Exam - 230227

Question 1

• Critical Path Identification:
  • CP = A-B-C-E-G-I = 26 days
• Crashing Procedure:
  • Shorten activities on the critical path with the lowest crashing cost per day, prioritizing earlier activities in case of identical costs.
• Crashing Steps and Costs:
  • C(2) - 1000 SEK (2 * 500)
  • A(1) - 1000 SEK
  • G(1) - 1000 SEK
  • E(1) - 1500 SEK
• Total Crashing Costs:
  • 4500 SEK
• Crashing Diagram Shape:
  • The curve typically steepens as it approaches the minimum project duration due to increasing crashing costs.
• Managerial Use:
  • Facilitates discussion on optimal crashing, focusing on 'knee points' to balance duration reduction and cost.

Question 2

• EVA Calculations (End of Day 4):
  • PV = 1600 €
  • EV = 1200 €
  • AC = 1600 €
  • CPI = EV/AC = 0.75
  • SPI = EV/PV = 0.75
• Budget Estimation:
  • Scenario 1 (Less Realistic): Total project costs = AC + (Original budget - EV)/CPI = 3467 €
  • Scenario 2 (More Realistic): Total project costs = AC + (Original budget - EV)/1 = 3000 €
• SPI vs. CPM:
  • SPI indicates delays (0.75 < 1).
  • CPM shows the project is on schedule due to float in Activity B.
  • EVA doesn't differentiate between critical and non-critical activities.
• Analytical Note to Sponsor (Scenario 2):
  • Schedule deviation on non-critical activity, cost overrun due to one-off event.
  • Forecast: Project duration = 7 days, Total project costs = 3000 €.

Question 3

• Payback Period Calculation:
  • Payback Period = Total Investment / Annual Net Cash Flow
• Project 1:
  • Total Investment = 20 MSEK + 6 MSEK = 26 MSEK
  • Annual Net Cash Flow = 10 MSEK - 2 MSEK - 4 MSEK = 4 MSEK
  • Payback Period = 26/4 = 6.5 years
• Project 2:
  • Total Investment = 40 MSEK + 5 MSEK + 10 MSEK = 55 MSEK
  • Annual Net Cash Flow = 10 MSEK
  • Payback Period = 55/10 = 5.5 years
• Prioritization:
  • Prioritize Project 2 for investment due to shorter payback period (5.5 < 6.5).

Question 4

• Top-Down Approach:
  • Relies on past experience.
  • Suitable when 100% accuracy is not essential.
• Bottom-Up Approach:
  • Requires time and resource investment early on.
  • Demands cooperation from key participants.
• Instrumental Approach to Benefits Management:
  • Rational perspective on benefits management.
  • Sequential process by project/organization.
  • Emphasizes measurability, evaluation process, organizational change, and performance.
  • Assumes proper implementation leads to reaping benefits.
  • Does not account for social and political dimensions.