Project management case studies second edition

160 • Haller Specialty Manufacturing 162 • The NF3 Project: Managing Cultural Differences 163 • An International Project Manager's Day A 172 • An International Project Manager's Day B se

Harold Kerzner, PH.D.

PROJECT MANAGEMENT CASE STUDIES, SECOND EDITION

Division of Business Administration Baldwin-Wallace College Berea, Ohio

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WILEYJohn Wiley & Sons, Inc.

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Contents _

Preface xi

1 PROJECT MANAGEMENT METHODOLOGIES 1

• Lakes Automotive 3

• Ferris HealthCare, Inc 5

• Clark Faucet Company 7

2 IMPLEMENTATION OF PROJECT MANAGEMENT 11

• Kombs Engineering 13

• Williams Machine Tool Company 15

• Wynn Computer Equipment (WCE) 17

• The Reluctant Workers 20

• MIS Project Management at First National Bank 56

• Cordova Research Group 70

• Cortez Plastics 71

• L P Manning Corporation 72

• Project Firecracker 74

v

vi CONTENTS

• Phillip Condit and Boeing 777: From Design and Development toProduction and Sales 81

• AMP of Canada (A) 105

• AMP of Canada (B)(seehandout provided by instructor)

• AMP of Canada (C)(seehandout provided by instructor)

• Lipton Canada 118

• Riverview Children's Hospital 124

• The Evolution of Project Management at Quixtar 145

3 PROJECT MANAGEMENT CULTURES 151

• Como Tool and Die (A) 153

• Como Tool and Die (B) 157

• Apache Metals, Inc 160

• Haller Specialty Manufacturing 162

• The NF3 Project: Managing Cultural Differences 163

• An International Project Manager's Day (A) 172

• An International Project Manager's Day (B)

(seehandout provided by instructor)

• An International Project Manager's Day (C)

(seehandout provided by instructor)

• An International Project Manager's Day (D)

(seehandout provided by instructor)

• Ellen Moore (A): Living and Working in Korea 177

• Ji'nan Broadcasting Corporation 196

4 PROJECT MANAGEMENT ORGANIZATIONAL STRUCTURES 205

• Quasar Communications, Inc 207

• Jones and Shephard Accountants, Inc 212

• Fargo Foods 216

• Government Project Management 220

• Falls Engineering 222

• White Manufacturing 227

• Martig Construction Company 229

• Mohawk National Bank 23 I

5 NEGOTIATING FOR RESOURCES 235

• Ducor Chemical 237

• American Electronics International 241

• The Carlson Project 245

• Spin Master Toys (A): Finding A Manufacturer for E-Chargers 279

• Spin Master Toys (B): A New E-Chargers' Supplier

(seehandout provided by instructor)

• Spin Master Toys(C): Keeping E-Chargers' Wings On

(seehandout provided by instructor)

• The Trophy Project 331

• Concrete Masonry Corporation 334

• Margo Company 343

• Project Overrun 345

• The Automated Evaluation Project 347

• The Rise and Fall of Iridium 351

• Missing Person-Peter Leung 369

• Zhou Jianglin, Project Manager 377

10 CONTROLLING PROJECTS 381

• The Two-Boss Problem 383

• The Bathtub Period 385

• Ford Motor Co.: ElectricallElectronic Systems Engineering 388

vii

viii CONTENTS

11 PROJECT RISK MANAGEMENT 401

• The Space Shuttle Challenger Disaster 403

• The Space Shuttle Columbia Disaster 453

• Facilities Scheduling at Mayer Manufacturing 475

• Scheduling the Safety Lab 478

• Telestar International 480

• The Problem with Priorities 482

13 MORALITY AND ETHICS 485

• The Tylenol Tragedies 487

14 MANAGING SCOPE CHANGES 515

• Denver International Airport (DIA) 517

15 WAGE AND SALARY ADMINISTRATION 561

• Photolite Corporation (A) 563

• Time Management Exercise 589

17 INDUSTRY SPECIFIC: CONSTRUCTION 613

• RobertL Frank Construction Company 615

• The Lyle Construction Project 652

Preface _

Other than on-the-job training, case studies and situations are perhaps the bestway to learn project management Case studies allow the students to apply theknowledge learned in lectures Case studies require that the students investigatewhat went right in the case, what went wrong, and what recommendations should

be made to prevent these problems from reoccurring in the future The use ofcases studies is applicable both to undergraduate and graduate level project man-agement courses, as well as to training programs in preparation to pass the exam

to become a Certified Project Management Professional (PMp®) administered bythe Project Management Institute

