A Friendly Assisted Living Facility Case-8 It was a beautiful day in mid-May 20X8. The Friendly Medical Center Assisted Living Facility project was near ing completion. As usual, the construction project man ager, Kyle Nanno, was thinking about the construction project's schedule. It seemed to him that work on finishing the interior of the building was slowing down a bit. He knew that the final weeks of a project always seemed to take forever, but he also knew that the project was running almost 2 weeks late as a result of a problem encountered during the excavation phase of the construction project. During March and April, it appeared that they were catching up. Kyle had discussed with the construction contractor that Friendly Medical Center would pay over time to catch up, but the speed-up was temporary, and the job continued to be late. Kyle was not quite sure why. Progress just seemed to be in slow motion. He decided to meet with Fred Splient, the President and CEO of Friendly Medical Center, to discuss the problems. Fred suggested that Kyle call in someone to audit the project, in particular to examine the project schedule care- fully. Fred also wanted the auditor to look at the project expenses to date. Fred had just received a crude spread sheet from the CFO, and it did not reflect the progress he thought should have been made as this project was coming to an end. CASE ALF Program Expenses as of 5/24X8 Actual as of 5/24/X8 Remaining s Budgeted $0.00 221,023.00 $6,743,000.00 453,277.00 600,000.00 354,332.00 0.00 50,668.00 150,321.00 249,679.00 Construction Costs: Building Contingency Land Program development & equipment costs Furniture A&E fees Financing costs Capitalized interest Site improvements Phone & IS system Kitchen equipment Subtotal Organizational Costs: Legal and accounting Initial marketing Project consultant Follow-up market survey Subtotal $6,743,000.00 674,300.00 600,000.00 405,000.00 400,000.00 202,000.00 135,000.00 125,000.00 30,000.00 30,000.00 $9,691,300.00 202,000.00 135,000.00 147,655.00 22,438.00 23.776.00 $9,278,157.00 0.00 0.00 -22,655.00 7,562.00 6,224.00 $413,143.00 $0.00 0.00 0.00 100 $25,000.00 250,000.00 80.000.00 20,000.00 $375,000.0 $10,066,300.00 $25,000.00 250,000.00 80,000.00 20,000.00 $375,000.00 $788,143.00 $0.00 Total $9,278,157.00 Fred asked Kyle to find out if anyone in the hospital's accounting department had experience with projects and project management software. Kyle knew instantly who to call. Caroline Stevens had once helped him on other hos pital projects. Kyle trusted her to act impartially and to be able to figure out what was happening Caroline agreed to function as the Project Auditor. She began by examining the most recent project schedule from the construction company. She then created a progress-to- date report with MSP. She also did a complete analysis of the CFO's report. The expense report she reviewed and updated is found below. Using MSP, Caroline created a graphical progress report on the project as of May 24. She marked the actual progress of each unfinished activity by placing a diamond embedded in a circle on the project's Gantt chart. If the symbol was to the left of the May 24 line, that activity was late; the amount of lateness was indicated by the distance of the symbol to the May 24 line. The symbol for on-time activities rested on the May 24 line. If there had been early activities, their symbols would have been to the right of the May 24 line. Caroline's chart is shown above. Caroline then scheduled a meeting with Kyle and Fred Splint. She reported that she did see a work slowdown She conducted interviews with the construction team, and it appeared that they were concerned about their next work assignment. They told her that in the past as projects were coming to a close they were told of their next scheduled job. They had not heard anything yet, and they were worried. She also reported that the interior designer had added seven extra days to complete the interiors (Task +6 of the project) because the carpet and wall coverings might arrive a week late from the manufacturer. They actually arrived on schedule. The estimated remaining duration for the interiors to be completed was 34.6 days The designer did tell her that the furniture had not all arrived, so they were withholding about 30 percent of the payment until it all arrived. Caroline also reported to Fred that it appeared that the expenses that were allocated to pay back Friendly Medical Center for such things as preliminary marketing efforts, legal support, and so on had not yet been expensed to the project budget. The only thing that was expensed was the original project construction budget. That budget seemed to be right on track. Kyle reported that he intended to spend the rest of the contingency budget for overtime work by the construction crews. He also intended to use the rest of the IS budget to purchase computers for the common areas of the facility and to wire those areas for access to the Internet. In addition, he was waiting for bills Assisted Living Facility Construction Project Update as of 5/24/XS Tak Nume Bueline Duration Reining Datin g Construction & furnishing 360 days w747 days 76.63 days 14 days 329 314.49 28.61 days 14 dan M 110. 15. e 1 Foundation & Phwe - Structure 113 de Odos 114 130 Odys how - 24. 46.3d . Pleten moet * units ready for m e Remaining 57 units licht heavy tumelavet Odays 10 C incomplete 11 May PM Nano "Please note MSP calculates the duration variance for each step of the action plan by subtracting the actual from the busine. The summary baseline and actual de are then rolled up to the summary tasks baseline and actual duration figures. The summary tasks' duration variance is the calculated by adding the summ a duration plus the remaining duration and then subtracting that sum from the baseline duration QUESTIONS 1. Estimate the final construction budget. 2. What should they do about the work slowdown? 3. Create a Gantt chart with the revisions to the dura tion of the interiors step. When will the project be completed? 4. What is the importance of the fact that the Hospital staff expenses were not reported under the project budget! 