Exam - 220221

Question 1: Project Crashing

• Objective: Determine the cost to shorten a project by 5 days.
• Critical Path: Identify the critical path (CP) to determine project duration.
• Crashing Process:
  1. Shorten activities on the critical path with the lowest crashing cost per day, provided they haven't reached their shortest possible duration.
  2. If multiple activities have the same crashing cost, shorten the earlier one.
  3. Check if the critical path changes after each reduction.
  4. Stop after achieving the desired reduction (5 days).
• Example:
  • Original CP = A-E-F-G-H-J = 27 days
  • Crashing Sequence: A(1)-J(1)-F(2)-H(1)
  • Total Crashing Cost = 5000 SEK

Question 2: Earned Value Analysis (EVA)

• Objective: Calculate project performance indicators and estimate final costs using EVA.
• Given Data:
  • Accumulated PV = 1000 KSEK
  • Accumulated EV = 800 KSEK
  • Accumulated AC = 1150 KSEK
  • Original Budget = 1600 KSEK
• Calculations:
  • Schedule Variance (SV) = EV - PV = 800 - 1000 = -200 KSEK
  • Cost Variance (CV) = EV - AC = 800 - 1150 = -350 KSEK
  • Cost Performance Index (CPI) = EV/AC = 800/1150 = 0.7
  • Schedule Performance Index (SPI) = EV/PV = 800/1000 = 0.8
  • Estimated Total Project Costs = AC + (Original Budget - EV)/CPI = 1150 + (1600 - 800)/0.7 = 2300 KSEK
• Interpretation:
  • The project is underperforming in both time and schedule.
  • Expected final costs: 2300 KSEK instead of 1600 KSEK.

Question 3: Payback Method

• Objective: Prioritize projects based on the payback period.
• Project 1 (ERP System):
  • Total Investment = 7 (development) + 4 (implementation) + 3 (compensation) = 14 MSEK
  • Annual Net Cash Flow = 5 (savings) - 1 (IT support) = 4 MSEK
  • Payback Period = 14/4 = 3.5 years
• Project 2 (New Equipment):
  • Total Investment = 15 (equipment) + 5 (shutdown loss) = 20 MSEK
  • Annual Net Cash Flow = 5 MSEK
  • Payback Period = 20/5 = 4 years
• Decision:
  • Prioritize Project 1 due to the shorter payback period.

Question 4: Benefits Management Approaches

• Instrumental Approach:
  • Rational perspective, objective process.
  • Focuses on measurability, evaluation, organizational change, and performance.
  • Assumes proper implementation leads to benefits.
  • May use rigid frameworks.
  • Neglects social and political dimensions.
• Social Approach:
  • Questions linearity and rationality.
  • Dynamic, non-linear; involves stakeholders.
  • Focuses on subjective dimensions, emotions, and actors' characteristics.
  • Benefits are multidimensional and multileveled.
  • Benefits are socially constructed.