Situations are smaller case studies and usually focus on one or two specificpoints that need to be addressed, whereas case studies focus on a multitude ofproblems The table of contents identifies several broad categories for the casesand situations, but keep in mind that the larger case studies, such as CorwinCorporation and The Blue Spider Project, could have been listed under several top-ics Several of the cases and situations have "seed" questions provided to assist thereader in the analysis of the case An instructor's manual is available from JohnWiley & Sons, Inc., to faculty members who adopt the book for classroom use.Almost all of the case studies are factual In most circumstances, the cases

and situations have been taken from the author's consulting practice Some cators prefer not to use case studies dated back to the 1970s and 1980s.Itwould

edu-xi

xii PREFACE

be easy just to change the dates but inappropriate in the eyes of the author Thecircumstances surrounding these cases and situations are the same today as theywere twenty years ago Unfortunately we seem to be repeating several of the mis-takes made previously

Recommendations for enhancements and changes to future editions of thetext are always appreciated The author can be contacted at

Phone: 216-765-8090

e-mail: hkerzner@bw.edu

Harold Kerzner

Baldwin-Wallace College

be-1

Lakes Automotive

Lakes Automotive is a Detroit-based tier-one supplier to the auto industry.Between 1995 and 1999, Lakes Automotive installed a project managementmethodology based on nine life-cycle phases All 60,000 employees worldwideaccepted the methodology and used it Management was pleased with the results.Also, Lakes Automotive's customer base was pleased with the methodology andprovided Lakes Automotive with quality award recognition that everyone be-lieved was attributed to how well the project management methodology wasexecuted

In February 2000, Lakes Automotive decided to offer additional products to

its customers Lakes Automotive bought out another tier-one supplier, PelexAutomotive Products (PAP) PAP also had a good project management reputationand also provided quality products Many of its products were similar to thoseprovided by Lakes Automotive

Because the employees from both companies would be working togetherclosely, a singular project management methodology would be required thatwould be acceptable to both companies PAP had a good methodology based onfive life-cycle phases Both methodologies had advantages and disadvantages,and both were well liked by their customers

3

QUESTIONS

LAKES AUTOMOTIVE

1 How do companies combine methodologies?

2 How do you get employees to change work habits that have proven to besuccessful?

3 What influence should a customer have in redesigning a methodology that hasproven to be successful?

4 What if the customers want the existing methodologies left intact?

5 What if the customers are unhappy with the new combined methodology?

Ferris HealthCare, Inc.

In July of 1999, senior management at Ferris recognized that its future growthcould very well be determined by how quickly and how well it implemented proj-ect management For the past several years, line managers had been functioning

as project managers while still managing their line groups The projects came outwith the short end of the stick, most often late and over budget, because managersfocused on line activities rather than project work Everyone recognized that proj-ect management needed to be an established career path position and that somestructured process had to be implemented for project management

A consultant was brought into Ferris to provide initial project managementtraining for 50 out of the 300 employees targeted for eventual project manage-ment training Several of the employees thus trained were then placed on a com-mittee with senior management to design a project management stage-gate modelfor Ferris

After two months of meetings, the committee identified the need for threedifferent stage-gate models: one for information systems, one for new products/services provided, and one for bringing on board new corporate clients Therewere several similarities among the three models However, personal interestsdictated the need for three methodologies, all based upon rigid policies andprocedures

After a year of using three models, the company recognized it had a problemdeciding how to assign the right project manager to the right project Project man-agers had to be familiar with all three methodologies The alternative, considered

5

6 FERRIS HEALTHCARE, INC.

impractical, was to assign only those project managers familiar with that specificmethodology

After six months of meetings, the company consolidated the three ologies into a single methodology, focusing more upon guidelines than on poli-cies and procedures The entire organization appeared to support the new singu-lar methodology A consultant was brought in to conduct the first three days of afour-day training program for employees not yet trained in project management.The fourth day was taught by internal personnel with a focus on how to use thenew methodology The success to failure ratio on projects increased dramatically

method-QUESTIONS

1 Why was it so difficult to develop a singular methodology from the start?

2 Why were all three initial methodologies based on policies and procedures?

3 Why do you believe the organization later was willing to accept a singularmethodology?

4 Why was the singular methodology based on guidelines rather than policiesand procedures?

5 Did it make sense to have the fourth day of the training program devoted to themethodology and immediately attached to the end of the three-day program?

