The JVS Construction Corporation The JVS Construction Corporation has been awarded a contract to construct a 32,000- se

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The JVS Construction Corporation

The JVS Construction Corporation has been awarded a contract to
construct a 32,000-
seat stadium. This company has formally signed a contract to build
this prestigious stadium
for Swinburne University of Technology, Melbourne. According to the
contract, the
construction must start by February 12, 2024 and be completed
within one year. A penalty
clause of $38,000 per week of delay beyond February 11, 2025 is
written into the contract.

David Anderson, the company president, called a planning meeting,
where he
expressed great satisfaction at obtaining the contract and revealed
that the company could
profit as much as $480,000 on the project. He was confident that
the project could be
completed on time with an allowance for the usual delays
anticipated in such a large project.

Stephen Johnson, the director of personnel, agreed that only slight
delays might
develop due to a shortage of labour in a normal year. However, he
reminded the president that
the company would have to use unionized employees for such a large
project and that the
construction industry labour agreements would expire on November
30, 2024. Past
experience indicated a fifty-fifty chance of a strike.

David agreed that a strike might cause a problem. Unfortunately,
there was no way to
change the contract. He inquired about the prospective length of a
strike. Stephen figured that
such a strike would last either 8 weeks (70% chance) or possibly 12
weeks (30% chance).
David was not pleased with these prospects. However, before he had
a chance to discuss
contingency plans, he was interrupted by Nicholas Kent, the
vice-president for engineering.
Nicholas commented that an extremely cold December had been
predicted. This factor had
not been considered during earlier estimates since previous
forecasts called for milder
weather. Concrete pouring in a cold December would require special
heating in one out of
three cases (depending on the temperature) that cost $620 per
week.

This additional information did not please David at all. The
chances for delay were
mounting. Apart from the heating cost, an overhead expense of $600
per week would be
incurred in case the project delay beyond the normal project
duration. The project’s technical
details are given in the appendix to this case.

The management team was asked to consider alternatives for coping
with the situation.
At the end of the week, five proposals were submitted.
1. Expedite the pouring of seat gallery supports. This would
cost $48,000 and cut the
duration of the activity by six weeks.

2. The same as proposal 1, but in addition, put a double shift on
the filling of the field. A
cost of $25,000 would result in a five-week time reduction.

3. The roof is crucial since it precedes several activities. The
use of three shifts and some
overtime could cut six weeks off the roofing at an additional cost
of only $32,000.

4. Do nothing special until December 1. Then, if December is indeed
cold, defer the
pouring of the seats until the cold weather breaks, schedule
permitting, and heat
whenever necessary. If a strike occurs, wait until it is over (no
other choice) and then
expedite all remaining activities. In that case, any activity’s
duration could be cut to no
less than one third of its normal duration. The additional cost per
activity for any week,
which is cut, would be $5,500.

5. Do not take any special action, that is, hope and pray that no
strike and no cold
December occur (no cost).


Appendix: Details of the Stadium Project

The proposed stadium is an indoor structure with a seating capacity
of 32,000. The project
begins with getting the site cleared off with temporary structures
and debris, this activity of
clearing the site will last 8 weeks. Once the site is clear, the
work can start simultaneously
on the structure itself and on the field.

The work on the field involves subsurface drainage, which lasts 8
weeks, followed by filling
for the playing field and track. Only with the completion of the
filling (14 weeks) can the
installation of the artificial playing turf take place, an activity
that consumes 12 weeks.

The work on the structure itself starts with excavation followed by
the pouring of concrete
footings. Each of these activities takes 4 weeks. Next comes the
pouring of supports for seat
galleries (12 weeks), followed by erecting pre-cast galleries (13
weeks). The seats can then
be poured (4 weeks) and are ready for painting. However, the
painting (3 weeks) cannot
begin until the dressing rooms are completed (8 weeks). The
dressing rooms can be
completed only after the roof is erected (8 weeks). The roof must
be erected on a steel
structure, which takes 4 weeks to install. This activity can start
only after the concrete
footings are poured.

Once the roof is erected, work can start simultaneously on the
installation of lights (5 weeks)
and on the scoreboard and other facilities (4 weeks).

Note: There are 29 days in February of 2024, and that February 12
falls on Monday.
(construction starts on February 12, 2024 and ends February 11,
2025)
Questions

1. Prepare the CPM network schedule for the project based on the
normal project duration.
Determine the normal project duration and its completion date.
Identify the critical
activities and critical path. [7 marks]

2. By considering the potential costs and profits and the
probability of occurrence for all
possible scenarios, evaluate all the proposals using appropriate
project management
techniques, including the AON network diagram, so that the best
proposal is identified.
[13 marks]