This Project Takes Place In South Australia.docx

This project takes place in South Australia. In September 2000, ACME Fabricators advised its staff that their new factory and offices out in semi-rural Angle Vale would be ready for completion by the end of April 2002. ACME was a responsible company and liked to keep their premises clean and tidy and their staff happy. The new premises at Angle Vale were developed on a 4.5-hectare site, previously used for grain crops. Consequently, ACME decided that significant landscaping would be required to enhance the amenity of the otherwise bare land. The senior executive group pictured some land contouring with an attractive green lawn, and trees and shrubs to soften the impact of otherwise stark commercial buildings. Accordingly, they notionally allocated $232,000 for the project, and developed a tender document that called for the work to be completed by the time they moved to the new premises. They then invited proposals for landscaping and quotes for the work. A company called Arbor Industries submitted an artist's sketch for the ACME evaluation team to picture what the landscaping would look like. Arbor was selected with a bid of $175,000, substantially lower than any other submission. Arbor then prepared a detailed landscaping plan based on existing drawings of the site provided in the tender. Arbor met with the ACME senior executives to agree project start date, access and security of plant and equipment, and a fixed price contract. A contract was duly signed. The project was scoped and planned by Arbor, with specific milestones for site works, irrigation, turf laying, and tree and shrub planting. Arbor had undertaken many similar jobs on city sites in the past and based on the knowledge and skills of the project team, they did not think that a formal project management plan would be needed. All they wanted was agreement on the scope of the project and the key deliverable dates. From experience, they wanted to deal with only one person from ACME and it was agreed that the finance manager, a senior executive, would be responsible for the project. Arbor commenced work on the 16th of November 2000 with site preparation including weed eradication. Work progressed smoothly until 20th of January 2001, when heavy vehicles delivering machinery, plant and equipment to the site significantly damaged the newly prepared and leveled ground for the lawn. The Arbor project manager arranged his first meeting with the ACME finance manager to complain that he would have to re-do the site for the lawn which would take an extra 3-5 days. The finance manager agreed that it was not Arbor's fault and that work would have to be re-done, but as there was no more funding available he suggested that the project manager make the savings somewhere else from within the project. This was agreed but not documented. By the end of January the landscaping site works were finished and the irrigation system was installed. Planting was to be done in three phases – shrubs, bushes and small trees first, then larger trees and finally the lawn. Shrub planting would take approximately 4 days, trees 7 days and the lawn would be laid in three separate operations over 2 days. On the first day after the planting commenced, some of the project team noticed a few small plants seemed to be missing or broken off. These were quickly replaced. Within the first 3 days after the last planting, however, it was noted that around 35% of the plantings had been destroyed by rabbits or hares (as it was later determined. Remember, this is in Australia.) The Project Manager was very concerned and called another meeting with the

ACME finance manager. Although sympathetic, the finance manager agreed that tree guards needed to be placed around trees but that was a contingency that the Arbor Company should have considered. The Arbor project manager indicated that pests were ACME's problem and again the finance manager indicated that Arbor should make savings elsewhere within its contract. The Arbor project manager reviewed his budget and costs and determined that the only way to re-coup the losses from having to replant the shrubs and protect them, was to plant fewer plants and smaller trees which came at a much lower cost. Another way to make some savings was to try and re-design the irrigation system using fewer sprinklers. Instant lawn was tentatively ordered for around the middle of March 2001 so that delivery would miss the hottest part of the year. Unfortunately, the commercial lawn growers had heavy demand at that time and advised that the last shipment could only be made by midFebruary 2001. This was necessary to allow them time to plant new lawn ready for winter and spring clients. Arbor had no choice but to accepted delivery in mid February 2001. As it turned out, it was particularly hot when the lawn delivery was made over the 2 days, with hot gusty northerly winds. By the third week of February 2001, the project was ahead of schedule by about three weeks due to the early delivery of the lawn, although the larger trees and plants had yet to be been planted. Unfortunately, water coverage of the lawn proved to be barely enough in windy conditions and, with the sprinkler head reduction, did not fully water all areas. By this time Arbor was over-budget by about $24,000. Since the original project was scoped and started, the original finance manager had secured a new position with another company and was set to leave in the third week of February 2001, just as the lawn started to brown off and die in patches. The new finance manager, who started one week later, was asked by the company to continue in the role of her predecessor on the project. The Arbor project manager, spotting an opportunity, advised the new finance manager that about $25,000-$30,000 more was needed for the project to be completed, as was agreed by the previous finance manager. The new ACME finance manager was not sure how to deal with this, having no background information on the project. She tried to contact the original finance manager but he was off on holiday prior to taking up his new position. The new ACME finance manager reviewed the budget for the project and finding that there existed a fixed price contract with no contingency amounts, notified the Arbor project manager accordingly. The Arbor project manager informed her of the problems caused by the heavy vehicles earlier in the project and the devastation by wild animals. Because of the refusal to provide more money, the Arbor project manager had reduced significantly the size of the larger trees that were to be planted later in March-April 2001 to try and contain the budget deficit and make savings. The project concluded with Arbor being three weeks ahead of schedule, but $25,100 (14.3%) over budget. The executives of ACME were not happy with the project at its conclusion. Through the finance manager, they indicate that the lawn was dead in patches, the plants were small and that as a result it was not like the drawing that they had been provided at tender stage. They insisted that either these issues be rectified or the contracted amount be reduced.

