Pump Delivery Slip on a Treatment-Plant Upgrade
Your firm is managing a 12-week upgrade of a water-treatment plant. The approved schedule has these activities: A site preparation (5 days), B foundations (8 days, after A), C purchase and delivery of the main pump (20 days, after A), D pump installation (6 days, after B and C), E pipe-rack fabrication (10 days, after B), F electrical and instrumentation (7 days, after E), and G commissioning (4 days, after D and F). All durations are deterministic and the project starts on day 0. The client's production shutdown begins on day 35 and any later completion costs $6,000 per day in liquidated damages. At the week-2 progress meeting, the pump vendor states that delivery will slip from 20 to 30 days because of a casting defect. The project manager proposes to crash E and F by two days each at a cost of $9,000, or to expedite pump installation from 6 to 2 days at a cost of $18,000. The purchase order contains vendor liquidated damages of $3,000 per day for delivery after day 20.
1. Calculate the original critical path, project duration, and total float of activity F. Show the forward and backward pass.
Read the worked answer
Forward pass: A ES=0, EF=5; B ES=5, EF=13; C ES=5, EF=25; E ES=13, EF=23; F ES=23, EF=30; D ES=max(13,25)=25, EF=31; G ES=max(31,30)=31, EF=35. Backward pass: G LS=31; D LS=25; F LS=24; E LS=14; C LS=5; B LF=min(D LS=25, E LS=14)=14, LS=6; A LF=min(B LS=6, C LS=5)=5, LS=0. Critical path is A-C-D-G with zero float. Project duration is 35 days. Activity F has ES=23 and LS=24, so total float = 1 day. The parallel B-E-F path has only 1 day of float, so it is near-critical and any delay over 1 day will affect completion. This matters because a short slip in fabrication or electrical work could become critical.
2. After the 10-day pump delay, calculate the new completion date and evaluate the two proposed recovery options plus the option of accepting the delay. Use the liquidated-damages figures. Recommend a course of action.
Read the worked answer
After the pump slip, C EF=5+30=35. D ES=max(B EF=13, C EF=35)=35, EF=41. G ES=max(D EF=41, F EF=30)=41, EF=45. New duration is 45 days, a 10-day slip; LD exposure = 10 x $6,000 = $60,000.
- Crash E and F by 2 days each: E/F path ends at 26 or 30, while G still waits for D at 41. No reduction in project duration. Cost = $9,000 crash + $60,000 LD = $69,000 gross; net after $30,000 vendor LD recovery = $39,000.
- Expedite D from 6 to 2 days: D EF=37, G ES=37, EF=41. Duration 41 days, 6-day slip. Cost = $18,000 + 6 x $6,000 = $54,000 gross; net after vendor recovery = $24,000.
- Accept delay: $60,000 gross; net after vendor recovery = $30,000. On pure cost, expediting D is best, provided the installation crew can safely and quality-wise complete in 2 days. If the expedite is not credible, accepting the delay and recovering vendor LD is better than crashing non-critical E/F. The decision should also consider that the pump vendor LD may be disputed or capped.
3. What contractual and communication actions should you take before authorizing the $18,000 expedite?
Read the worked answer
Before authorizing the $18,000 expedite: (1) issue a written notice to the pump vendor reserving rights and demanding a recovery schedule; (2) confirm the LD entitlement and whether the contract caps it; (3) obtain a written method statement, risk assessment and resource commitment from the installation crew for the 2-day duration; (4) verify that the expedite does not bypass inspection/testing or create a safety risk; (5) update the schedule baseline and issue a revised look-ahead to the client with the selected recovery plan; (6) record the decision, cost code and rationale in the daily log and change log. Do not rely on verbal assurances. If the vendor will not accept responsibility, escalate commercially before spending the $18,000.