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SCHOOL OF ENGINEERING
Civil & Environmental Engineering This paper MUST be handed
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SECOND SEMESTER EXAMINATIONS 2001

CAMPUS: Townsville

STUDENT NAME:
(block letters)

STUDENT NUMBER:

SUBJECT CODE: CS3007:03

SUBJECT NAME: Systems Engineering and Management 1

EXAMINER: Professor L. C. WADHWA PHONE NO: 4781 4290

DURATION OF EXAMINATION (hours): Three (3) Hours

PERUSAL TIME (minutes): Ten (10) minutes

TOTAL NUMBER OF QUESTIONS: Six (6)

INSTRUCTIONS TO STUDENTS:
Answer all questions.
Marks for each question and its parts are shown in parentheses.
Maximum marks = 60

MATERIALS TO BE SUPPLIED BY EXAMINATION SECTION:

Examination Booklets required: Yes/No

MATERIALS STUDENTS MAY USE:

One A4 sheet of handwritten or typed notes. Both sides of the sheet may be used.

Access to an English Dictionary: Yes ✔ or No

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Question 1: True/False or multiple choice (10 marks)

Circle the appropriate answer:

(i) In the bottom-up budgeting strategy, available past data concerning similar activities and the
judgements and experiences of management are used to estimate the project budget.

True False
(ii) Which one of the following is typically associated with bottom-up budgeting?
A: competition for funds is often intense
B: resource requirements are frequently overstated
C: aggregate budgets are quite accurate
D: tasks need not be identified in detail
E: commitment by the functional managers is low
(iii) Each time a production output doubles, the worker hours per unit decrease to a fixed percentage of their
previous value. That percentage is called the mass production factor.
True False
(iv) The statistical measure that can be used to test estimation errors for potential bias is called MAD.
True False
(v) A(n) ___ is a clearly identifiable point in a project or set of activities that commonly denotes a reporting
requirement of completion of a large or important set of activities.
A: event
B: milestone
C: critical event
D: gate
E: checkpoint
(vi) The critical path in a network is the path that
A: is the longest path
B: is the shortest path
C: has the largest number of nodes
D: has the largest number of activities
E: has the greatest technical risk
(vii) The expected time that an activity would take is calculated by the formula TE=(a+4m+b)/6 where a equals
_____, m equals_____, and b equals _____.
A: pessimistic time estimate, most likely time estimate, actual time
B: contingency time estimate, actual time, most likely time estimate
C: optimistic time estimate, most likely time estimate, pessimistic time estimate
D: actual time, pessimistic time estimate, optimistic time estimate
E: most likely time estimate, contingency time estimate, optimistic time estimate
(viii)The critical path contains activities that
A: have the highest costs
B: can't be delayed without slipping the project end date
C: have the highest risk
D: are the most important to the project's success
E: use more resources than other activities
(ix) Activity __________ is defined as the cost per day of crashing a project activity.
A: slope
B: expediting cost
C: premium
D: acceleration cost
E: rush premium
(x) Which of the following should be used as a guideline in crashing a project?
A: crash only activities on the critical path, starting with the least expensive
B: crash any activity, starting with the least expensive
C: crash any activity, starting with the longest
D: crash only activities on the critical path, starting with the longest