Arbor responded that a number of verbal agreements had been reached and that Arbor had fulfilled its obligations indeed had lost money on the contract. The dispute was then referred to the respective legal representatives of each company for resolution, but the antagonism between the parties meant that the dispute could well end up in court. As a professional project manager, you have been requested by both legal representatives to conduct a Post-Project Review. Bear in mind that you are acting independently, may be asked to give evidence, and must reflect strict impartiality. Questions: 1. How would you set about conducting such a review? How would you structure your report, i.e. on what basis?(10 marks) 2. What advice would you give to ACME? In a similar way, what advice would you give to Arbor? (5 marks)

A years-overdue project was brought to Operational Pilot, saving millions in development time. Company A consumer finance company with locations across North America Challenge Changing state and federal regulatory compliance challenges caused this company to reinvent its custom-built storefront and home office systems. The IT and PMO teams were geared more for operational maintenance rather than for the complexities of developing new systems. This resulted in an overwhelming workload and schedule overrun measured in years. Project personnel had suffered through turnover of staff and technologies, requiring numerous restarts and integration challenges. Even basic business requirements needed to be re-initiated. Little progress other than some “wire frame” models and discarded technologies had been realized. Solution The company reached out to PM Solutions for a senior-level program manager to take charge of the situation. He recommended a “back to basics” approach, including a full project review and the establishment of stakeholder ownership and project governance. Business requirements were then developed to guide the team in the work necessary to succeed. Gradually introducing agile techniques permitted a quick restart, with a series of sprints to develop “proof of concept” components of the system. The company already had Atlassian’s JIRA system for operational maintenance, and PM Solutions expanded JIRA’s use by creating workflows and tools to apply the agile approach to a new development project. Embedding the PMO business analysts and quality assurance personnel with the developers helped to improve timeliness and success rates for delivered work. To help pace the work, a Kanban approach was introduced; this also assisted project management in tracking deliveries and reporting progress to the stakeholders. Workload assignment overloads in a department tasked with supporting both new development and operational systems, threatened to derail the project; however,

introducing work in progress (WIP) limits improved work throughput, and management effectiveness for the team. The company next employed PM Solutions to develop a change management system that emphasized the early management review of requirements and authorizations prior to work being assigned. This reduced the overall workload for the IT Department and permitted company leadership to take part in priorities and resource utilization decisions, and focus on the “must haves” before the “nice to haves.” Transparency in the system reduced the impact of politics in getting tasks and projects prioritized in the information systems departments. Results After numerous restarts and turnovers of staff and technologies over the five years prior to PM Solutions’ involvement, the assigned consultant helped the PMO reorganize the development team to include project management, stakeholder governance, business analysis, and quality assistance. With a team of up to a dozen developers, the system was redesigned and delivered to stores in four states as a production pilot in two years. The team now focuses on improving and developing systems in more states, taking into account complex differences in federal and state legal requirements. Employing Kanban via JIRA, and a theme of “stop starting and start finishing,” the throughput of task completions improved from about one task in 20 hours to one in five hours of development time. Improved requirement definitions, and quality assurance participation in planning also played a large role in the improvements to throughput. Rejection rates of work submitted for QA dropped from 30% to 5% over six months running up to the pilot deployment. Workflow and success rates are now measured and monitored weekly and monthly. When some IT managers reverted to a more “traditional” workflow, rejection rates increased and throughputs slowed. Active governance was applied to bring work practices into conformance with the new, proven processes, demonstrating the value of a strong metrics and monitoring program.

