Sharon Construction Essay

868 Words Feb 11th, 2014 4 Pages
The Sharon Construction Corporation has been awarded a contract for the construction of a 20,000-seat stadium.
The construction must start by February 15 and be completed within one year. A penalty clause of $15,000 per week of delay beyond February 15 of next year is written into the contract.
Jim Brown, the president of the company, called a planning meeting. In the meeting he expressed great satisfaction at obtaining the contract and revealed that the company could net as much as $300,000 on the project.
He was confi dent that the project could be completed on time with an allowance made for the usual delays anticipated in such a large project.
Bonnie Green, the director of personnel, agreed that in a normal year only
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Concrete pouring in
December might thus require in one out of every three cases (depending on the temperature) special heating that costs $500 per week.
This additional information did not please Jim at all.
The chances for delay were mounting. And an overhead expense of $500 per week would be incurred in case of any delay. The technical details of the project are given in the appendix to this case.
The management team was asked to consider alternatives for coping with the situation. At the end of the week, fi ve proposals were submitted.
1. Expedite the pouring of seat gallery supports. This would cost $20,000 and cut the duration of the activity to six weeks.
2. The same as proposal 1, but in addition, put a double shift on the fi lling of the fi eld. A cost of $10,000 would result in a fi ve-week time reduction.
3. The roof is very important since it precedes several activities. The use of three shifts and some overtime could cut six weeks off the roofi ng at an additional cost of only $9,000.
4. Do nothing special until December 1. Then, if December is indeed cold, defer the pouring until the cold wave breaks, schedule permitting, and heat whenever necessary. If a strike occurs, wait until it is over (no other choice) and then expedite all remaining activities. In that case, the duration of any activity could be cut but to no less than one-third of its normal duration. The