Case Scenario:
Specialty Contractors, Inc. In early 1993, Specialty Contractors, Inc. (SCI) received a fixed price contract to construct a telecommunications relay station from the Nebraska Broadcasters' Association (NBA). Using network diagramming, the contract coordinator, Mr. Harris, determined that the project could begin on August 6 and still be completed prior to the October 26 deadline imposed by the NBA. The network of the project , with the activity durations (Normal Time). As the August 6th date approached, Mr. Harris learned that a fire in SCI's regional office would delay the start of the project by four weeks. He was noticeably disturbed, as he recalled the penalty clause in the contract: For each week or part of a week beyond the October 26th completion deadline, the contract pice would be reduced by $9,000 from the original fixed price of $90,000. Since Mr. Harris' original network diagram included no overtime or expediting costs, he felt it might be possible to reduce the length of the overall project to avoid some of the penalty costs. He began his analysis by determining the minimum time duration (Crash Time in weeks) required to complete each activity in the network if the maximum amount of overtime and expediting were employed for the project. He also calculated the total cost of the project for completion within this minimum time. He further determined the crashing cost (the cost required to reduce an activity by one week) for each activity.
Mr. Harris then wondered how to determine which activities should be decreased in duration and by how much. He felt the crashing features of the Critical Path Method (CPM), could help him reach a logical decision about the NBA project. What is the optimal strategy for Mr. Harris?
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