Transformative Leadership Sets Financial Services Enterprise PMO on Fast Track to Strategic Value Company The bank, which operates over 100 branch offices in three states, found itself at a crossroads. Having spent significant time creating a good strategic plan for the bank, they wanted to improve execution and delivery. Executive leadership recognized the effectiveness of aligning projects and strategy; and realized that the company’s existing project management processes were ad hoc and inconsistent across IT and business projects.

Challenge The company had begun the process of building an Enterprise Project Management Office (EPMO) and there was energy, support, and sponsorship for the potential value that an EPMO could deliver. However, initial attempts to get this organizational transformation program off the ground had faltered.

One of the executive team had read J. Kent Crawford’s book, The Strategic Project Office, which outlines plans to build an Enterprise Project Management Office. Initially, the bank reached out to PM College in early 2015, with the thought of developing the skills first, then working toward the structure and methodology. But as the PM College business development representative listened, she realized that, in order to fully realize the benefits of the training, the bank needed to first create the structure and processes that would give newly trained project managers the tools to succeed. She took the bank’s overview of their issues to her PM Solutions consulting colleagues and enlisted their help to frame the problem and its solution.

Solution Bringing in an expert was viewed as the key factor in accelerating the adoption of the EPMO in the minimum amount of time. The managing consultant quickly established a strong partnership with the new EPMO director. Some of the solutions agreed upon included: 

Partnered to develop a roadmap for EPMO formation, while coaching and mentoring the EPMO team to drive ongoing results. Create a charter and executive steering committee to guide the evolution of a strategic EPMO.

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Conduct Discovery—a process of stakeholder interviews and process mapping—to identify gaps and develop a roadmap to drive subsequent capability improvement.

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Initiate capability improvement efforts based on the roadmap. Where practical, capability improvements were initiated in parallel with roadmap completion.

Results Business impacts included: 

De-scoped a major project using the new project management methodology, allowing the company to spell out immediate possible achievements

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Guided the enterprise-wide development of a project management culture, a significant organizational change

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Stronger partnership with business leaders and transparency of Project Inventory and Status

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Prioritization of project selection and timing including the declination of projects that did not meet strategic objectives

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40% improvement in closing projects during first 6 months of EPMO.

THE RELUCTANT WORKERS Tim Aston had changed employers three months ago. His new position was project manager. At first he had stars in his eyes about becoming the best project manager that his company had ever seen. Now, he wasn’t sure if project management was worth the effort. He made an appointment to see Phil Davies, director of project management. Tim Aston: “Phil, I’m a little unhappy about the way things are going. I just can’t seem to motivate my people. Every day, at 4:30 P.M., all of my people clean off their desks and go home. I’ve had people walk out of late afternoon team meetings because they were afraid that they’d miss their car pool. I have to schedule morning team meetings.” Phil Davies: “Look, Tim. You’re going to have to realize that in a project environment, people think that they come first and that the project is second. This is a way of life in our organizational form.” Tim Aston: “I’ve continually asked my people to come to me if they have problems. I find that the people do not think that they need help and, therefore, do not want it. I just can’t get my people to communicate more.” Phil Davies: “The average age of our employees is about forty-six. Most of our people have been here for twenty years. They’re set in their ways. You’re the first person that we’ve hired in the past three years. Some of our people may just resent

seeing a thirty-year-old project manager.” Tim Aston: “I found one guy in the accounting department who has an excellent head on his shoulders. He’s very interested in project management. I asked his boss if he’d release him for a position in project management, and his boss just laughed at me, saying something to the effect that as long as that guy is doing a good job for him, he’ll never be released for an assignment elsewhere in the company. His boss seems more worried about his personal empire than he does in what’s best for the company. “We had a test scheduled for last week. The customer’s top management was planning on flying in for firsthand observations. Two of my people said that they had programmed vacation days coming, and that they would not change, under any conditions. One guy was going fishing and the other guy was planning to spend a few days working with fatherless children in our community. Surely, these guys could change their plans for the test.” Phil Davies: “Many of our people have social responsibilities and outside interests. We encourage social responsibilities and only hope that the outside interests do not interfere with their jobs. “There’s one thing you should understand about our people. With an average age of fortysix, many of our people are at the top of their pay grades and have no place to go. They must look elsewhere for interests. These are the people you have to work with and motivate. Perhaps you should do some reading on human behavior.”