6 Why was the consultant not allowed to teach the methodology?

Clark Faucet Company

BACKGROUND

By 1999, Clark Faucet Company had grown into the third largest supplier offaucets for both commercial and home use Competition was fierce Consumerswould evaluate faucets on artistic design and quality Each faucet had to be avail-able in at least twenty-five different colors Commercial buyers seemed more in-terested in the cost than the average consumer, who viewed the faucet as an ob-ject of art, irrespective of price

Clark Faucet Company did not spend a great deal of money advertising onthe radio or on television Some money was allocated for ads in professional jour-nals Most of Clark's advertising and marketing funds were allocated to the twosemiannual home and garden trade shows and the annual builders trade show.One large builder could purchase more than 5,000 components for the furnishing

of one newly constructed hotel or one apartment complex Missing an nity to display the new products at these trade shows could easily result in a six-

opportu-to twelve-month window of lost revenue

CULTURE

Clark Faucet had a noncooperative culture Marketing and engineering wouldnever talk to one another Engineering wanted the freedom to design new products,

7

8 CLARK FAUCET COMPANY

whereas marketing wanted final approval to make sure that what was designedcould be sold

The conflict between marketing and engineering became so fierce that earlyattempts to implement project management failed Nobody wanted to be theproject manager Functional team members refused to attend team meetings andspent most of their time working on their own "pet" projects rather than the re-quired work Their line managers also showed little interest in supporting projectmanagement

Project management became so disliked that the procurement manager fused to assign any of his employees to project teams Instead, he mandated thatall project work come through him He eventually built up a large brick wallaround his employees He claimed that this would protect them from the contin-uous conflicts between engineering and marketing

re-THE EXECUTIVE DECISION

The executive council mandated that another attempt to implement good projectmanagement practices must occur quickly Project management would be needednot only for new product development but also for specialty products and en-hancements The vice presidents for marketing and engineering reluctantlyagreed to try and patch up their differences, but did not appear confident that anychanges would take place

Strange as it may seem, nobody could identify the initial cause of the conflicts

or how the trouble actually began Senior management hired an external tant to identify the problems, provide recommendations and alternatives, and act

consul-as a mediator The consultant's process would have to begin with interviews

ENGINEERING INTERVIEWS

The following comments were made during engineering interviews:

• "We are loaded down with work.Ifmarketing would stay out of neering, we could get our job done."

engi- "Marketing doesn't understand that there's more work for us to do otherthan just new product development."

• "Marketing personnel should spend their time at the country club and inbar rooms This will allow us in engineering to finish our work uninter-rupted!"

Questions 9

• "Marketing expects everyone in engineering to stop what they are doing

in order to put out marketing fires I believe that most of the time theproblem is that marketing doesn't know what they want up front Thisleads to change after change Why can't we get a good definition at thebeginning of each project?"

The consultant wrestled with the comments but was still somewhat plexed "Why doesn't engineering understand marketing's problems?" ponderedthe consultant In a follow-up interview with an engineering manager, the fol-lowing comment was made:

per-"We are currently working on 375 different projects in engineering, and thatincludes those which marketing requested Why can't marketing understand ourproblems?"

QUESTIONS

1 What is the critical issue?

2 What can be done about it?

3 Can excellence in project management still be achieved and, if so, how? Whatsteps would you recommend?

4 Given the current noncooperative culture, how long will it take to achieve agood cooperative project management culture, and even excellence?

10 CLARK FAUCET COMPANY

5 What obstacles exist in getting marketing and engineering to agree to a lar methodology for project management?

singu-6 What might happen if benchmarking studies indicate that either marketing orengineering are at fault?

7 Should a singular methodology for project management have a process for theprioritization of projects or should some committee external to the methodol-ogy accomplish this?

