Sharon Construction Stadium Project: Case Analysis

Background

The Sharon Construction Company has won the bid to build a new 20,000-seat stadium, but several issues have arisen that concern project management. Since the dual goals of any business endeavor are to make money and increase the reputation of the firm, complications incurred during a project are to be avoided wherever possible. Because a best-case scenario is rarely achieved due to unforeseen difficulties, it is the purpose of management to evaluate all possible negative consequences for any project and to mitigate such occurrences to the greatest extent possible.

Sharon Construction has identified several occurrences that could hinder the contracted completion timeline. Because unionized labor must be hired, a strike is a real threat. Additionally, since concrete pours must be completed at a certain temperature, all such work must be finished before any extreme winter weather sets in. With these and other issues in mind, five contingency plans have been devised by the firm's managers to ensure successful completion of the project with as little delay and extra cost as possible. It is the job of this consulting firm to determine the most appropriate plan of action given the probability of time loss, which could result in a significant financial penalty if the project is completed late.

Possible Problems

A number of issues present themselves, though many can be addressed as they arise. However, a few require immediate consideration. Hiring labor for a project of this magnitude requires the use of skilled, unionized workers. This is not inherently problematic, as these workers are well trained and can be expected to perform effectively in their given fields. Unfortunately, the contracts of all unionized employees must be periodically renegotiated. This fact could seriously impact project completion if a new contract is not agreed upon before the expiration of current labor agreements. If new contracts are not in place by November 30th, the various union trades will strike until a new agreement is reached, potentially causing a delay of eight to twelve weeks. A second issue is the possibility that weather will negatively impact construction. It has been forecast that December could be an extremely cold month, which could affect whether tons of concrete will set properly.

These problems require solutions, but they are not the most significant issues facing Sharon Construction. The continued viability of any business relies on two primary factors. First, the reputation a company establishes through completed projects depends on the timeliness, professionalism, and excellence with which it performs its work. The reputation of a construction firm must be above reproach given the competition that exists within the industry. The second and most important issue is discussed in the following section.

The signed contract stipulates that work on the stadium must be completed within one year. Construction will begin on February 15th and must therefore be completed before that same date the following year. If the work is not completed by that date, a penalty of $15,000 per week will be assessed for each week the project is delayed. These terms make the primary concern financial in nature. All other potential problems are ultimately tied to the issue of finishing the project on time and avoiding any penalty upon completion.

Major Problem

It is possible that Sharon Construction could realize a net profit of approximately $300,000, but this cannot be guaranteed unless all necessary precautions are taken. Unionized workers must be employed, and December weather is not conducive to pouring concrete. Therefore, the chosen proposal must successfully mitigate any possible problems that could occur during construction and significantly reduce the risk to profitability.

Five solutions were proposed that would provide varying degrees of assurance that the project will be completed according to the agreed timeline. If no problems occurred during the construction phase, the stadium would be completed in 48 weeks, leaving a time buffer of four weeks. The chosen solution must address both timely completion and minimized additional cost.