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Analyzing the .U. Singer Hospital Products Corp. case

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Analyzing the .U. Singer Hospital Products Corp. case Page. 1 from 16
Singer Hospital Products Corp. case Page. 1 from 16 Project Risk Management Analyzing the D.U. Singer

Project Risk Management

Analyzing the D.U. Singer Hospital Products Corp. case

P MBA 15 – Project Risk Management Date: 17.04.2011

Analysing Risk in the Dragonfly case

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Analysing Risk in the Dragonfly case Page. 2 from 10

This report will analyze the project plan for the long-term antiseptic product which is to be produced by the Singer’s Antiseptic Division.

Question 1: By introducing the missing information related to cost of materials and other direct charges as well as corporate purchasing department data, it became apparent that the overall project would change. The precedence relation between activities P and Q is a finish to finish relationship with 3 week delay, since as explained by the director of research, “the last 3 of the 10 weeks it will take to do that will have to wait for the installation and construction”. In more detail, although the completion date, the duration and critical activities remained the same, the total project cost was increased by 549.500€. Moreover, the corporate purchasing resources together with R&D group, Hospital Products Manufacturing, Packaged Product Manufacturing were found to be overloaded [Exhibit 1]. During project execution, we should be able to monitor the labor requirements for each resource category. With that in mind and by examining the network diagram [Figure 2] of the project we have identified activities I and Q as the most appropriate to introduce milestones that will help us to monitor / track the progress of the project. These milestones were selected based on the fact that they belong to the Critical Path and in more detail, firstly activity I follows after the completion of activities H, G which are mandatory and crucial requirements for the continuity of the project and secondly a milestone in the beginning of activity Q is essential since activities N,O,P are related with more significant project tasks (installation).

Question 2: In the pursue of the a leveled resources plan which will minimize resource conflicts, it was decided to perform initially automatic constrained leveling using all available slack while at the same time the projects duration would remain 65 weeks. As a result of the above, the available slack was reduced to zero and additionally all activities became critical [Figure 3] and the resources were allocated in a different order [Exhibit 2]. From the above analysis we conclude that this approach improves the overload problem of the project by keeping its duration constant. In order to achieve further minimization of the project duration it is necessary to perform manual constrained leveling by moving tasks in such an order that satisfies both the above mentioned requirements and avoidance of resource conflicts. Concerning the criticality of the activities, it must be said that as compared to the initial conditions, in this case all projects activities were found to be critical which reveals that the overloading makes the project more vulnerable.

Question 3: While project is under execution it is necessary to monitor together with other parameters, its progress in terms of cost and schedule performance. To do so it required to perform simultaneously critically Path and Earned Value analysis in order to collect the required data. Exhibit

Analysing Risk in the Dragonfly case

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Analysing Risk in the Dragonfly case Page. 3 from 10

3 summarizes our findings including the initial project plan/performance as a benchmark for comparison. Results from activities A,B,E were gradually inserted and the difference in between steps were stored and examined. Accumulating the results offers a better view of the progress. From this analysis we can see that in terms of schedule performance the schedule performance indicator is less than one (SPI < 1) revealing that the project is behind schedule. In the cost evaluation context, the overall conclusion is that the project performs better so far given that the cost performance indicator is greater than one.

Question 4: At this step the calculated project is re-scheduled in order to estimate the effects of changes in cost and schedule due to the progress update reports received. Re-scheduling in MS Project offers two main options; the first is to update the work as complete through (option A) and the second to reschedule uncompleted work (option B). With the first option, both ongoing paths running at current date are time critical and it is observed that all available slack is exhausted. This fact increases the risk of completing the project on time (Figure 4). However, using the option of rescheduling uncompleted work from current date when updating the project, affects the critical path. This occurs because MSP assumes that task E will take longer to be completed although there is no official change in task duration. As a result E,F,H,I,J,K.N.R path becomes critical and the total project duration becomes 66 wks (Figure 5). It can be seen that the two scenarios have different EAV due to the difference in the calculated percentage of completion. Option B has more deteriorated results for costs as expected. The SV of ( - 94.027,89) shows poor scheduling performance and the negative CV (-€15.319,56) shows a poor spending control (Exhibit 4). However, depending on the nature of the project the appropriate option should be chosen.

Question 5: By plugging the new information into the tables, we get the updated project’s progress, as it was on December 6, 2004. Exhibit 5 shows the Total Project Cost as completed on every tracking date, by taking into account the available data. However, simply monitoring the money expenditure is not the appropriate way to measure progress. In general, we can see that a company has to perform a holistic analysis at any point of time during a project, in order to examine if it performs well, according to its initial projections in terms of cost, and schedule. To obtain more reliable results, it is essential to perform Earned Value analysis. By applying this type of analysis, the goal is to see on one side, how far the planned cost is from the actual cost, and on the other side to monitor schedule performance in terms of cost. To do so, it is important to examine the EV chart breakdown as shown in Exhibit 6.

Budgeted cost of work scheduled [BCWS]: €2.743.222,22. Shows the cumulative baseline costs up to the status date(26/12/04) and it is equivalent to the planned value of the project.