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 E: crash any activity, starting with the earliest scheduled
(xi) Which of the following is not a potential outcome after using resource levelling?
A: fewer people assigned to project
B: reduced peak loads
C: increased labour costs
D: reduced overtime expenses
E: delayed expenses
F: all of these are potential outcomes
(xii) Which of the following is the primary concern in establishing a monitoring system?
A: keeping senior management informed
B: auditing performance
C: providing information on a timely basis
D: learning from past mistakes
E: cost
(xiii)Which of the following are good characteristics of monitoring project progress?
A: easily gathered, objective measures
B: objective measures, measures intensity of activity
C: objective and subjective measures, measures output of activity
D: measures intensity of activity, easily gathered
E: measures output of activity, easily gathered
(xiv)The project manager can tolerate almost any kind of behaviour on data reporting except mistakes.
True False
(xv) Your text identifies distinct types of reports that should be used by the project manager. From the list below
identify the report not recommended.
A: weekly
B: routine
C: exception
D: special analysis
E: all of these are recommended
(xvi)The authors identified three common reporting problems. From the list below select the one not identified.
A: not enough detail
B: too much detail
C: poor interface between project and parent firm's information systems
D: poor correspondence between planning and monitoring systems
E: all were identified
(xvii) The fundamental objective(s) of control are
A: advance warning of schedule slippage
B: the regulation of results through the alteration of activities
C: the stewardship of organizational assets
D: both B and C above
E: both A and C above
F: A, B, and C above
(xviii) All of the following are characteristics of a good control system except
A: sensible
B: cost effective
C: simple to operate
D: flexible
E: ethical
F: all of these are characteristics of a good control system
(xix)Important tools available to the PM for controlling projects include all of the following except
A: benchmarking
B: monthly reports
C: variance analysis
D: trend projection
E: postperformance reviews

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 F: all of these are important tools
(xx) Which of the following critical ratios should be investigated first?
A: 1.4
B: 1.2
C: 1.0
D: 0.8

Question 2: Project organisation (8 marks)

(a) State some guidelines for choosing an organisational form for a project. (2)
(b) Define four basic types of project organisation. (3)
(c) Identify key advantages and disadvantages of each type. (3)

Question 3: Resource allocation (10 marks)

(a) Identify various resources that may need to be considered when scheduling projects. (1)
(b) What is resource loading? How does it differ from resource levelling? (2)
(c) What is an activity slope and what does it indicate? (1)
(d) Name four priority rules. How would you determine the best priority rule? (2)
(e) Name three efficiency criteria that might be considered when choosing a multi-project scheduling
system. (1)
(f) What are two methods for addressing the constrained resources allocation problem? (1)
(g) When might a firm choose to crash a project? What factors must be considered in making this
decision? (2)

Question 4: Monitoring and control (8 marks)

(a) Five activities of a project to develop a new type of telecommunications satellite were monitored at week 6
as shown in Table 1.

Table 1: Telecommunication satellite development project

Activity Immediate Duration, Budget, $ Actual cost, $ % complete
predecessors weeks
A - 2 3,000 4,000 100
B - 3 2,000 1,800 100
C A 2 2,500 3,000 100
D A 5 6,000 4,000 20
E B,C 4 4,000 2,000 20

(i) Calculate the cost and schedule variances. (2)

(ii) Also determine the cost performance index, schedule performance index, cost-schedule index, estimated
cost to complete and total work unit cost. (3)

(b) Calculate the critical ratios for the following activities (Table 2) in the World Trade building project. Which
activities are on target and which need to be investigated? (3)

Table 2: World Trade building project

Activity Actual progress Scheduled Budget, $ Actual cost, $
progress
A 4 days 4 days 6,000 4,000
B 3 days 2 days 5,000 5,000
C 2 days 3 days 3,000 2,000
D 1 day 1 day 2,000 3,000

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 E 2 days 4 days 2,500 2,500
Question 5: Project Scheduling (18 marks)

The architectural planning section of a large engineering firm has determined the following lists of activities (Table 3)
necessary to receive approval from the relevant authorities.

Table 3: List of Activities

Activity Description Immediate
Predecessorsece
A Survey building site -
B Prepare initial design -
C Receive zoning approval A,B
D Select design/engineering firm C
E Determine needed cash flow C
F Review final design D
G Obtain corporate financing E, F
H Receive contractor bids D
I Select contractor H,G

As soon as the above activities are completed, the actual project can start.

