2024 – 1 Use the following information to answer parts a through h Describe what the results of

1.Use the following information to answer parts a

through h. Describe what the results of each calculation

mean to you as a project manager. What

do you propose to do?

PV $25,000

EV $30,000

AC $29,000

BAC $1,000,000

a. Schedule variance (SV)

b. Cost variance (CV)

c. Schedule performance index (SPI)

d. Cost performance index (CPI)

e. Estimate to complete (ETC—first method)

f. Estimate to complete (ETC—second method)

g. Estimate at completion (EAC)

h. To-complete performance index (TCPI)

2.For a cost savings project, you have captured data

that show the following costs: delays between

operations = $900; broken/missing tools =

$1,200; water losses = $3,700; poor seals =

$1,500; other = $2,000. Construct a Pareto chart.

What would your next course of action be?

CaSe STUDy 13.2

The Superconducting Supercollider

Conceived in the 1980s as a device to accelerate particles

in high-energy physics research, the Superconducting

Supercollider (SSC) was a political and technical hot

potato from the beginning. The technical challenges associated

with the SSC were daunting. Its purpose was to

smash subatomic particles together at near the speed of

light. That would require energy levels of 40 trillion electron

volts. Using the physics of quantum mechanics, the

goal of the project was to shed light on some of the fundamental

questions about the formation of the universe.

The SSC was designed to be the largest particle accelerator

ever constructed, far bigger than its counterpart at

Fermi Laboratory. In order to achieve these energy levels,

a set of 10,000 magnets was needed. Each of the magnets,

cylindrical in shape (1 foot in diameter and 57 feet long),

would need to operate at peak levels if the accelerator

were to achieve the necessary energy levels for proton

collision. The expected price tag just for the construction

of the magnets was estimated at $1.5 billion.

The technical difficulties were only part of the overall

scope of the project. Construction of the SSC would be

an undertaking of unique proportions. Scientists determined

that the accelerator required a racetrack-shaped

form, buried underground for easier use. The overall

circumference of the planned SSC required 54 miles of

tunnel to be bored 165 to 200 feet underground. The initial

budget estimate for completing the project was $5

billion, and the estimated schedule would require eight

years to finish the construction and technical assemblies.

The SSC’s problems began almost immediately

after President Reagan’s 1988 kickoff of the project. First,

the public (including Congress) had little understanding

of the purpose of the project. A goal as nebulous as

“particle acceleration” for high-energy physics was not

one easily embraced by a majority of citizens. The original

operating consortium, URA, consisted of 80 public

and private American research centers and universities,

but it was expected that European and Asian scientists

also would wish to conduct experiments with the SSC.

Consequently, the U.S. Department of Energy hoped to

offset some of the cost through other countries. While

initially receptive to the idea of participating in the

project, these countries became vague about their levels

of contribution and time frame for payment.

Another huge problem was finding a suitable location

for the site of the SSC. At its peak, work on the SSC

was expected to employ 4,500 workers. Further, once

in full-time operation, the SSC would require a permanent

staff of 2,500 employees and an annual operating

budget of $270 million. Clearly, it was to almost every

state’s interest to lure the SSC. The result was a political

nightmare as the National Research Council appointed

a site review committee to evaluate proposals from 43

states. After making their judgments based on a series

of performance and capability criteria, the committee

narrowed their list to eight states. Finally, in late 1988,

the contract for the SSC was awarded to Waxahachie,

Texas, on a 16,000-acre tract south of Dallas. While

Texas was thrilled with the award, the decision meant

ruffled feathers for a number of other states and their

disappointed congressional representatives.

The final problem with the SSC almost from the

beginning was the mounting federal budget deficit,

which caused more and more politicians to question

the decision to allocate money at a time when Congress

was looking for ways to cut more than $30 billion from

the budget. This concern ended up being a long-term

problem, as the SSC was allocated only $100 million for

1989, less than one third of its initial $348 million funding

request. Budget battles would be a constant refrain

throughout the SSC’s short life.

