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MANAGING EFFECTIVE PROJECTS CHAPTER 2 107

well as the work breakdown structure and diagrams showing the criti-
cal path for the possible project options. The work breakdown structure,
activity times, and activity precedence relationships are shown in the table
on the previous page.

QUESTIONS
1. Coordinating departments in a major project is always a challenge.
Which departments within the Starwood organization likely played a role
in each of the following project related activities?
a. Defining and organizing the project
b. Planning the project
c. Monitoring and controlling the project
2. Many times, project decision makers do not rely solely on financial hur-

Pearson
dles, such as return on investment or internal rates of return, but place
a lot of emphasis on intangible factors. Which are the salient intangible When the Phoenician, a luxury hotel in Phoenix, Arizona, sought to re-
factors associated with selecting one of the three options for the spa? design its Center for Well-Being, its management team created a work
3. Timing is always a challenge in managing projects. Construct a network breakdown structure in order to compare different project options and
diagram for the spa selection process. How soon can The Phoenician choose the best one.
management make a decision on the spa?

CASE The Pert Mustang

Roberts Auto Sales and Service (RASAS) consists of three car dealerships that wants to restore this car in time to exhibit it at the Detroit Auto Show. If the
sell and service several makes of American and Japanese cars, two auto parts car gets a lot of press, it will be a real public relations coup for RASAS—
stores, a large body shop and car painting business, and an auto salvage yard. especially if Roberts decides to enter this new venture. Even if she does not,
Vicky Roberts, owner of RASAS, went into the car business when she inherited the car will be a showpiece for the rest of the business.
a Ford dealership from her father. She was able to capitalize on her knowledge Roberts asked the director of service operations to prepare a report
and experience to build her business into the diversified and successful mini- about what is involved in restoring the car and whether it can be done in
empire it is today. Her motto, “Sell ‘em today, repair ‘em tomorrow!” reflects a time for the Detroit show in 45 working days using PERT/CPM. The parts
strategy that she refers to in private as “Get ‘em coming and going.” manager, the body shop manager, and the chief mechanic have provided the
Roberts has always retained a soft spot in her heart for high-performance following estimates of times and activities that need to be done, as well as
Mustangs and just acquired a 1965 Shelby Mustang GT 350 that needs a lot cost estimates:
of restoration. She also notes the public’s growing interest in the restoration of
vintage automobiles. Roberts is thinking of expanding into the vintage car res- a. Order all needed material and parts (upholstery, windshield, carburetor,
toration business and needs help in assessing the feasibility of such a move. and oil pump). Time: 2 days. Cost (telephone calls and labor): $100.
She wants to restore her 1965 Shelby Mustang to mint condition, or as close b. Receive upholstery material for seat covers. Cannot be done until order
to mint condition as possible. If she decides to go into the car restoring busi- is placed. Time: 30 days. Cost: $2,100.
ness, she can use the Mustang as an exhibit in sales and advertising and take
c. Receive windshield. Cannot be done until order is placed. Time:
it to auto shows to attract business for the new shop.
10 days. Cost: $800.
Roberts believes that many people want the thrill of restoring an old
car themselves, but they do not have the time to run down all the old parts. d. Receive carburetor and oil pump. Cannot be done until order is placed.
Still, others just want to own a vintage auto because it is different and many Time: 7 days. Cost: $1,750.
of them have plenty of money to pay someone to restore an auto for them. e. Remove chrome from body. Can be done immediately. Time: 1 day.
Roberts wants the new business to appeal to both types of people. Cost: $200.
For the first group, she envisions serving as a parts broker for NOS (“new f. Remove body (doors, hood, trunk, and fenders) from frame. Cannot be
old stock”), new parts that were manufactured many years ago and are still done until chrome is removed. Time: 1 day. Cost: $300.
packaged in their original cartons. It can be a time-consuming process to find g. Have fenders repaired by body shop. Cannot be done until body is
the right part. RASAS could also machine new parts to replicate those that removed from frame. Time: 4 days. Cost: $1,000.
are hard to find or that no longer exist.
h. Repair doors, trunk, and hood. Cannot be done until body is removed
In addition, RASAS could assemble a library of parts and body manuals
from frame. Time: 6 days. Cost: $1,500.
for old cars to serve as an information resource for do-it-yourself restorers.
The do-it-yourselfers could come to RASAS for help in compiling parts lists, i. Pull engine from chassis. Do after body is removed from frame. Time:
and RASAS could acquire the parts for them. For others, RASAS would take 1 day. Cost: $200.
charge of the entire restoration. j. Remove rust from frame. Do after the engine has been pulled from the
Roberts asked the director of service operations to take a good look at chassis. Time: 3 days. Cost $900.
her Mustang and determine what needs to be done to restore it to the condi- k. Regrind engine valves. Do after the engine has been pulled from the
tion it was in when it came from the factory more than 40 years ago. She chassis. Time: 5 days. Cost: $1,000.
108 PART 1 COMPETING WITH OPERATIONS

