GROUP U - LNG PROJECT CONFLICT CLOUD

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Company A is constructing an LNG facility but due certain slippages the project is falling behind schedule. The footings for the gas turbines were originally scheduled to be completed by 30th November, but the proposed change is now targeting the 1st November with an additional cost of $1.5 million. The conflict is between the Area manager, who is in favour of spending the money and the overall Project manager, who thinks that the extra cost is not justified.

D: Install the footings by 1st Nov, at an additional cost of $1.5 million in order to recover from slippages
D': Complete the footings by 30th Nov, as per the original schedule and avoid the additional cost of $1.5 million
B: Recover from project slippages and meet the project deadlines.
C: Control the overall cost of project operations
A: Install the footings and complete the project at the earliest to start the production and deliveryof LNG
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In order to Install the footings and complete the project at the earliest to start the production and deliveryof LNG I must Recover from project slippages and meet the project deadlines. and in order to Recover from project slippages and meet the project deadlines. I must Install the footings by 1st Nov, at an additional cost of $1.5 million in order to recover from slippages. But, in order to Install the footings and complete the project at the earliest to start the production and deliveryof LNG I must also Control the overall cost of project operations and in order to Control the overall cost of project operations I must Complete the footings by 30th Nov, as per the original schedule and avoid the additional cost of $1.5 million. I can't both Install the footings by 1st Nov, at an additional cost of $1.5 million in order to recover from slippages and Complete the footings by 30th Nov, as per the original schedule and avoid the additional cost of $1.5 million.
RelationAssumption(s)Injection(s)
D-D'The earned value system does not appreciate the advantage of spending $1.5 million to install the footings ahead of scheduled time whereas the critical path method will justify that the extra cost would help to recover from earlier slippages.Both the earned value system and the critical path method cannot be used separately as depending only upon earned value system would lead to schedule delay, on the other hand relying only upon critical path method will lead to cost overrun. The project team should use a combination of both the systems to meet the project constraints.
B-DInstallation of footings before time will help in early completion of other tasks depending on it, there by creating new dependencies by introducing start to start lags between various tasks which would help in project completion on time.It is still unsure whether the installation of footings lies on critical path and will help in completion of project on the new proposed date. There can be other methods for completion of project on time without incurring extra cost of $1.5 million.
C-D'The project team working on the project is still uncertain whether spending the extra cost would help in finishing ahead of time and will improve the critical path.Consequences of project not completing on time would be more serious and company would suffer huge losses which can be mitigated by spending the extra $1.5 million for installing the footings by 1st Nov which will reduce WIP( work in progress).
A-BIf the project is not completed on time company cannot commence the production and delivery of LNG which could lead to company facing legal consequences and result in failure of project.The project team can evaluate alternative methods for completion of project on time and recover from slippages by adopting new ideas and techniques within project scope, budget and time.
A-CThe main goal of the company is to emphasise on making profits and controlling the cost and reduce expenditure.Production and delivery of LNG is more important than cost control in order to avoid the penalties face due to do project not finishing on time.