Question

Frankly speaking, Jeff, I didn’t think we would stand a chance in winning this $20 million program. I was really surprised when they said that they’d like to accept our bid and begin negotiations. As Chief contract administrator, you will head up the negotiation team, “remarked Gus Bell, vice president and general manager of Cory Electric. “You have two weeks to prepare your data and line up your team. I want to see you when you’re ready to go”. Jeff Stokes was chief contract negotiator for Cory Electric, a $250- million-a year electrical components manufacturer serving virtually every major U.S industry. Cory Electric had a well-established matrix structure that had withstood fifteen years of testing. Job casting standards were well established, but did include some “fat” upon the discretion of the functional manager.

Two weeks later, Jeff met with Gus Bell to discuss the negotiation process.

Gus Bell: “Have you selected an appropriate team? You had better make sure that you’re covered on all sides”

Jeff: “There will be four, plus myself, at the negotiating table; the programme manager, the chief engineer who developed the engineering labour packages; the chief manufacturing engineer who developed the production labour package; and a pricing specialist who has been on the proposal since the kick-off meeting. We have a strong team and should be able to handle any questions”.

Jeff: “Yes! Our minimum position is $20 million plus an 8 percent profit. Of course, this profit percentage will vary depending on the negotiated cost. We can bid the programme at $15 million cost; that’s $5 million below our target cost and still book a 1.6 million profit by overrunning the cost-plus-fee contract. Here is a list of the possible cases. See Exhibit one below

Jeff: “I’ve read over all terms and conditions, and so have all the project office personnel as well as the key functional managers. The only major item is that the customer wants us to qualify some few vendors as sources for raw material procurement. We have included in the package the cost of qualifying two new raw material suppliers”

Gus Bell: “Where are the weak points in our proposal? I’m sure we have some”

Jeff: “Last month, the customer sent in a finding team to go over all of our labour justifications. The impression that I get from our people is that we’re covered all the way round. The only major problem might be where we’ll be performing on our learning curve. We put into the proposal 45 percent learning curve efficiency. The customer has indicated that we should be up around 50 to 55 percent efficiency based on our previous contracts with him. Unfortunately, those contracts the customer referred to were four years old. Several of the employees who worked on those programs have left the company. Others are assigned to on-going projects here at Cory. I estimate that we could put together about 10 percent of people we used previously. That learning curve percentage will be a big point for disagreements. We finished off the previous programs with the customer at 35 percent learning curve position. I don’t see how they can expect us to be smarter, given these circumstances.”

Gus Bell: “If that’s the only weakness, then we’re in good shape. It sounds like we have a fool proof audit trail. That’s good! What’s your negotiation sequence going to be?

Jeff: “I’d like to negotiate the bottom line only, but that’s a dream. We’ll probably negotiate the raw materials, the man-hours and the learning curve, the overhead rate, and finally the profit percentage. Hopefully, we can do it in that order.”

Gus Bell: “Do you think that we’ll be able to negotiate a cost above our minimum position?”

Jeff: “Our proposal was $22.2 million. I don’t foresee any problem that will prevent us from coming out ahead of the minimum position. The 5 percent change in learning curve efficiency amounts to approximately $ 1 million. We should be well covered.

“The first move will be up to them. I expect that they’ll come in with an offer of $ 18 to $19 million. Using the binary chop procedure, that’ll give us our guaranteed minimum position.

Gus Bell: “Do you know the guys who you’ll be negotiating with?”

Jeff: “Yes, I’ve dealt with them before. The last time, the negotiations took three days. I think we both got what we wanted. I expect this one to go just smoothly”

Gus Bell: “Okay, Jeff. I’m convinced we’re prepared for negotiations. Have a good trip”

The negotiations began at 9:00 A .M on Monday morning. The customer countered the original proposal of $22.2 million with an offer of $15 million. After six solid hours of arguments, Jeff and his team adjourned. Jeff immediately called Gus Bell at Cory Electric.