The project manager has developed the cost estimates and three time estimates - optimistic (a), pessimistic (b) and
most likely (m) - for completion of each activity which are given in Table 4 below:

Table 4: Activity Times (days) and Costs (dollars)

Activity a m b Normal Cost Crash Cost
(expected time) (optimistic time)
A 3 6 9 600 1,500
B 2 4 6 500 800
C 1 2 3 300 600
D 6 7 14 800 1,000
E 2 4 6 400 800
F 6 8 16 1,000 2,000
G 1 2 3 200 300
H 3 6 9 600 1,350
I 6 10 14 1,100 1,500

(i) Draw the activity network diagram. (3)

(ii)Calculate the expected time and the variance for each activity. (2)
(iii)
Determine the critical path and the expected time when the actual project will be ready to start. (5)
(iv)What is the probability that the actual project will be ready to start before 35 days? Not ready to start until
40 days? (3)
(v) Find the minimum cost of completing all of above activities within 35 days. (5)

QUESTION 6 (6 marks)

(a) What are the key management topics in project management? Why is human resource management
important?
(2)
(b) As a project manager, how would you ensure commitment from your team on a project in a remote area in
Northern Territory? (4)

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SOLUTION:

Question 2

(a)
(i) Use the FUNCTIONAL form if the emphasis is on technical performance.
(ii) Cost and schedule are not critical.
(iii) This is also appropriate if the project lies within one functional area and
coordination is not needed.
(iv) This form is also best if large capital investments are required.

(i) Use the PROJECT form if the firm is organized on this basis
(ii) Also appropriate if the firm already has a significant number of projects.

(i) Choose the MATRIX form if the project requires part-time technical skills
from a number of organization’s functional areas.

(b)

FUNCTIONAL: Projects assigned to functional area that is most appropriate.

(Fig. 4.1)

PURE PROJECT: Project is self-contained with its own technical and

administrative staff. (Fig. 4.2)

MATRIX: Blend of functional and project. (Fig. 4.3)

MIXED: Projects and functions are organizationally coequal. (Fig. 4.4)

(c)

Form Advantage Disadvantage

Functional Maximum flexibility in the use of Project is always a second
manpower priority to functional crisis.

Project Maximum flexibility and Duplicates firm’s resources

responsiveness
Matrix Good resource balance and Complexity of administration.
utilization
Mixed Flexible for meeting the firm’s Hard to manage. Duplicate

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 needs resources.

Question 3

(a) skilled and unskilled labour; special skills or services; machine or facility hours;
materials, cash; computing time etc.

(b) Resource loading shows the amounts of various resources required by a specific
schedule during specific time periods. Resource leveling aims to minimize the
period-by-period variations in resource usage (indicated by resource loading
projections) by shifting tasks within their slack allowances, thereby smoothing the
resource loading.

(c) The activity slope identifies the trade-off between the project schedule and the
level of resources in dollars per period of time expedited.

(d) Priority rules:

Shortest task first most resources first minimum slack first
Most critical followers first most followers first longest task first
least resources first maximum slack first fewest followers first

Given the computer facilities available today, it is possible for a PM to try a variety
of priority rules and select one that gives good results on the measure of
importance for each situation. Minimum slack first is generally best.

(e) Schedule slippage, resource utilization, and amount of in-process inventory

(f) Heuristics (rule of thumb) and Optimisation models (LP, Branch and bound,
Integer Programming, etc.)

(g) When the activities become delayed and threaten to delay the project
completion; the client changes the project requirements; better allocation of
resources (other than time) can be obtained; competition requires earlier
completion; new projects require this project’s resources, etc.

The factors of importance are the costs and benefits of crashing activities for
earlier completion compared to the costs and benefits of delay (overheads,
penalties, etc.)

