Quality Engineer

Topics: Project management, Costs, Cost Pages: 5 (895 words) Published: July 1, 2014

Case of Study: Bathtub Period

The Scott project was a ten-month time period to develop a new product for Scott Corporation. The project team was seven full-time employees including Jerry Dunlap the project manager. Dunlap’s team were selected as the best employees of Park Industries. Besides, eight people from functional department. Four full time and the rest half time. Dunlap did not wish to break up the project office or reduce the team member as the workload was not constant. The monthly man-hour rate was 2,080 and the estimated cost per person was $ 60.00. After four month remaining on the project, Scott Corporation complained to Park Industries about the projected cash flow problem. Dunlap assigned his key people to other projects to guarantee that they will be not here at the beginning of the follow-on-work. Dunlap estimated 40,000 per month during the “bathtub” period to support and maintain his key people.

Should Jerry go to the General Manager?
Jerry should compare apple to apple “Work is priced out at the department average, and all work performed is charged to the project at the department average salary, regardless of who accomplished the work”. Jerry did not price the man-hour and determine the budget correctly. The way he assigned the key personnel and the estimate during the bathtub was improper.

Should the key people be supported on overhead?
Yes, key people have enough experience to work with new client and maintain a rapport with usual customers. However, new employees and new engineers should be involved in project to maintain transfer knowledge and experiences. Also, this could help the organization to determine a reasonable cost for the man-hour considering all the salaries and payroll. If this were a cost-plus program would you consider approaching the customer with your problems in hopes of relief? It would be in this case, however, this will show the customer that my organization has poor pricing and no budget forecast was initiated. Customer needs to be satisfied with the project output some of them don’t care about the money as they care about the time. I would say we approach the customer but with additional feature on the product. Improper cost control should not be paid by the customer. When Frank told Jerry that he wanted to “book” the management a reserve of $125,000 as excess profit, he was assuming that Jerry knows that it is not cost-plus forecast and he did not forecast man-hour budgeting properly. If you were the customer of this cost-plus program, what would your response be for additional funds for the bathtub period, assuming cost overrun? No, follow-on work need reasonable estimate and forecast. I would assume my contractor did good estimate.

Would your previous answer change if the program had the money available as a result of an under-run? Under-run is not necessarily a criteria of completing the phases with less cost. It might be an indication of nothing happened or major milestones was not achieved. Cost control should reflect a proper measurement of consumed resources, status and accomplishment, Compare measurements to projections and standards and finally provide the basis for diagnosis and re-planning How do you prevent this situation from recurring on all yearly follow-on contract? By implementing proper cost control through;

Measure resources consumed
Measure status and accomplishments
Compare measurements to projections and standards
Provide the basis for diagnosis and re-planning
Thorough planning of the work to be performed to complete the project Good estimating of time, labor, and costs
Clear communication of the scope of required tasks
A disciplined budget and authorizations of expenditures
Timely accounting of physical progress and cost expenditures Periodic re-estimation of time and cost to complete remaining work Frequent, periodic comparison of actual progress and expenditures to schedules and budgets, both at...
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