CHAPTER 9,

PROBLEM 17
Patricia D. Gamboa - BSA23C - A
The Porsche Shop, founded in 1985 by Dale Jensen, specializes in the restoration of vintage
Porsche automobiles. One of Jensen's regular customers asked him to prepare an estimate
for the restoration of a 1964 model 365SC Porsche. To estimate the time and cost to
perform such a restoration, Jensen broke the restoration process into four separate
activities: disassembly and initial preparation work (A), body restoration (B), engine
restoration (C), and final assembly (D). Once activity A has been completed, activities B and
C can be performed independently of each other; however, activity D can be started only if
both activities B and C have been completed. Based on his inspection of the car, Jensen
believes that the following time estimates (in days) are applicable:

Activity Optimistic Most probable Pessimistic

A 3 4 8

B 5 8 11

C 2 4 6

D 4 5 12
 Jensen estimates that the parts needed to restore the body will cost $3000 and that
the parts needed to restore the engine will cost $5000. His current labor costs are
$400 a day.

a.) Develop a project network

b.) What is the expected project completion time?
c.) Develop cost estimates for completing the restoration based on both a best- and

worst- case analysis. Assume that the total restoration cost is the sum of the labor cost
plus material cost.
d.) If Jensen obtains the job with a bid that is based on the costs associated with an
expected completion time, what is the probability that he will lose money on the job?
e.) If Jensen obtains the job based on a bid of $16,800, what is the probability that he
will lose money on the job?
A.) Project Network

Start A D Finish

C
B.) Expected project completion time
Critical Path, A-B-D
Expected time = 4.5 + 8.0 + 6.0 = 18.5 weeks
C.) Cost estimates
Material cost = $3000 + $5000 = $8000
Best case (Optimistic Times) 3 + 5 + 2 + 4 = 14 days
Total cost = $8000 + 14($400) = $12,800
Worst case (Pessimistic Times) 8 + 11 + 6 + 12 = 37 days
Total cost = $8000 + 37($400) = $22,800
D.) Bid cost
Bid cost = $8000 + 18.5($400) = $15,400
E.) Probability of a loss
3.47 = 1.86

Bid = $16,800 = $8000 + Days($400)=

400 days = 16,800 - 8000 =8,800
22 = Days
The project must be completed in 22 days or less

22 - 18.5
z= = 1.88
1.86