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Case Teaneck

Satisfactory Essays

TEANECK CONSTRUCTION COMPANY

Teaneck is a small organization with 90% of its peso volume obtained from contracts for municipal work. Management decided to submit a bid for the construction in April of a mile-long extension to the main sewer system in a nearby town which until now has used septic tanks. The bidding is expected to be competitive because whoever gets this contract will have some advantage in obtaining a contract to be awarded by the town later in the year worth about P50 million. In order to submit the most competitive bid possible, the project managers of Teaneck decided to evaluate the alternatives of using one, two or three work shifts.

Table 1 shows time and cost estimates of Teaneck’s engineers. The trunk sewer …show more content…

With a great deal of misgiving, the project managers came up with the following guesses:

Length of the strike in days 20 30 40
Probability of a strike of n days, on condition that a strike occurs 0.25 0.25 0.50

You are the project manager assigned. The president and his two executive vice-presidents have asked you for a detailed recommendation, including the exact bid to be submitted. One Shift Two Shifts Three Shifts
TABLE 1 ACTIVITY Predecessor Days Pesos Days Pesos Days Pesos
A Move in machinery/equipment - 12 150,000 6 165,000 4 180,000
B Excavate primary shaft A 12 347,500 12 347,500 12 347,500
C Excavate secondary shafts B 60 312,500 24 330,000 12 347,500
D Excavate trenches A 300 1,685,000 150 2,125,000 100 2,235,000
E Excavate tunnel B 305 1,807,500 155 1,955,000 105 2,000,000
F Backfill (trenches only) J 50 50,000 25 75,000 17 100,000
G Pipelaying in trenches D 50 375,000 25 410,000 17 445,000
H Pipelaying in tunnel C,E 50 275,000 25 285,000 15 300,000
J Pour concrete in trenches G 70 570,000 35 582,500 25 592,500
K Pour concrete in tunnel H 60 550,000 30 562,500 20 575,000
L Landscape K, F 10 100,000 8 145,000 6

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