Jeff: “Their counteroffer to our bid is absurd. They’ve asked us to make a counteroffer to their offer. We can’t do that. The instant we give them a counter-offer, we are in fact giving credibility to their absurd bid. Now, they’re claiming that, if we don’t give them a counteroffer, then we’re not bargaining in good faith. I think we’re in trouble”

Gus Bell: “Has the customer done their homework to justify their bid?”

Jeff: “Yes, very well”. Tomorrow we’re going to discuss every element of the proposal, task by task. Unless something drastically changes in their position within the next day or two, contract negotiations will probably take up to a month”

Gus Bell: “Perhaps this is one program that should be negotiated at the top levels of management. Find out if the person that you’re negotiating with reports to a vice president and general manager, as you do. If not, break off contract negotiations until the customer gives us someone at your level. We’ll negotiate this at my level, if necessary.”

Source: John Wiley & Sons Inc

Gus Bell: “Okay, I’II take your word for it. I have my own checklist for contract negotiations. I want you to come back with a guaranteed fee of $1.6 million for our stockholders. Have you worked out the possible situations based on the negotiated costs?”

Analyse the various types of Gantt charts Gus bell and Jeff can use to schedule preparations for the above negotiation.

Answer 1

****Please please please LIKE THIS ANSWER, so that I can get a small benefit, Please****

The Gantt chart provides a standard graphical representation by scheduling information, it does this by listing all their relevant activities in a logical sequence with their durations and key dates to assist project managers in controlling their key activities down to the various levels required in order to make any project a success, it is therefore critical to map and track all the relevant information on the Gantt Chart to assist in that regard.

In the (PMBOK guide, 2017) Gantt chart is defined as a bar chart of schedule information where the activities are listed on the vertical axis, dates are shown on the horizontal axis and activity durations are shown as the horizontal bars placed according to start and finish dates. This tracking system is very simple and easy to understand and any project manager can simply track and manage the effects of activities on the project if one can understand the simple trend of the Gantt chart the success of achieving activity success should be found distinctively.

The figure 5. below shows a simple Gantt chart for constructing an RDP house in a rural community the Gantt chartt shows the activities, dates and tracking chart for the construction the house this simple chart gives a graphical depiction of what is required and when key dates are to be met in order to deliver the house the owner and when the house can be handed over to the owner. There are however four variations of the Gantt chart which will be discussed further.

The four types of variations of the Gantt chart are the following:

1) Revised Gantt Chart
2) Rolling Gantt Chart
3) Trend Gantt Chart
4) Logic Gantt Chart

1) Revised Gantt Chart

The revised Gantt chart is a tracking sheet that allows us to make further changes and updates to the baseline programme as the project progresses through its stages of completions. According to (PMBOK guide, 2017) the Gantt chart was originally designed as a planning and controlling tool where the actual progress of the project is marked up against the original plan. For tracking the progress, the progress bars are drawn above, inside or below the original activity bar in order to measure the progress this will give an indication to the project managers if the activities are running ahead or behind its schedule and where more controls will be required.

For the Gantt chart to be effective the baseline plan needs to be completed and fixed into position, where the only changes can be those done if there is a change in the scope of works required by the client. Once the baseline plan is complete in order to revise the Gantt chart the project manager will need to set up a progress reporting sheet which is shown on the following table 3 the progress tracking needs to be done as the project progresses and must be reported next to a work breakdown structure number or activity number, the start and finish dates must also be shown to clearly show whether the activity has started or finished.

PROGRESS REPORTING SHEET
Project	RDP House	Report Date:	30/05/2020
WBS	Activity Number	Description	Start Date	Finish Date	Percentage Complete	Remaining Duration
1	1	Dig Foundations	20/04/2020	24/04/2020	50%	2 days
2	2	Pour Concrete			0%
3	3	Construct Walls	27/04/2020	14/05/2020	75%	1 day
4	4	Install Doors			0%
5	5	Install Roof	15/05/2020	21/05/2020	25%	3 days
6	6	Finishes			0%

Table 3: Progress reporting data capture template

Once all this information has been reported on the progress report the project manager can draw the revised Gantt chart using the remaining duration as the Gantt chart works on a time scale schedule and not a percentage complete scale as the percentage complete does not give a direct indication of when an activity will be completed or is running behind schedule. Figure 6 shows the revised Gantt chart with the progress drawn in yellow up to the timenow line. The progress tracking shows that activity 1 has a remaining duration of one week and is ahead which means that no control is required on this activity. Activity 3 has a remaining duration of 2 weeks and also required no control as the activity is on time. Activity 5 however needs control as it shows that the activity is one week behind schedule therefore this activity needs to speed up to progress in order to finish the activity on time and this can be achieved by allocating more resources from other activities in order to the achieve this.