Analysing Risk in the Dragonfly case

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Analysing Risk in the Dragonfly case Page. 4 from 10

Budgeted cost of work performed [BCWP]: €1.880.000,00. This is the value completed in the project so far.

Actual cost of work performed [ACWP]: €2.020.000,00. This is greater than the budgeted cost, which means that the project is proved to demand more spending in resources (Overtimes, etc.)

Earned value scheduled variance [SV]: - €863.222,22. It shows the difference in terms of schedule between the current status date and the baseline plan of the project, taking into account all assigned resources. When SV is negative, as happens in this case the project is behind schedule.

Earned value cost variance [CV]: - €140.000 Shows the difference between how much the project should have cost and how much it has actually cost in order to achieve the desired level of performance for the specific duration. The negative sign implies that cost wise the project underperforms. The analysis performed, implies that the company has misestimated both project cost (approximately by 7%) and duration (approximately 31%). The results of earned value analysis and therefore the performance of the project can be examined in more detail in figure 6. Additionally in figure 7 the relationship between the cost of planned resources and the actual cost of resources is shown. It is clear from both graphs that the actual cost is deviating from the planned costs as the project progresses.

Summary and interpretation of results

In our analysis using MS project the automatic and manual leveling differences were explored revealing fundamental constraints of the software tool regarding multi objective optimization of the given problem. Detailed leveling is better achieved manually rather than using the MSP solution. Furthermore the platform cannot import into its calculation the human element concerning the productivity of personnel especially in overtimes, weekends and night shift work. Nevertheless, this is up to the Project Manager decision to allocate the personnel in the best possible order that will ensure the stability of the productivity for as long as possible. Beyond the planning processes examined, the EV analysis was used as a monitoring tool that over performs the capabilities of a more simplistic tool such as a milestone. EV offers a quick and tangible representation of the current status in terms of cost and schedule when compared to the baseline plan. As our case reveals a cost and schedule deficiency, the PM must figure out what to do in order to get the project back on track by either borrowing resources from other tasks, perform brainstorming meetings, requesting extra resources from senior management etc. In practice, it can be stated that the initial setup of the baseline is crucial in the sense that the Project Manager through his/her experience would be in a position to judge the feedback from experts or peers in order to minimize uncertainty and remove the subjective human conservatism. This is not

Analysing Risk in the Dragonfly case

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Analysing Risk in the Dragonfly case Page. 5 from 10

only a soft skill that only a PM should possess but also should be embraced in the overall culture of the company that undertakes the project. Further to this the Project Manager should have in mind a change control system that shall incorporate most important project deviations.

Analysing Risk in the Dragonfly case

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Analysing Risk in the Dragonfly case Page. 6 from 10

APPENDICES

Analysing Risk in the Dragonfly case

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Analysing Risk in the Dragonfly case Page. 7 from 10

Resource

 

Material

             

Base

Name

Type

Label

Initials

Group

Max. Units

Std. Rate

Ovt. Rate

Cost/Use

Accrue At

Calendar

PA

Work

 

P

 

2,500%

€1,000.00/wk

€0.00/hr

€0.00

Prorated

Standard

RD

Work

 

R

 

2,000%

€1,000.00/wk

€0.00/hr

€0.00

Prorated

Standard

EN

Work

 

E

 

2,000%

€1,000.00/wk

€0.00/hr

€0.00

Prorated

Standard

HP

Work

 

H

 

1,500%

€1,000.00/wk

€0.00/hr

€0.00

Prorated

Standard

PP

Work

 

P

 

1,500%

€1,000.00/wk

€0.00/hr

€0.00

Prorated

Standard

MA

Work

 

M

 

10,000%

€1,000.00/wk

€0.00/hr

€0.00

Prorated

Standard

CP

Work

 

C

 

1,500%

€1,000.00/wk

€0.00/hr

€0.00

Prorated

Standard

Exhibit 1 Overloaded Resources highlighted in red ink

Standard Exhibit 1 Overloaded Resources highlighted in red ink Figure 2 Network Diagram Figure 3 Gantt

Figure 2 Network Diagram

Standard Exhibit 1 Overloaded Resources highlighted in red ink Figure 2 Network Diagram Figure 3 Gantt

Figure 3 Gantt chart

Analysing Risk in the Dragonfly case

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Analysing Risk in the Dragonfly case Page. 8 from 10

Over allocation

RD

HP

PP

CP

Activity A

(2x400%)+(3x600%)

(2x300%)

(2x100%)+(2x800%)

Activity B

(2x400%)+(3x600%)

(2x300%)

Activity C

(2x400%)+(3x600%)

(2x300%)

(2x100%)+(2x800%)

(3x100%)

Activity D

(2x400%)+(3x600%)

(2x300%)

Activity E

(2x400%)+(3x600%)

(2x300%)

(2x100%)+(2x800%)

(3x100%)

Activity F

(2x400%)+(3x600%)

(2x100%)+(2x800%)

(3x100%)

