• First that the project is completed in a more efficient manner than originally planned, fewer resources are being used, and the project is on schedule (or even ahead of schedule).
• The second conclusion is that the project is behind schedule and that the reason for the lesser amount of expenditures are that not enough work has been done to use up the entire $450,000 that were budgeted for that point in time.
Company X is a consulting company that helps manufacturing companies to set up their assembly lines and quality control processes for high technology products.
When the company receives a request for work, the tasks are first evaluated by the VP of Engineering to determine whether it is something within the company's area of expertise. If the VP of Engineering accepts the task, then a member of the finance department in conjunction with two members of the engineering team prepare a proposal for the cost of carrying out the task. This task also includes a cover letter, a statement of work, specification of the length, and stack of standard clauses.
Once this is done, the company sends the estimate to the party requesting the proposal. Once the party accepts, then the engineering team begins working on how to best execute the task described in the proposal. This type of approach is called as proposal preparation.
The following is an arrow diagram of the project.
The critical path for the project is V-Y and the duration of this path is 31 weeks.
The lowest cost duration for the project will be 30 weeks, with a additional project cost of $6,600. To achieve this cost, activity V should be reduced by one week by paying $1,000, and the company should pay a penalty for four weeks late, which corresponds to $5,600.