Suppose you are a project manager of a power plant project, and there is a penalty...

  

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Suppose you are a project manager of a power plant project, and there is a penalty in your contract with the main client for every day you deliver the project late. You must decide which sub-contractor is appropriate for your project's critical path activities. But while selecting a sub-contractor, you should consider the costs and delivery dates. Sub-contractor 1 bids MYR500,000. You estimate there is a 20% possibility of completing 60 days late. As per your contract with the client, you must pay a delayed penalty of MYR5,000 per calendar day for every day you deliver late. Sub-contractor 2 bids MYR420,000. You estimate there is a 15% possibility of completing 20 days late. As per your contract with the client, you must pay a delayed penalty of MYR5,000 per calendar day for every day you deliver late. You need to determine which sub-contractor is appropriate for your project's critical path activities. Both sub-contractors promise successful delivery and high-quality work. You should: a) Prepare a decision tree for a project management situation and assign the probability of occurrence for the risks. (6 marks) b) Calculate the Expected Monetary Value (EMV) of both subcontractors. (4 marks) Suppose you are a project manager of a power plant project, and there is a penalty in your contract with the main client for every day you deliver the project late. You must decide which sub-contractor is appropriate for your project's critical path activities. But while selecting a sub-contractor, you should consider the costs and delivery dates. Sub-contractor 1 bids MYR500,000. You estimate there is a 20% possibility of completing 60 days late. As per your contract with the client, you must pay a delayed penalty of MYR5,000 per calendar day for every day you deliver late. Sub-contractor 2 bids MYR420,000. You estimate there is a 15% possibility of completing 20 days late. As per your contract with the client, you must pay a delayed penalty of MYR5,000 per calendar day for every day you deliver late. You need to determine which sub-contractor is appropriate for your project's critical path activities. Both sub-contractors promise successful delivery and high-quality work. You should: a) Prepare a decision tree for a project management situation and assign the probability of occurrence for the risks. (6 marks) b) Calculate the Expected Monetary Value (EMV) of both subcontractors. (4 marks)

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