Question 4
(a)
D
A, 5
2
C
2
B
3 E
4

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 Budgeted / Actual
Activity Week 1 2 3 4 5 6 7 8
A 1500/200 1500/200
0 0
B 667/600 667/600 667/600
C 1250/150 1250/150
0 0
D 1200/100 1200/100 1200/1000 1200/1000 1200/?
0 0
E 1000/1000 1000/1000 1000/? 1000/?
Total 2167/260 2167/260 3117/310 2450/250 2200/2000 2200/2000 2200/? 1000/?
0 0 0 0
Cumulati 2167/260 4333/520 7450/830 9900/108 12100/128 14300/148
0 0 0 00 00 00
ve

At week 6, the budgeted cost was 14,300

The actual cost at week 6 was 14,800.
Earned value = 1.0*(3000 + 2000 + 2500) + 0.2*6000 + 0.2*4000 = 9,500
Cost/spending variance = Earned value – Actual cost = 9,500 – 14,800 = -5,300
Schedule variance = Earned value – Budgeted cost = 9,500 – 14,300 = - 4,800
Time variance = Time scheduled for the work that has been performed – Actual
time used to perform it =

Cost Performance Index = CPI = Earned value/Actual cost = 9500/14800 = 0.6419

SPI = Schedule Performance Index = Earned value/Budgeted cost = 9500/14300 =
0.6648
CSI = Cost-Schedule Index = CPI*SPI = 0.4267
ECT = Estimated cost to complete = (Budget cost for the project – Earned
value)/CPI = (17500 – 9500)/0.6419 = 12,460
Total work unit cost = ECT + Actual cost to date = 12460 + 14800 = 27,260

(b) Critical ratio = (Actual progress/Scheduled progress)/(Budgeted cost/Actual

cost)

Activity Actual Comme Budgeted Comme Critical Commen

progress nt cost /Actual nt Ratio t
/Scheduled cost
progress
A 1 On 1.5 Cost 1.5 Investiga
schedule saving te at
leisure
B 1.5 Ahead of 1 On 1.5 Investiga
schedule budget te at
leisure
C 0.667 Behind 1.5 - 1.0 Alright if
schedule time not

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 critical
D 1 On 0.667 Cost 0.667 Investiga
schedule over-run te
E 0.5 Behind 1 - 0.5 investiga
schedule te

Question 5

SOLUTION
(a)

A
D H
C

F
B
I
E
G

(b)
Activity a m b Predecessor Normal cost Crash cost Expected tome Var. Crash days $/crash day
A 3 6 9 - 600 1,500 6 1 3 300
B 2 4 6 - 500 800 4 0.444444 2 150
C 1 2 3 A, B 300 600 2 0.111111 1 300
D 6 7 14 C 800 1,000 8 1.777778 2 100
E 2 4 6 C 400 800 4 0.444444 2 200
F 6 8 16 D 1,000 2,000 9 2.777778 3 333
G 1 2 3 E, F 200 300 2 0.111111 1 100
H 3 6 9 D 600 1,350 6 1 3 250
I 6 10 14 H, G 1,100 1,500 10 1.777778 4 100

(c)
Activity ES EC LS LC Critical Slack
A 0 6 0 6 √ 0
B 0 4 2 6 2
X 6 6 6 6 √
C 6 8 6 8 √
D 8 16 8 16 √
E 8 12 21 25 13
F 16 25 16 25 √
G 25 27 25 27 √
H 16 22 21 27 5
I 27 37 27 37 √

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(d)
Critical path is A-C-D-F-G-I
Expected completion time = 37 days

(e)
Variance of critical path = 7.55564; SD = 2.748753

Prob. that the project will be completed in 35 days or less is given by z = (35-37)/2.748753 = -0.7276 which
corresponds to a probability of 23.3%.

Prob. that the project will not be completed in 40 days is given by z = (40-37)/2.748753 = 1.0914 which corresponds
to a probability of (1-0.8621) = 13.8 %.

(f)
Days to Crash costs Total costs
complete
37 0 5500
36* 100 5600
35** 200 5700

Note: Check the critical path after each day of crashing and crash the activity on the critical path which costs the
least for crashing.

*Crash D by 1 day, crash cost = $100

**Crash D by another day, total crash cost = 200

The minimum cost solution is to complete the project in 35 days in $5,700.

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