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Quantitative Problems- Project Management

A leading manufacturer of construction and mining equipment is considering placing a bid for 6 excavators. The manufacturer has just finished building the first excavator. The data for the first excavator is as follows:

Labor Hours = 6,000
Material Cost = $200,000
Labor Cost = $50/hour

The company expects a Learning Rate of 75% in building these excavators for the next 2 units, then anticipates that the time per unit levels out and little further improvement occurs.

Determine the bid that should be placed, that is, the total budget and schedule needed to complete this prospective project.

2. Tracking signals may identify the accuracy of one's estimating skills. Using the following data:
a. Compute the tracking signal for each period
b. What is the Mean Absolute Ratio (MAR) at the end of 6 months?
c. Interpret the results

Bias in Estimate Chart
Month Estimate Actual (At/Et)-1 |(At/Et)-1| MAR Tracking Signal
1 1000 950
2 1100 1040
3 1110 1050
4 1000 960
5 1150 1090
6 1100 1050

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Solution Summary

There are two problems. Solution to first problem depicts the methodology to calculate the bid amount in the given case. Solution to second problem calculates the Tracking Signal and Mean Absolute Ratio in the given case.