Question

In: Operations Management

As the first days of work on the Dune Buggy progress, you are concerned that information...

As the first days of work on the Dune Buggy progress, you are concerned that information provided to you from your seconded supervisors, in terms of work completed, may not be accurate. As a result you may be experiencing problems which will only surface much later, when it will be to late for corrective action.

To remedy the problem, you decide to implement the same system of rigid controls that A-1 is being forced to apply on its military contracts, ie. Earned Value.

As a first step, using the following pricing data developed for the Cement Dune Buggy Project augmented with overhead costs, determine a cost/schedule baseline, by calculating the Planned Value (PV) for each of days 10, 25 and 40 .

Assume that all activity costs are distributed evenly on a daily basis.

         

What is the Budget at Completion (BAC)?

                 Description                                 Durn                 Start                                            Finish                 Cost  

A              Design Dune Buggy                     10                 01                                                 10                 3915

B              Order, Receive Materials             12                 11                                                 22             540

C              Test, Prepare Engine                    11                 23                                                 33                 4061

D              Add Suspension                           06                 25                                                 30                 2063

E              Add Drive Train                          03                 34                                                 36                 1248

F              Add W/A/S to Frame                   04                 31                                                 34                 1269

G              Test Fit Body Shell                      01                 43                                                 43             227

H              Cast Body Shell                           05                 35                                                 39                 2457

I               Sand & Prime Shell                     03                 40                                                 42             725

J               Paint Body Shell                          03                 44                                                 46                 1359

K              Install Engine                               05                 44                                                 48                 1673

L              Attach Body                                 01                 49                                                 49             369

M             Install Accessories                       03                 50                                                 52             964

N              Road Test                                    02                 53                                                 54             608

   

                                                                                                                                                                     21,478

Solutions

Expert Solution

Status Report: Ending Day 10 (Note: We ignore all other activities that start on or after day 10).                                                                                                                       

Activity

Planned % completion

Cost

Planned Value (PV)

A

100 %

3,915

1 x 3,915 = 3,915

Cumulative Total

3,915

Status Report: Ending Day 25 (Note: We ignore all other activities that start on or after day 25).                                                                                                                       

Activity

Planned % completion

Cost

Planned Value (PV)

A

100 %

3,915

1 x 3,915 = 3,915

B

100 %

540

1 x 540 = 540

C

2 / 11 = 18.2 %

4,061

0.182 x 4,061 = 739.10

Cumulative Totals

5,194.10

Status Report: Ending Day 40 (Note: We ignore all other activities that start on or after day 40).                                                                                                                       

Activity

Planned % completion

Cost

Planned Value (PV)

A

100 %

3,915

1 x 3,915 = 3,915

B

100 %

540

1 x 540 = 540

C

100 %

4,061

1 x 4,061 = 4,061

D

100 %

2,063

1 x 2,063 = 2,063

E

100 %

1,248

1 x 1,248 = 1,248

F

100 %

1,269

1 x 1,269 = 1,269

H

100 %

2,457

1 x 2,457 = 2,457

Cumulative Totals

15,553

Summary of PV’s at end of the required periods:

Period

PV

10

3,915

25

5,194.10

40

15,553

Budget at Completion (BAC) = Sum of Cost of all activities = 21,478.


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