A P P E N D I X T W O

Computer Project
Exercises
In developing the exercises, trade-offs had to be made to enrich the learning experi-
ence. One of the major problems students initially encounter is data and detail over-
load. This reduces their ability to identify project and data problems and to compare
alternatives. Although the project found in the exercises is real, it has been reduced
and detail has been eliminated many times to concentrate on applying project
management principles and understanding linkages. In addition, other simplifying
assumptions have been made so that students and instructors can trace problems
and discuss outcomes. These assumptions detract from reality, but they keep the
focus on the objectives of the exercises and reduce student frustration with software
intricacies. Moving from these exercises to real projects is primarily one of increas-
ing detail.

The POM+ Project*

Big Kola Company has been concerned that specialized fruit drinks have been erod-
ing their cola market. The CEO mandates that “If you can’t beat them, join them.”
Grape juice was the first product that was successful after an advertising blitz claim-
ing the antitoxin benefits. Lately, competition is compressing grape juice margins and
profits. Months of additional market surveys and focus groups have resulted in three
potential high-margin drinks: cranberry, blueberry, and pomegranate. All these
choices represent antitoxins. The decision is to produce the pomegranate drink that
has many health claims. For example, the relative ability of these juices to eliminate
harmful free radicals (antitoxins) is 71 percent for pomegranate, 33 percent for blue-
berry, and 20 percent for cranberry (Technion Institute of Technology). The market
potential appears very attractive and should have a higher profit margin than the other
potential juice products. Another appeal for pomegranate juice is its familiarity in the
Middle East and Asia.
The Priority Matrix for the POM+ Project is:

Time Scope Cost

Constrain X
Enhance X
Accept X

* Cliff Gray, Erik Larson, & Pinyarat Sirisomboonsuk, doctoral candidate at Rawls College of Business, Texas Tech
University.

616
 Appendix 2 Computer Project Exercises 617

Connor Gage, the project manager, has formed his project team and the members
have come up with the following work breakdown structure.

1.0 POM+Project
1.1 R&D product development
1.1.1 Need survey
1.1.2 Set product specs
1.1.3 Shelf life report
1.1.4 Nutrition report
1.2 Secure fruit suppliers
1.3 Initial Production
1.3.1 Equipment rehab
1.3.2 Production trials
1.3.3 Quality trials
1.3.4 Quality metrics
1.3.5 Quality training
1.4 Distribution
1.4.1 Market testing
1.4.2 Package design
1.4.3 Select distributors
1.5 Legal
1.5.1 Complete FDA certification
1.5.2 Register trademark
1.6 Prepare product launch

Part 1
1. Develop the WBS outline using the software available (save your file).
2. Use this file and the information provided below to create a project
schedule.
3. The following holidays are observed: January 1, Martin Luther King Day (third
Monday in January), Memorial Day (last Monday in May), July 4th, Labor Day
(first Monday in September), Thanksgiving Day (4th Thursday in November),
December 25 and 26.
4. If a holiday falls on a Saturday then Friday will be given as an extra day off, and if
it falls on a Sunday then Monday will be given off.
5. The project team works eight-hour days, Monday through Friday.
6. The project will begin on January 3, 2012.
7. Based on this schedule, submit a memo that answers the following questions:
a. When is the project estimated to be completed? How many working days will it
take?
b. What is the critical path?
c. Which activity has the most total slack?
d. How sensitive is this network?
e. Identify two sensible milestones and explain your choice.
618 Appendix 2 Computer Project Exercises

Include the following (one page) printouts:

∙ A Gantt chart.
∙ A network diagram highlighting the critical path.
∙ A schedule table reporting ES, LS, EF, LF, and slack for each activity.
Hints: Change the timescale to months and weeks. The estimated duration of the
project is 135 days.

Remember: Save your files for future exercises!

The following information has been derived from the WBS. Note that the activity
number is what appears in the software with the complete WBS entered.

#* Activity Duration Predecessor(s)

3 Need survey 20 None
4 Set product specs 15 3
5 Shelf life report 10 4
6 Nutrition report 5 4
7 Select fruit suppliers 20 5, 6
9 Equipment rehab 30 4
10 Production trials 15 7, 9
11 Quality trials 20 10
12 Quality metrics 5 11
13 Quality training 15 12
15 Market testing 30 5, 6
16 Package design 15 15
17 Select distributors 25 5, 6
19 Complete FDA certification 15 7, 15
20 Register trademark 5 7, 15
21 Prepare product launch 15 13, 16, 17, 19FS + 25
days, 20FS + 15 days

