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This project examines the project scheduling of a contract to supply a portal frame steel building to be done by Engineering & Construction Incorporated.

Extracts from this document...

Introduction

TABLE OF CONTENTS EXECUTIVE SUMMARY 2 INTRODUCTION 3 BACKGROUND 5 Abridged History Of Companies Involved 5 Rose Hall Estate 6 METHODOLOGY 8 PERT / CPM Method 8 Charting 9 ANALYSIS Expected Times & Variances 10 Comments On Task Times 11 Project Network 13 Activity Schedule 14 Variability Analysis 15 Time / Cost Analysis 16 FINDINGS / RESULTS List Of Findings 17 Critical Path / Time Discussion 18 RECOMMENDATIONS 20 REFERENCES 22 APPENDICIES 23 Contract Documents 23 Corporate Documents 28 EXECUTIVE SUMMARY This project examines the project scheduling of a contract to supply a portal frame steel building to be done by Engineering & Construction Incorporated. This turnkey operation encompasses the entirety of the project, from the purchase of the raw materials to the delivery and erection of the finished product on site. The project was evaluated using the program evaluation and review technique (PERT) and the critical path method (CPM.) The analysis found that the expected total project time would be 290.9 days and time required for 95% probability of paying no liquidated damages is 314.2 days. The contract time for the project was 291 days, including time variations requested by the contractor (ECI.) This resulted in a shortfall of 23 days. A time cost analysis found that the per day cost of crashing the project exceeded the per day cost of liquidated damages. So the recommendation given was to accept the liquidated damages for 23 day, which was calculated to be $955,000. It is important to note that there is a fifty percent chance the project will finish on or before the contract deadline. The Board accepted this recommendation for the reasons above along with the knowledge that the cost savings on the steel with longer delivery times was greater than the total liquidated damages. INTRODUCTION Engineering & Construction Incorporated (ECI) of Guyana South America, specializes in the design, fabrication and installation of heavy metal structures. ...read more.

Middle

ANALYSIS Expected Times and Variances Activity Description a m b Expected Variance (d) (d) (d) Time (d) ?^2 A Steel rolling (Petroplast, Russia) 96 105 157 110.5 72.25 B Welding / consumables delivery to port (Miami USA.) 2 2 3 2.2 0.03 C Fasteners delivery to port (Guangzhou, China) 28 49 64 51.3 87.11 D Cladding delivery to port (Antwerp, Belgium) 17 20 42 23.2 17.36 E Steel delivery to port (Antwerp, Belgium) 8 11 16 11.3 1.78 F Welding / consumables Shipping to plant 12 13 18 13.7 1.00 G Fasteners shipping to plant 90 144 165 138.5 156.25 H Cladding shipping to plant 28 34 58 37.0 25.00 I Steel shipping to plant 28 30 48 30.3 25.00 J Fabrication 56 70 104 73.3 64.00 K Trail assembly 14 17 21 17.2 1.36 L Packing for inland transport 5 5 6 5.2 0.03 M Mobilization of site workers 2 2 2 2.0 0.00 N Mobilization of site machines 5 8 9 7.7 0.44 O First overland transport 2 2 3 2.2 0.03 P Barging 3 3 4 3.2 0.03 Q Second overland transport 1 1 2 1.2 0.03 R Erection 21 35 56 36.2 34.03 Table 1 Key a - optimistic b - Pessimistic m - Most likely Comments on Task Times The tasks in Table 1 show a wide range of durations, specifically when looking at the difference between the optimistic, pessimistic and most probable times. Explanations are as follows A. Steel rollings in the Russian plant in Petroplast occur every forty five days. At present, the broker is consolidating our order and is confident that the items will be scheduled in the next rolling in mid April, giving the optimistic result. From experience, rollings usually run between one and two weeks behind, giving the most likely result. In the unlikely event the steel is not scheduled in this rolling, it will definitely make the next one, giving the pessimistic time. ...read more.

Conclusion

on existing jobs. Additionally, time variations can be claimed from the employer based on the force majeure clause of the contract, as delays in shipping due to unforeseen circumstances are completely beyond the contractor's control. From experience with Guysuco, variation claims are usually granted once they can be substantiated in writing by the manufacturer or shipping company, and are made well in advance. 2. Accept liquidated damage rather than crashing: The lowest crashing cost per day is K (trial assembly) at approximately eighty two thousand, five hundred dollars. This is more than double the cost per day of liquidated damages (approximately forty-one thousand dollars.) Further, this daily rate is only applicable for a maximum reduction of seven point four days. If more than this is required, the fabrication cost per day of crashing is approximately one hundred and twenty eight thousand dollars. As a result, it is recommended that no crashing be done, and that liquidated damages be accepted as the least expensive alternative of any case where the project will not be finished on time. To put this in perspective, as shown in the analysis, there is greater than fifty percent probability that the project will finish on time and greater than ninety-five percent probabilities than the liquidated damages will not exceed one million dollars. 3. Request additional time based on bid validity The original bid validity was one hundred and twenty days, meaning that the tender submitted was not valid past four months from the date of the tender. The initial award in September 2002 was within the validity period, but the subsequent delay and final contract signing in January 2003 was beyond. As per contract, a petition should be made stating that the delays in the final award caused supplier agreements to expire, which lost placements in raw materials manufacturer scheduling. Resultantly, the orders were removed from the queue, causing delay times which pushed the estimated completion time beyond the contract completion requirement. Though this recommendation is unrelated to the analysis put forward here, it is nonetheless valid and would reduce any liquidated damages. ...read more.

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