1. A major American manufacturer of automobile parts has a division that has successfully existed for the past ten years with multiple products, a highly sophisticated R&D section, and a pure traditional structure. The growth rate for the past five years has been 12 percent. Almost all middle and upper-level managers who have worked in this division have received promotions and transfers to either another division or corporate headquarters. According to “the book,” this division has all the prerequisites signifying that they should have a project organizational form of some sort, and yet they are extremely successful without it. Just from the amount of information presented, how can you account for their continued success? What do you think would be the major obstacles in convincing the personnel that a new organizational form would be better? Do you think that continued success can be achieved under the present structure? 2. Assume that you have to select a project organizational form for a small company. For each form described in this chapter, discuss the applicability and state the advantages and disadvantages as they apply to this small company. (You may find it necessary to first determine the business base of the small company.) 3. A major utility company in Cleveland has what is commonly called “fragmented” project management, where each department maintains project managers through staff positions. The project managers occasionally have to integrate activities that involve departments other than their own. Each project normally requires involvement of several people. The company also has product managers operating out of a rather crude project (product) organizational structure. Recently, the product managers and project managers were competing for resources within the same departments. To complicate matters further, management has put a freeze on hiring. Last week top management identified 120 different projects that could be undertaken. Unfortunately, under the current structure there are not enough staff project managers available to handle these projects. Also, management would like to make better use of the scarce functional resources. Staff personnel contend that the solution to the above problems is the establishment of a project management division under which there will be a project management department and a product management department. The staff people feel that under this arrangement better utilization of line personnel will be made, and that

each project can be run with fewer staff people, thus providing the opportunity for more projects. Do you agree or disagree, and what problems do you foresee? 4. THE BATHTUB PERIOD The award of the Scott contract on January 3, 1987, left Park Industries elated. The Scott Project, if managed correctly, offered tremendous opportunities for follow-on work over the next several years. Park’s management considered the Scott Project as strategic in nature. Case Studies 673 CASE STUDIES c15.qxd 10/30/07 3:29 PM Page 673 The Scott Project was a ten-month endeavor to develop a new product for Scott Corporation. Scott informed Park Industries that solesource production contracts would follow, for at least five years, assuming that the initial R&D effort proved satisfactory. All followon contracts were to be negotiated on a year-to-year basis. Jerry Dunlap was selected as project manager. Although he was young and eager, he understood the importance of the effort for future growth of the company. Dunlap was given some of the best employees to fill out his project office as part of Park’s matrix organization. The Scott Project maintained a project office of seven full-time people, including Dunlap, throughout the duration of the project. In addition, eight people from the functional department were selected for representation as functional project team members, four full-time and four half-time. Although the workload fluctuated, the manpower level for the project office and team members was constant for the duration of the project at 2,080 hours per month. The company assumed that each hour worked incurred a cost of $60.00 per person, fully burdened. At the end of June, with four months remaining on the project, Scott Corporation informed Park Industries that, owing to a projected cash flow problem, follow-on work would not be awarded until the first week in March (1988). This posed a tremendous problem for Jerry Dunlap because he did not wish to break up the project office. If he permitted his key people to be assigned to other projects, there would be no guarantee that he could get them back at the beginning of the follow-on work. Good project office personnel are always in demand. Jerry estimated that he needed $40,000 per month during the “bathtub” period to support and maintain his key people. Fortunately, the bathtub period fell over Christmas and New Year’s, a time when the plant would be shut down for seventeen days. Between the vacation days that his key employees would be taking, and the small special projects that his people could be temporarily assigned to on other programs, Jerry revised his estimate to $125,000 for the entire bathtub period. At the weekly team meeting, Jerry told the program team members that they would have to “tighten their belts” in order to establish a management reserve of $125,000. The project team understood the necessity for this action and began rescheduling and replanning until a management reserve of this size could be realized. Because the contract was firm-fixed-price, all schedules for administrative support (i.e., project office and project team members) were extended through February 28 on the supposition that this additional time was needed for final cost data accountability and program report documentation. Jerry informed his boss, Frank Howard, the division head for project management, as to the problems with the bathtub period. Frank was the intermediary between Jerry and the general manager. Frank agreed with Jerry’s approach to the problem and requested to be kept informed. On September 15, Frank told Jerry that he wanted to “book” the management reserve of $125,000 as excess profit since it would influence his (Frank’s) Christmas bonus. Frank and Jerry argued for a while, with Frank constantly saying, “Don’t worry! You’ll get your key people back. I’ll see to that. But I want those uncommitted funds recorded as profit and the program closed out by November 1.” Jerry was furious with Frank’s lack of interest in maintaining the current organizational membership. a. Should Jerry go to the general manager? b. Should the key people be supported on overhead.

