9.10 Exercises

GreenFuture Inc., a fictional company, is launching a renewable energy project to install a 50 MW solar farm in Texas. The project aims to generate clean energy for 10,000 homes annually. This initiative is part of the company’s strategic plan to expand its renewable energy portfolio and support the state’s sustainability goals. The project involves various stages: site preparation, equipment installation, system testing, and final commissioning.

Project Details:

• Project Objective: Deliver a fully operational solar farm within 12 months, adhering to high environmental and safety standards.
• Key Deliverables:
  1. Clear and prepare the land (50 acres).
  2. Install solar panels, inverters, and related equipment.
  3. Construct an on-site substation to connect to the grid.
  4. Conduct system testing and commissioning.

Available Data: The following data provides insights into costs based on industry benchmarks and past projects:

1. Land Preparation Costs:
   • Optimistic: $150,000
   • Most Likely: $200,000
   • Pessimistic: $250,000
2. Equipment Installation Costs:
   • Parametric Estimate: $2,500 per kW for solar panel and inverter installation.
   • Total capacity: 50 MW.
3. Substation Construction Costs:
   • Analogous Estimate: $1.5 million based on a similar project completed last year.
4. Labor Costs:
   • Expert Judgment: $50/hour for electricians and $40/hour for general workers.
   • Estimated labor hours: 20,000 (split as 40% electricians and 60% general workers).
5. Project Management Costs: $150,000 for project oversight.
6. Contingency Reserve: Allocate 10% of the total direct costs.

Tasks and Questions:

Part 1: Estimating Costs

1. Land Preparation:
   • Use the three-point estimation method to calculate the expected cost based on the optimistic, most likely, and pessimistic estimates.
   • Which method (triangular or beta distribution) provides a more realistic cost estimate, and why?
2. Equipment Installation:
   • Calculate the total cost of installing solar panels and inverters using the parametric estimating method.
3. Substation Construction:
   • Explain the analogous estimating technique used for this activity and justify its application.
4. Labor Costs:
   • Calculate the total labor costs using the provided expert judgment data.

Part 2: Determining Budget

1. Aggregate the estimated costs for all activities (Land Preparation, Equipment Installation, Substation Construction, and Labor Costs).
2. Add the project management cost and contingency reserve (10% of direct costs) to establish the total project budget.
3. Based on the total project budget, what cost components contribute the most, and how can they be optimized to reduce costs without compromising quality?

You should use the solution file for Chapter 7’s Microsoft Project exercise.

Table 1: Resources allocated to each activity

* HR: Human Resource, M: Material, EQ: Equipment

Table 2: Resource Sheet

Questions

1. On the “Resource Sheet” page on the MS Project file, type all the available resources in Table 2.
2. In the “Resource Sheet,” select the “Type” for each resource, and type all the costs for all resources, which are available in Table 2.
3. On the “Gantt Chart” view, insert a “Cost” column to the right of “Resource Names.”
4. Allocate resources by checking them for each task on the dropdown menu.
5. Type the number of units for materials by double-clicking relevant tasks. Under the “Resources” tab on the task pop-up window, type the number of units for materials as indicated in the table above.
6. Type the costs of flights and hotels on the task pop-up window. Do not write these costs in the “Resource Sheet.” These costs are not per hour or unit. They can be different for each activity. Therefore, you must type them on the task pop-up windows.
7. Open “Resource Usage” to determine the resources that cause resource conflict. Based on the information in the “Resource Usage” window, explain the resource conflicts under the first screenshot on the Word document. Indicate which resources are overallocated in which weeks (e.g., May 2nd week: HR2).
8. Apply resource leveling to solve the resource conflict.
9. If you see any scheduling issues (e.g., underlined date), solve the scheduling issues by respecting links. Even if you don’t see it, you should apply “Respect Links” to the activities after the leveled activities.
10. Answer the questions below:
    1. Did the total project duration change?
    2. Did the total cost change?
    3. How did resource leveling affect activities? Which activities were scheduled? Is there any split activity? If so, explain how resources were reallocated in this activity.
11. Under the “Report” tab, click Costs and select Resource Cost Overview, and review the charts and tables.