Another critical issue is that the entire organization may not end up ing the same level of support for project management This could delay the finalimplementation of project management Inaddition, there may be some pocketswithin the organization that are primarily project-driven and will give immediatesupport to project management, whereas other pockets, which are primarilynon-project-driven, may be slow in their acceptance.

provid-11

j j j j j j j j j j j j j j j j j j j

Engineering

In June 1993, Kombs Engineering had grown to a company with $25 million insales The business base consisted of two contracts with the U.S Department ofEnergy (DOE), one for $15 million and one for $8 million The remaining $2 mil-lion consisted of a variety of smaller jobs for $15,000 to $50,000 each

The larger contract with DOE was a five-year contract for $15 million peryear The contract was awarded in 1988 and was up for renewal in 1993 DOEhad made it clear that, although they were very pleased with the technical perfor-mance of Kombs, the follow-on contract must go through competitive bidding bylaw Marketing intelligence indicated that DOE intended to spend $10 million peryear for five years on the follow-on contract with a tentative award date ofOctober 1993

On June 21, 1993, the solicitation for proposal was received at Kombs Thetechnical requirements of the proposal request were not considered to be a prob-lem for Kombs There was no question in anyone's mind that on technical meritalone, Kombs would win the contract The more serious problem was that DOErequired a separate section in the proposal on how Kombs would manage the $10million/year project as well as a complete description of how the project man-agement system at Kombs functioned

When Kombs won the original bid in 1988, there was no project managementrequirement All projects at Kombs were accomplished through the traditional or-ganizational structure Line managers acted as project leaders

13

In October 1993, Kombs received notification that it would not be grantedthe contract During a post-award conference, DOE stated that they had no "faith"

in the Kombs project management system Kombs Engineering is no longer inbusiness

QUESTIONS

1 What was the reason for the loss of the contract?

2 Could it have been averted?

3 Does it seem realistic that proposal evaluation committees could considerproject management expertise to be as important as technical ability?

Williams Machine Tool Company

For seventy-five years, the Williams Machine Tool Company had provided ity products to its clients, becoming the third largest U.S.-based machine toolcompany by 1980 The company was highly profitable and had an extremely lowemployee turnover rate Pay and benefits were excellent

qual-Between 1970 and 1980, the company's profits soared to record levels The pany's success was due to one product line of standard manufacturing machine tools.Williams spent most of its time and effort looking for ways to improve its bread-and-butter product line rather than to develop new products The product line was so suc-cessful that companies were willing to modify their production lines around these ma-chine tools rather than asking Williams for major modifications to the machine tools

com-By 1980, Williams Company was extremely complacent, expecting this nomenal success with one product line to continue for twenty to twenty-five moreyears The recession of 1979-1983 forced management to realign their thinking.Cutbacks in production had decreased the demand for the standard machine tools.More and more customers were asking for either major modifications to the stan-dard machine tools or a completely new product design

phe-The marketplace was changing and senior management recognized that anew strategic focus was necessary However, lower-level management and thework force, especially engineering, were strongly resisting a change The em-ployees, many of them with over twenty years of employment at WilliamsCompany, refused to recognize the need for this change in the belief that the glorydays of yore would return at the end of the recession

15

16 WILLIAMS MACHINE TOOL COMPANY

By 1985, the recession had been over for at least two years, yet WilliamsCompany had no new product lines Revenue was down, sales for the standardproduct (with and without modifications) were decreasing, and the employeeswere still resisting change Layoffs were imminent

In 1986, the company was sold to Crock Engineering Crock had an

experi-enced machine tool division of its own and understood the machine tool business.Williams Company was allowed to operate as a separate entity from 1985 to

1986 By 1986, red ink had appeared on the Williams Company balance sheet.Crock replaced all of the Williams senior managers with its own personnel Crockthen announced to all employees that Williams would become a specialty ma-chine tool manufacturer and that the "good old days" would never return.Customer demand for specialty products had increased threefold in just the lasttwelve months alone Crock made it clear that employees who would not supportthis new direction would be replaced

The new senior management at Williams Company recognized that five years of traditional management had come to an end for a company nowcommitted to specialty products The company culture was about to change,spearheaded by project management, concurrent engineering, and total qualitymanagement

eighty-Senior management's commitment to product management was apparent bythe time and money spent in educating the employees Unfortunately, the sea-soned twenty-year-plus veterans still would not support the new culture.Recognizing the problems, management provided continuous and visible supportfor project management, in addition to hiring a project management consultant towork with the people The consultant worked with Williams from 1986 to 1991.From 1986 to 1991, the Williams Division of Crock Engineering experiencedlosses in twenty-four consecutive quarters The quarter ending March 31, 1992,was the first profitable quarter in over six years Much of the credit was given tothe performance and maturity of the project management system.In May 1992,

the Williams Division was sold More than 80 percent of the employees lost theirjobs when the company was relocated over 1,500 miles away

Wynn Computer Equipment (WCE)