Work proceeded slowly on the Waxahachie site

throughout the early 1990s. Meanwhile, European financial

support for the project was not forthcoming. The

various governments privately suspected that the project

would never be completed. Their fears were becoming

increasingly justified as the cost of the project continued

to rise. By 1993, the original $5 billion estimate had

ballooned to $11 billion. Meanwhile, less than 20% of

the construction had been completed. The process was

further slowed when Congress began investigating

expenditures and determined that accounting procedures

were inadequate. Clearly, control of the project’s

budget and schedule had become a serious concern. In a last desperate move to save SSC funding,

Energy Secretary Hazel O’Leary fired URA as prime

contractor for the construction project. There was talk

of replacing URA with a proven contractor—Martin

Marietta and Bechtel were the two leading candidates.

By then, however, it was a case of too little, too late.

Costs continued to climb and work proceeded at such

a snail’s pace that when the 1994 federal budget was

put together, funding for the SSC had been removed

entirely. The project was dead. The nonrecoverable costs

to the U.S. taxpayer from the aborted project have been

estimated at anywhere between $1 billion and $2 billion.

Few questioned the government’s capability to

construct such a facility. The technology, though leading-

edge, had been used previously in other research

laboratories. The problem was that the pro- and anti-

SSC camps tended to split between proponents of

pure research and those who argued (increasingly

swaying political support their way) that multibillion-

dollar research having no immediate discernible

impact on society was a luxury we could not afford,

particularly in an era of federal budget cuts and hard

choices. The SSC position was further weakened

by the activities of the research consortium supervising

the project, URA. Its behavior was termed

increasingly arrogant by congressional oversight

groups that began asking legitimate questions about

expenditures and skyrocketing budget requests. In

place of evidence of definable progress, the project

offered only a sense of out-of-control costs and poor

oversight—clearly not the message to send when

American taxpayers were questioning their decision

to foot a multibillion-dollar bill.17

Questions

1. Suppose you were a consultant called into the

project by the federal government in 1990, when

it still seemed viable. Given the start to the project,

what steps would you have taken to reintroduce

some positive “spin” on the Superconducting

Supercollider?

2. What were the warning signs of impending failure

as the project progressed? Could these signs

have been recognized so that problems could

have been foreseen and addressed or, in your

opinion, was the project simply impossible to

achieve? Take a position and argue its merits.

3. Search for “superconducting supercollider” on the

Internet. How do the majority of stories about the

project present it? Given the negative perspective,

what are the top three lessons to be learned from

this project?

CaSe STuDy 14.1

New Jersey Kills Hudson River Tunnel Project

When dignitaries broke ground on the Access to the

Region’s Core (ARC) project in northern New Jersey in

2009, it was supposed to be a celebration to signal the

start of a bright new future. Creating a commuter rail

tunnel under the Hudson River was not a particularly

new or difficult idea, but it was viewed as a critical

need. The project was first proposed in 1995, and every

New Jersey governor after that time had publicly supported

the need for the tunnel. The reasons were compelling:

The entire commuter rail system connecting

New York and New Jersey was supported by only one

congested 100-year-old, two-track railroad tunnel into

an overcrowded Penn Station in midtown Manhattan;

both tracks had reached capacity and could no longer

accommodate growth. Passengers were making more

than 500,000 trips through Penn Station every day,

with station congestion and overcrowding the norm.

The project was especially critical for New Jersey residents

because their commuter ridership to New York

had more than quadrupled in the past 20 years from

(continued) 10 million annual trips to more than 46 million annual

passenger trips. In the peak hours, the New Jersey

Transit Authority operated 20 of the 23 trains heading

into or out of New York. Building the ARC would double

the number of New Jersey Transit commuter trains,

from 45 to about 90, that could come into Manhattan

every morning at rush hour.

