Question: MT Contractors is negotiating a deal with a realty firm. The realty firm wants each house to be completed within 45 days after it is started. If a house is not completed within this time frame it wants to be able to charge the contractor a penalty. MT Contractors want to make sure to meet the deadline for a house before they enter into an agreement with a penalty involved. If there is a likelihood that they can’t finish a house in 45 days they want to increase the bid to cover the penalty charge. They made their estimates conservatively and tended to increase their pessimistic estimates to compensate for bad weather and variations in labor force.

Required:

a. Develop a CPM/PERT network for MT Contractors and determine the probability that the company can complete a house within 45 days. Does it appear that MT Contractors might need to increase their bid to compensate for potential penalties?

b. Indicate which project activities MT Contractors should be particularly diligent to keep on schedule by making sure workers and materials are always available. Also indicate which activities the company might shift workers from as the need arises.