Planning and Scheduling Communication Question:

Project Background

You are Tom Martin, Planning & Scheduling Manager for M/s Consolidated Contractors
working on the package No.3 which consist of the supply and installation of the Turbines,
Generator, and associated equipments for the Hydropower generation project which is
being built at Missouri. The contractor M/s Consolidated entered into a lump sum type of
contract for this package No.3 with NHPC a government owned Company having a total
contract value of $ 2,000,000.00.

Based on the performance at his previous project, Jill Collins was assigned as the Project
Manager for this package No.3 by the senior management of the Consolidated contractors
Company and was responsible for delivering the project on time and within the allocated
budget. The delivery of this work package within the agreed contract duration of 60days
was very critical for the overall completion and commissioning of this Hydropower
project and in order to meet this timeline the contractor is required to work seven days a
week. Due to the criticality of this package NHPC imposed a delay penalty in the
condition of contract subject to a maximum 10% of the Contract value.

The complete fabrication and the erection of steel structure for the associated buildings
within in the package No.3 was subcontracted to a specialized local contractor M/s
Perfect Fabricators. The tasks being performed by the subcontractor were on the critical
path.

Another major deliverable under this package is the supply of the Generators and
Turbines. As per the approved Baseline schedule this activity has zero float was so
this order was placed to a specialized Japanese Manufacturer. This contract was again
on a Lump sum basis with delay penalty to avoid any risk of cost and time.

The special conditions of contract for the package No.3 clearly stipulated the need for the
contractor to establish a baseline schedule from the start of the contract and the
requirement for this schedule to be updated after every three days throughout the contract
duration. On day 36 while updating the schedule, you discover that the progress on a
group of five activities being performed the sub-contractor M/s Perfect fabricators was
over-reported in the last report. Due to this error in reporting the progress, these activities
have been shown to be more complete than their actual progress at site. On verification of
the progress reported by M/s Perfect it was confirmed that the sub-contractor was not
responsible for this reporting error.

The error in the progress reporting has resulted in a forecasted project completion date of
six days earlier than it is supported by the current information. Since the previous
forecast indicated that the work would be completed on day number 60 to meet the
contractor’s contractual obligations, the revised forecast now indicates that the project
would be completed only on day No.66. The liquidated damages as per the contract
was $50,000 per day for any delay beyond the agreed contract duration. So there is
significant financial impact for the target profit of the contractor due to any delay to the
stipulated project completion date. The contract also has the provision for the contractor
to an entitlement for an early completion bonus of $25,000 per day.

Jill Collins ordered for an investigation to find the cause for the incorrect reporting.
Furthermore you were assigned by the Project Manager to meet with the team and
recommend corrective actions for consideration and implementation. As changes to the
schedule at this stage was not recommended and any rework was not acceptable to the
Company. Hence the option for performing any duration compression by fast tracking
was ruled out. Based on the direction, you met with the project team and formulated
three corrective courses of action listed below, based on Crashing as a means for
duration compression to address the problem:

1. M/s Perfect has proposed to increase the resource allocation to some of the
outstanding critical activities at an estimated cost of $150,000. You have analyzed
the subcontractor’s proposal and determined that it would reduce the project
completion by four days. The subcontractor was quite confident (about 95%) to
achieve this time reduction provided the variation order for the additional cost
was approved within 3days.
2. You discussed with your Procurement Manager and found that the Generator &
Turbines are ready with the manufacturer and by changing the shipment from
sea to air their delivery time could be reduced from the current seven to three
days. Despite the fact the meteorological department forecasted foggy weather;
the airline was able to provide 100% assurance. The transportation cost by sea
cargo was $ 10,000.00 while the air cargo would cost $ 90, 000.00
3. At the same time your discussions with the Construction superintendent revealed
that this is possible to crash an uncompleted activity “Electrical cabling work”
with an original duration of 22days. This activity was performed by your
company and this crashing would reduce the activity duration up to a minimum
of 14days. This additional source would cost your company $25,000.00 per day.

Upon checking with the schedule you realize the activity “Electrical cabling work” was a
near critical activity having a free float of three days and on a parallel path with the
Generator & Turbines.

Assignment:

Draft a memorandum to your Project Manager Jill Collins, explaining in your own words

a) The schedule problem affecting the project delivery.

b) The alternative corrective actions available for recovery.
c) Your evaluations and recommendations.

Prepare a draft (one page) and the final report (three pages)