Activity G

(2x400%)+(3x600%)

(2x300%)

Activity H

(2x400%)+(3x600%)

(2x100%)+(2x800%)

(3x100%)

Activity I

(2x400%)+(3x600%)

(2x300%)

(2x100%)+(2x800%)

 

Activity J

(2x400%)+(3x600%)

 

(3x100%)

Activity K

(2x400%)+(3x600%)

(2x300%)

 

(3x100%)

Activity L

(2x100%)+(2x800%)

(3x100%)

Activity M

(2x300%)

(2x100%)+(2x800%)

(3x100%)

Activity N

(2x400%)+(3x600%)

(2x300%)

 

(3x100%)

Activity O

(2x100%)+(2x800%)

(3x100%)

Activity P

(2x400%)+(3x600%)

(2x300%)

(2x100%)+(2x800%)

(3x100%)

Activity Q

(2x400%)+(3x600%)

(2x300%)

(2x100%)+(2x800%)

Activity R

(2x400%)+(3x600%)

(2x300%)

(2x100%)+(2x800%)

Exhibit 2: Over allocation of resources per activity

       

Schedule Evaluation

   

Cost evaluation

 
   

Task Name

Planned Value - PV (BCWS)

Earned Value - EV (BCWP)

SV

SPI

Earned Value - EV (BCWP)

 

AC (ACWP)

CV

CPI

 

Initial Status

Project

€ 428.708,33

 

€ 0,00

-€ 428.708,33

   

€ 0,00

 

€ 0,00

 

€ 0,00

 
 

TASK A

A

€ 136.000,00

€ 136.000,00

 

€ 0,00

 

1,00

 

€ 136.000,00

150.000,00

-€ 14.000,00

0,91

STEP 1

Total

Project

€ 428.708,33

€ 136.000,00

-€ 292.708,33

0,32

 

€ 136.000,00

150.000,00

-€ 14.000,00

0,91

Change

                 
 

TASK B

B

€ 110.208,33

€ 75.687,41

 

-€ 34.520,92

 

0,69

 

€ 75.687,41

€ 75.000,00

 

€ 687,41

1,01

STEP 2

Total

Project

€ 428.708,33

€ 211.687,41

-€ 217.020,92

0,49

 

211.687,41

225.000,00

-€ 13.312,59

0,94

Change

                 

STEP 3

TASK E

E

€ 182.500,00

€ 146.000,00

 

-€ 36.500,00

 

0,80

 

146.000,00

€ 125.000,00

€ 21.000,00

1,17

Today

Total

Project

€ 428.708,33

€ 357.687,41

 

-€ 71.020,92

0,83

 

357.687,41

€ 350.000,00

 

€ 7.687,41

1,02

5/04/200

Change

           

59,18%

 

64,29%

173,17%

 
 

Exhibit 3: EVA analysis

 

Task Name

Planne d V a lue - PV (BCWS)

Earne d V a lue - EV (BCWP)

AC (ACWP)

SV

CV

EAC

BAC

VAC

 

CPI

SPI

Option A

428708,33

 

420230,56

 

350000

 

-8477,78

70230,56

2674781,7

 

3211500

 

536718,31

 

1,2

0,98

Option B

428708,33

 

334680,44

 

350000

-94027,89

-15319,56

3358502,2

 

3211500

 

-147002,23

 

0,96

0,78

Exhibit 4 Results for different scheduling options

Analysing Risk in the Dragonfly case

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Analysing Risk in the Dragonfly case Page. 9 from 10
Analysing Risk in the Dragonfly case Page. 9 from 10 Figure 4: Update work as complete

Figure 4: Update work as complete through (option A)

10 Figure 4: Update work as complete through (option A) Figure 5: Reschedule uncompleted work (option

Figure 5: Reschedule uncompleted work (option B).

     

Project

Question

Tracking Date

Project Cost

Completion

1

Baseline

3.211.500,00 €

15/4/2005

2

Baseline

3.211.500,00 €

15/4/2005

3

05/04/2004

3.221.660,00 €

15/4/2005

4

Updated

05/04/2004

3.157.500,00 €

15/4/2005

5

06/12/2004

3.270.655,00 €

15/4/2005

Exhibit 5 Tracking Date and Project Cost

   

Schedule Evaluation

   

Cost evaluation

 

Task Name

Planned Value - PV (BCWS)

Earned Value - EV (BCWP)

SV

SPI

Earned Value - EV (BCWP)

AC (ACWP)

CV

CPI

Project

2743222,22

1880000

-863222,22

0,69

1880000

2020000

-140000

0,93

Exhibit 6 Schedule and Cost evaluation

Analysing Risk in the Dragonfly case

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Analysing Risk in the Dragonfly case Page. 10 from 10
Analysing Risk in the Dragonfly case Page. 10 from 10 Figure 6 Earned Value Over Time

Figure 6 Earned Value Over Time Report

in the Dragonfly case Page. 10 from 10 Figure 6 Earned Value Over Time Report Figure

Figure 7 Resource Costs by time period

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