5. Write a one-page audit report of this project. A Friendly Assisted Living Facility Case-8 It was a beautiful day in mid-May 20X8. The Friendly Medical Center Assisted Living Facility project was near ing completion. As usual, the construction project man ager, Kyle Nanno, was thinking about the construction project's schedule. It seemed to him that work on finishing the interior of the building was slowing down a bit. He knew that the final weeks of a project always seemed to take forever, but he also knew that the project was running almost 2 weeks late as a result of a problem encountered during the excavation phase of the construction project. During March and April, it appeared that they were catching up. Kyle had discussed with the construction contractor that Friendly Medical Center would pay over time to catch up, but the speed-up was temporary, and the job continued to be late. Kyle was not quite sure why. Progress just seemed to be in slow motion. He decided to meet with Fred Splient, the President and CEO of Friendly Medical Center, to discuss the problems. Fred suggested that Kyle call in someone to audit the project, in particular to examine the project schedule care- fully. Fred also wanted the auditor to look at the project expenses to date. Fred had just received a crude spread sheet from the CFO, and it did not reflect the progress he thought should have been made as this project was coming to an end. CASE ALF Program Expenses as of 5/24X8 Actual as of 5/24/X8 Remaining s Budgeted $0.00 221,023.00 $6,743,000.00 453,277.00 600,000.00 354,332.00 0.00 50,668.00 150,321.00 249,679.00 Construction Costs: Building Contingency Land Program development & equipment costs Furniture A&E fees Financing costs Capitalized interest Site improvements Phone & IS system Kitchen equipment Subtotal Organizational Costs: Legal and accounting Initial marketing Project consultant Follow-up market survey Subtotal $6,743,000.00 674,300.00 600,000.00 405,000.00 400,000.00 202,000.00 135,000.00 125,000.00 30,000.00 30,000.00 $9,691,300.00 202,000.00 135,000.00 147,655.00 22,438.00 23.776.00 $9,278,157.00 0.00 0.00 -22,655.00 7,562.00 6,224.00 $413,143.00 $0.00 0.00 0.00 100 $25,000.00 250,000.00 80.000.00 20,000.00 $375,000.0 $10,066,300.00 $25,000.00 250,000.00 80,000.00 20,000.00 $375,000.00 $788,143.00 $0.00 Total $9,278,157.00 Fred asked Kyle to find out if anyone in the hospital's accounting department had experience with projects and project management software. Kyle knew instantly who to call. Caroline Stevens had once helped him on other hos pital projects. Kyle trusted her to act impartially and to be able to figure out what was happening Caroline agreed to function as the Project Auditor. She began by examining the most recent project schedule from the construction company. She then created a progress-to- date report with MSP. She also did a complete analysis of the CFO's report. The expense report she reviewed and updated is found below. Using MSP, Caroline created a graphical progress report on the project as of May 24. She marked the actual progress of each unfinished activity by placing a diamond embedded in a circle on the project's Gantt chart. If the symbol was to the left of the May 24 line, that activity was late; the amount of lateness was indicated by the distance of the symbol to the May 24 line. The symbol for on-time activities rested on the May 24 line. If there had been early activities, their symbols would have been to the right of the May 24 line. Caroline's chart is shown above. Caroline then scheduled a meeting with Kyle and Fred Splint. She reported that she did see a work slowdown She conducted interviews with the construction team, and it appeared that they were concerned about their next work assignment. They told her that in the past as projects were coming to a close they were told of their next scheduled job. They had not heard anything yet, and they were worried. She also reported that the interior designer had added seven extra days to complete the interiors (Task +6 of the project) because the carpet and wall coverings might arrive a week late from the manufacturer. They actually arrived on schedule. The estimated remaining duration for the interiors to be completed was 34.6 days The designer did tell her that the furniture had not all arrived, so they were withholding about 30 percent of the payment until it all arrived. Caroline also reported to Fred that it appeared that the expenses that were allocated to pay back Friendly Medical Center for such things as preliminary marketing efforts, legal support, and so on had not yet been expensed to the project budget. The only thing that was expensed was the original project construction budget. That budget seemed to be right on track. Kyle reported that he intended to spend the rest of the contingency budget for overtime work by the construction crews. He also intended to use the rest of the IS budget to purchase computers for the common areas of the facility and to wire those areas for access to the Internet. In addition, he was waiting for bills Assisted Living Facility Construction Project Update as of 5/24/XS Tak Nume Bueline Duration Reining Datin g Construction & furnishing 360 days w747 days 76.63 days 14 days 329 314.49 28.61 days 14 dan M 110. 15. e 1 Foundation & Phwe - Structure 113 de Odos 114 130 Odys how - 24. 46.3d . Pleten moet * units ready for m e Remaining 57 units licht heavy tumelavet Odays 10 C incomplete 11 May PM Nano "Please note MSP calculates the duration variance for each step of the action plan by subtracting the actual from the busine. The summary baseline and actual de are then rolled up to the summary tasks baseline and actual duration figures. The summary tasks' duration variance is the calculated by adding the summ a duration plus the remaining duration and then subtracting that sum from the baseline duration QUESTIONS 1. Estimate the final construction budget. 2. What should they do about the work slowdown? 3. Create a Gantt chart with the revisions to the dura tion of the interiors step. When will the project be completed? 4. What is the importance of the fact that the Hospital staff expenses were not reported under the project budget! 5. Write a one-page audit report of this project