c. If this were a cost-plus program, would you consider approaching the customer with your problem in hopes of relief? d. If you were the customer of this cost-plus program, what would your response be for additional funds for the bathtub period, assuming cost overrun? e. Would your previous answer change if the program had the money available as a result of an underrun? f. How do you prevent this situation from recurring on all yearly follow-on contracts? FRANKLIN ELECTRONICS In October 2003 Franklin Electronics won an 18-month laborintensive product development contract awarded by Spokane Industries. The award was a cost reimbursable contract with a cost target of $2.66 million and a fixed fee of 6.75 percent of the target. This contract would be Franklin’s first attempt at using formal project management, including a newly developed project management methodology. Franklin had won several previous contracts from Spokane Industries, but they were all fixed-price contracts with no requirement to use formal project management with earned value reporting. The terms and conditions of this contract included the following key points: ● Project management (formalized) was to be used. ● Earned value cost schedule reporting was a requirement. ● The first earned value report was due at the end of the second month’s effort and monthly thereafter. ● There would be two technical interchange meetings, one at the end of the sixth month and another at the end of the twelfth month. Earned value reporting was new to Franklin Electronics. In order to respond to the original request for proposal (RFP), a consultant was hired to conduct a four-hour seminar on earned value management. In attendance were the project manager who was assigned to the Spokane RFP and would manage the contract after contract award, the entire cost accounting department, and two line managers. The cost accounting group was not happy about having to learn earned value management techniques, but they reluctantly agreed in order to bid on the Spokane RFP. On previous projects with Spokane Industries, monthly interchange meetings were held. On this contract, it seemed that Spokane Industries believed that fewer interchange meeting would be necessary because the information necessary could just as easily be obtained through the earned value status reports. Spokane appeared to have tremendous faith in the ability of the earned value measurement system to provide meaningful information. In the past, Spokane had never mentioned that it was considering the possible implementation of an earned value measurement system as a requirement on all future contracts. Franklin Electronics won the contact by being the lowest bidder. During the planning phase, a work breakdown structure was developed containing 45 work packages of which only 4 work packages would be occurring during the first four months of the project. Franklin Electronics designed a very simple status report for the project. The table below contains the financial data provided to Spokane at the end of the third month. A week after sending the status report to Spokane Industries, Franklin’s project manager was asked to attend an emergency meeting requested by Spokane’s vice president for engineering, who was functioning as the project sponsor. The vice president was threatening to cancel the project because of poor performance. At the meeting, the vice president commented, “Over the past month the cost variance overrun has increased by 78 percent from $14,000 to $25,000, and the schedule variance slippage has increased by 45 percent from $31,000 to $45,000. At these rates, we are easily looking at a 500 percent cost overrun and a schedule slippage of at least one year. We cannot afford to let this project continue at this lackluster performance rate. If we cannot develop a plan to control time and cost any better than we have in the past three months, then I will just cancel the contract now, and we will find another contractor who can perform.” QUESTIONS 1. Are the vice president’s comments about cost and schedule variance

correct? 2 What information did the vice president fail to analyze? 3. What additional information should have been included in the status report? 4. Does Franklin Electronics understand earned value measurement? If not, then what went wrong? 5. Does Spokane Industries understand project management? 6. Does proper earned value measurement serve as a replacement for interchange meetings? 7. What should the project manager from Franklin say in his defense?