l. Replace carburetor and oil pump. Do after engine has been pulled from In the restoration business there are various categories of restoration.
chassis and after carburetor and oil pump have been received. Time: A basic restoration gets the car looking great and running, but a mint condition
1 day. Cost: $200. restoration puts the car back in original condition—as it was “when it rolled
m. Rechrome the chrome parts. Chrome must have been removed from off the line.” When restored cars are resold, a car in mint condition commands
the body first. Time: 3 days. Cost: $210. a much higher price than one that is just a basic restoration. As cars are re-
n. Reinstall engine. Do after valves are reground and carburetor and oil stored, they can also be customized. That is, something is put on the car that
pump have been installed. Time: 1 day. Cost: $200. could not have been on the original. Roberts wants a mint condition restoration
for her Mustang, without customization. (The proposed new business would
o. Put doors, hood, and trunk back on frame. The doors, hood, and trunk
accept any kind of restoration a customer wanted.)
must have been repaired first. The frame must have had its rust re-
The total budget cannot exceed $70,000 including the $50,000 Roberts
moved first. Time: 1 day. Cost: $240.
has already spent. In addition, Roberts cannot spend more than $3,600 in
p. Rebuild transmission and replace brakes. Do so after the engine has any week given her present financial position. Even though much of the work
been reinstalled and the doors, hood, and trunk are back on the frame. will be done by Roberts’s own employees, labor and materials costs must be
Time: 4 days. Cost: $2,000. considered. All relevant costs have been included in the cost estimates.
q. Replace windshield. Windshield must have been received. Time: 1 day.
Cost: $100. QUESTIONS
r. Put fenders back on. The fenders must have been repaired first, 1. Using the information provided, prepare the report that Vicky Roberts
the transmission rebuilt, and the brakes replaced. Time: 1 day. Cost: requested, assuming that the project will begin immediately. Assume
$100. 45 working days are available to complete the project, including trans-
porting the car to Detroit before the auto show begins. Your report
s. Paint car. Cannot be done until the fenders are back on and windshield
should briefly discuss the aspects of the proposed new business, such
replaced. Time: 4 days. Cost: $1,700.
as the competitive priorities that Roberts asked about.
t. Reupholster interior of car. Must have received upholstery material first.
2. Construct a table containing the project activities using the letter as-
Car must have been painted first. Time: 7 days. Cost: $2,400.
signed to each activity, the time estimates, and the precedence rela-
u. Put chrome parts back on. Car must have been painted and chrome tionships from which you will assemble the network diagram.
parts rechromed first. Time: 1 day. Cost: $100.
3. Draw a network diagram of the project similar to Figure 2.4. Determine
v. Pull car to the Detroit Auto Show. Must have completed reuphol- the activities on the critical path and the estimated slack for each activity.
stery of interior and have put the chrome parts back on. Time: 2 days.
4. Prepare a project budget showing the cost of each activity and the total
Cost: $1,000.
for the project. Can the project be completed within the budget? Will the
Roberts wants to limit expenditures on this project to what could be project require more than $3,600 in any week? To answer this ques-
recovered by selling the restored car. She has already spent $50,000 to ac- tion, assume that activities B, C, and D must be paid for when the item
quire the car. In addition, she wants a brief report on some of the aspects of is received (the earliest finish time for the activity). Assume that the
the proposed business, such as how it fits in with RASAS’s other businesses costs of all other activities that span more than one week can be pro-
and what RASAS’s operations task should be with regard to cost, quality, rated. Each week contains five work days. If problems exist, how might
customer service, and flexibility. Roberts overcome them?

Source: This case was prepared by and is used by permission of Dr. Sue P. Siferd, Professor Emerita, Arizona State University (Updated September, 2007).

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