FS = Finish to Start lag

Part 2
Remember the old saying, “A project plan is not a schedule until resources are com-
mitted.” This exercise illustrates this sometime subtle, but important point.
Using your files from Part 1, input resources and their costs if you have not already
done so. All information is found in Tables A2.1 and A2.2.
Prepare a memo that addresses the following questions:
1. Which if any of the resources are overallocated?
2. Assume that the project is time constrained and try to resolve any overallocation
problems by leveling within slack. What happens?
3. What is the impact of leveling within slack on the sensitivity of the network?
Include a Gantt chart with the schedule table after leveling within slack.
4. Assume the project is resource constrained and resolve any overallocation problems
by leveling outside of slack. What happens?
 Appendix 2 Computer Project Exercises 619

TABLE A2.1 Activity Resources

Resource
Assignments Need survey MRKT (500%)
Set product specs R&D (400%), MRKT (200%)
Shelf life report R&D (300%)
Nutrition report R&D (300%)
Select fruit suppliers PURCH (100%)
Equipment rehab ENG (1,000%), PROD (2,000%)
Production trials PROD (1,500%), PURCH (100%), ENG (1,000%)
Quality trials QUAL (300%), PROD (500%)
Quality metrics QUAL (300%), PROD (100%)
Quality training QUAL (300%), PROD (1,500%)
Market testing MRKT (500%)
Package design DESIGN (300%), MRKT (100%)
Select distributors MRKT (500%)
Complete FDA certification LEGAL (300%)
Register trademark LEGAL (300%)
Prepare product launch QUAL (300%), PURCH (200%), PROD (1,500%),
MRKT (500%), ENG (500%), R&D (100%)

TABLE A2.2 Resource Abbrev Available Hourly rate

Resources
Availability and Pay Marketing staff MRKT 5 $ 80/hr
Rates R&D R&D 5 $ 80/hr
Engineering ENG 10 $100/hr
Purchasing PURCH 2 $ 60/hr
Quality engineers QUAL 3 $ 80/hr
Designers DESIGN 3 $ 60/hr
Legal staff LEGAL 3 $120/hr
Production PROD 20 $ 60/hr

Include a Gantt chart with the schedule table after leveling outside of slack.
Note: No splitting of activities is allowed.
Note: No partial assignments (e.g., 50 percent). All resources must be assigned
100 percent.

Part 3
Top management has accepted the July 19th completion schedule created at the end of
Part 2. Prepare a brief memo that addresses the following questions:
1. How much will the project cost? What is the most expensive activity?
2. What does the cash flow statement tell you about how costs are distributed over the
life span of the project?
Include a monthly cash flow for the project.
Once you are confident that you have the final schedule, save the file as a baseline.
Hint: Save a backup file just in case without baseline!
620 Appendix 2 Computer Project Exercises

TABLE A2.3 Activity Actual Start Actual Finish Actual Duration Remaining Duration
Status Report
March 31, 2012 Need survey 1/3/12 2/2/12 22 0
Set product specs 2/3/12 2/28/12 18 0
Shelf life report 2/29/12 3/13/12 10 0
Nutrition report 3/14/12 3/19/12 4 0
Equipment rehab 2/29/12 23 12

Part 4 A
Assume that today is March 31, 2012, and Table A2.3 contains the tracking informa-
tion for the project up till now. Enter this information into your saved baseline file and
prepare a status report for the first three months of the POM+ project.
Your status report should also address the following questions:
1. How is the project progressing in terms of cost and schedule?
2. What activities have gone well? What activities have not gone well?
3. What do the PCIB and PCIC indicate in terms of how much of the project has been
accomplished to date?
4. What is the forecasted cost at completion (EACf)? What is the predicted VACf?
5. Report and interpret the TCPI for the project at this point in time.
6. What is the estimated date of completion?
7. How well is the project doing in terms of its priorities?
Try to present the above information in a form worthy of consideration by top
management.
Include an Earned Value table and a Tracking Gantt Chart.
Note: Insert March 31, 2012, as the status date in the Project Information box.
Part 4 B
Assume that today is May 31, 2012, and Table A2.4 contains the tracking information
for the project up till now. Enter this information into your saved baseline file and pre-
pare a status report for the POM+ project.
Your status report should address the following questions:
1. How is the project progressing in terms of cost and schedule?
2. What activities have gone well? What activities have not gone well?
3. What do the PCIB and PCIC indicate in terms of how much of the project has been
accomplished to date?
4. What is the forecasted cost at completion (EACf)? What is the predicted VACf?
5. Report and interpret the TCPI for the project at this point in time.
6. What is the estimated date of completion?
7. How well is the project doing in terms of its priorities?
Try to present the above information in a form worthy of consideration by top
management.
Include an Earned Value table and a Tracking Gantt Chart.
Note: Insert May 31, 2012, as the status date in the Project Information box.