The revised Gantt chart is easy to understand as it clearly indicates progress to date against the original baseline Gantt chart and it also provides access to access on the controls required to achieve activity success. Progress trends can also be marked up by showing the progress on the Gantt chart and the tracking can assist the project manager in controlling the project and bring activities back on track to achieve success as any disruptions on key dates due to delays and all this information can be clearly tracked on the revised Gantt chart as it allows the project manager to make changes and additions as the project progresses.

2) Rolling Horizon Gantt Chart

The rolling horizon Gantt chart or rolling wave Gantt chart According to (PMBOK guide, 2017) this Gantt chart is a simplified version of the Gantt chart that focuses on the activities that are currently working or will be working in the next few weeks. This chart therefore focuses on a short period ahead during the life cycle of activities.

This short period of time can be between two or three weeks ahead for the activities being worked on, and four weeks ahead for ensuring all the pre-planning measures are in place. The Gantt chart in Figure 7 can be completed by preparing a planning template which includes the scope of work broken down into more simple activities and can be marked by hand on the original Gantt chart which will give the project manager clear indication of progress.

Figure 7: Rolling Horizon Gantt chart – the chart shows how a Gantt chart can be marked by hand for the next two or three weeks.

The main objective will be on what can be done, instead of what s shown on the original Gantt chart, this type of activity tracking should be very accurate as it is captured on the latest activity information and drawn up by personnel who is working directly with the activity and its progress. It is also very quick to access and it only includes the relevant information on the current activities that are currently being carried out.

3) Trend Gantt Chart

The progress trend Gantt chart can enable a project manager to determine the direction and trend the project is at a glance by marking the progress weekly or monthly. This will assist the project manager to determine which of the activities are behind and which are ahead of schedule. In order to limit the number of activities the trend Gantt chart can be drawn at hammock level.

According to (Burke, 2019) a hammock or summary activity is used to gather together a number of sub-activities into one master activity, which becomes a useful technique for layering or rolling up the entire projects schedule. The Gantt chart with hammock activities will assist the project manager by providing him with more detail on each activity this will also assist him greatly as one can track the progress of each activity.

RDP HOUSE CONSTRUCTION
Activity Description	Mon 1	Tue 2	Wed 3	Thu 4	Fri 5	Sat 6	Sun 7	Mon 8	Tue 9	Wed 10
1000 Foundations
1001 Set out Foundation
1002 Excavate Foundation
1003 Cast Concrete Foundation
2000 Construct Walls
3000 Install Roof

Figure 8: Hammock Gantt Chart – shows the hammock activity bar drawn in blue from start of the earliest activity to the end of the latest activity; the subactivities are shown in green.

The level of detail on this Gantt chart can be seen to assist the project manager as this technique is a fundamental feature for tracking the project planning and for controlling the activities this detailed level does not need to be shown to client but is beneficial to the project team in order to track the progress as each activity is being completed.

4) Logic Gantt Chart

The logic Gantt chart shows the logical relationship between activities and is shown clearly and in detail on the Gantt chart format. Due to the logic Gantt chart showing the relationship of activities it is also known as the linked Gantt chart since all the activities are linked to one another. This Gantt chart can only be used on modest sized project as is it not as effective on larger projects because

This Gantt chart illustrates the logical relationships of activities explicitly in Gantt chart format. This Gantt chart is very appropriate for modest sized projects. The logic Gantt chart is also known as a linked Gantt chart. This chart is not effective on larger projects because of the sear number of activities on large projects. Too many activities will result in the chart becoming much cluttered and its use will not be as effective in such a scenario.

****Please please please LIKE THIS ANSWER, so that I can get a small benefit, Please****