In the face of such congestion and perceived

need, the ARC project was conceived to include the

following elements:

• Two new tracks under the Hudson River and the

New Jersey Palisades

• A new six-track passenger station, to be known

as “New York Pennsylvania Station Extension”

(NYPSE) under 34th Street, with passenger connection

to Penn Station

• A new rail loop near the Lautenberg Secaucus

Junction station to allow two northern New

Jersey line trains access to New York City

• A midday rail storage yard in Kearny, New Jersey

Proponents also argued the environmental advantages

of the project, noting that the ARC project would eliminate

30,000 daily personal automobile trips, taking

22,000 cars off the roads and resulting in 600,000 fewer

daily vehicle miles traveled. The project was expected

to thus reduce greenhouse gas emissions by nearly

66,000 tons each year.

The ARC project was anticipated to take eight

years to complete, coming into service in 2017. The

cost of the project was significant, as the Federal

Transit Administration (FTA) reported the project cost

as $8.7 billion in their Annual Report. In order to share

the burden of the project costs, the funding as originally

proposed included the following sources:

• Federal government: $4.5 billion

• Port Authority of New York and New Jersey:

$3.0 billion

• New Jersey Turnpike Authority: $1.25 billion

A final important feature of the funding plan limited

the exposure of the federal government for any

project overruns, meaning that the government was

locked into its original commitment amount only. Any

cost overruns or project slippages would have to be

covered exclusively by the state of New Jersey.

The contracts for various parts of the project

began to be awarded following competitive bidding

in June 2009, and the first tunneling contract was

awarded in May 2010. Within little more than three

months, rumbles began being heard from the New

Jersey governor’s office on the viability of the project.

Governor Chris Christie ran and was elected on

the promise of reining in what many viewed as outof-

control spending by the state’s legislature, coupled

with some of the highest property and business taxes

in the country. As a self-described “budget hawk,”

Christie was increasingly troubled by rumors of cost

overruns in the ARC project. Worse, all projections for

completion of the project pointed to a much higher

final price tag than the original $8.7 billion estimate.

In early September 2010, Governor Christie

ordered a temporary halt in awarding new contracts

for the project until his office had a chance to study

project cost projections more thoroughly. This issue

was highlighted when U.S. Transportation Secretary Ray LaHood, though a supporter of the tunnel, publicly

admitted that federal estimates showed the project

could go between $1 billion and $4 billion over

budget. Christie suspected that even those estimates

might be low, putting his state on the hook for a

potentially huge new debt, at a time when the economy

was sour and the state was already desperately

seeking means to trim runaway spending. As additional

evidence of highly suspect initial cost estimates,

Christie’s supporters pointed to the recently completed

“Big Dig” project in Boston, which started with

an initial price tag of $2.5 billion and ultimately ended

up costing well over $14 billion to complete.

Governor Christie first canceled the contract on

October 7, 2010, citing cost overruns for which he said

the state had no way to pay. The following day, he

agreed to temporarily suspend his cancellation order

so that he could try to resolve the funding dilemma

with federal transportation officials and other project

stakeholders. After a two-week period to analyze all

their options, the governor made the cancellation official.

Christie said that given the impact of the recession

and the probability of continuing cost overruns,

the state could no longer afford the tunnel’s escalating

costs. More than a half-billion dollars had already been

spent on construction, engineering, and land acquisition

for a project that was budgeted at $8.7 billion, but

which the governor said could go as high as $14 billion.

“The only prudent move is to end this project,”

Governor Christie said at a Trenton news conference.

“I can’t put taxpayers on a never-ending hook.”30

Questions

1. How would you respond to the argument that it

is impossible to judge how successful a project

like this one would have been unless you actually

do it?

2. Take a position, either pro or con, on Christie’s

decision to kill the ARC. Develop arguments to

support your point of view.

3. In your opinion, how clearly must a large infrastructure

project like ARC have determined its

need, costs, and so forth before being approved?

If the criteria are too stringent, what is the implication

for future projects of this type? Would any

ever be built?

 Students should incorporate outside resources into their paper. A minimum of five (5) outside sources will need to be referenced.   The Final Course Paper should be approximately 10-12 pages with at least five (5) outside references.