40000 177500 200000 180000 20000 400000 80000 230000 20000 400000

Crash** Time 0 4 0 2 3 0 3 6 0 3 6 0 3 10 4 4 4 2 2 2 2 6 0 2 2 0 2 4 4 0 2 0 2 0 2

**

maximum time by which an activity can be crashed. For example, if an activity has an expected time of 12 days, and there is a 2 in the crash time column, this means that the crash time you would enter in the WINQSB software would be 10.

crash cost includes the normal cost plus any additional cost needed to expedite that activity.

For example if activity has a normal cost of $110,000, and a crash cost of $150,000, the additional cost of expediting that activity by 4 days is $40,000 or $10,000 per day.