In 1965, Joseph Wynn began building computer equipment in a small garage

be-hind his house By 1982, WCE was a $1 billion a year manufacturing tion employing 900 people The major success found by WCE has been attributed

organiza-to the nondegreed workers who have stayed with WCE over the past fifteen years.The nondegreed personnel account for 80 percent of the organization Both thesalary structure and fringe benefit packages are well above the industry average

CEO PRESENTATION

In February 1982, the new vice president and general manager made a

presenta-tion to his executive staff outlining the strategies he wished to see implemented

to improve productivity:

Our objective for the next twelve months is to initiate a planning systemwith the focus on strategic, developmental, and operational plans that willassure continued success of WCE and support for our broad objectives Ourstrategy is a four-step process:

• To better clarify expectations and responsibility

• To establish cross-functional goals and objectives

17

18 WYNN COMPUTER EQUIPMENT (WCE)

• To provide feedback and performance results to all employees ineach level of management

• To develop participation through teamwork

The senior staff will merely act as a catalyst in developing long- and term objectives Furthermore, the senior staff will participate and provide di-rection and leadership in formulating an integrated manufacturing strategythat is both technology- and human-resources-driven.The final result should

short-be an integrated project plan that will:

• Push decision making down

• Trust the decision of peers and people in each organization

• Eliminate committee decisions

Emphasis should be on communications that will build and convey ship in the organization and aweapproach to surfacing issues and solvingproblems

owner-In April 1982, a team of consultants interviewed a cross section of Wynn sonnel to determine the "pulse" of the organization The following informationwas provided:

per-• "We have a terrible problem in telling our personnel (both project andfunctional) exactly what is expected on the project Itis embarrassing tosay that we are a computer manufacturer and we do not have any com-puterized planning and control tools."

• "Our functional groups are very poor planners We, in the project office,must do the planning for them They appear to have more confidence inand pay more attention to our project office schedules than to their own."

• "We have recently purchased a $65,000 computerized package for ning and controlling.Itis going to take us quite a while to educate our peo-ple In order to interface with the computer package, we must use a workbreakdown structure This is an entirely new concept for our people."

plan-• "We have a lack of team spirit in the organization I'm not sure if it is ply the result of poor communications I think it goes further than that.Our priorities get shifted on a weekly basis, and this produces a demor-alizing effect As a result, we cannot get our people to live up to eithertheir old or new commitments."

sim-• "We have a very strong mix of degreed and nondegreed personnel Allnew, degreed personnel must 'prove' themselves before being officiallyaccepted by the nondegreed personnel We seem to be splitting the orga-nization down the middle Technology has become more important thanloyalty and tradition and, as a result, the nondegreed personnel, who be-lieve themselves to be the backbone of the organization, now feelcheated What is a proper balance between experience and new blood?"

CEO Presentation 19

• "The emphasis on education shifts with each new executive Our greed personnel obviously are paying the price I wish I knew what di-rection the storm is coming from."

nonde-• "My department does not have a database to use for estimating.Therefore, we have to rely heavily on the project office for good estimat-ing Anyway, the project office never gives us sufficient time for good es-timating so we have to ask other groups to do our scheduling for us."

• "As line manager, I am caught between the rock and the hard spot Quiteoften, I have to act as the project manager and line manager at the sametime When I act as the project manager I have trouble spending enoughtime with my people In addition, my duties also include supervising out-side vendors at the same time."

• "My departmental personnel have a continuous time management lem because they are never full-time on anyone project, and all of ourprojects never have 100 percent of the resources they need How can ourpeople ever claim ownership?"

prob-• "We have trouble in conducting up-front feasibility studies to see if wehave a viable product Our manufacturing personnel have poor interfac-ing with advanced design."

• "Ifwe accept full project management, I'm not sure where the projectmanagers should report Should we have one group of project managersfor new processes/products and a second group for continuous (or old)processes/products? Can both groups report to the same person?"

The Reluctant Workers

Tim Aston had changed employers three months ago His new position was ect manager At first he had stars in his eyes about becoming the best project man-ager that his company had ever seen Now, he wasn't sure if project managementwas worth the effort He made an appointment to see Phil Davies, director ofproject management

proj-Tim Aston: "Phil, I'm a little unhappy about the way things are going I just can'tseem to motivate my people Every day, at 4:30P.M., all of my people clean offtheir desks and go home I've had people walk out of late afternoon team meetingsbecause they were afraid that they'd miss their car pool I have to schedule morn-ing team meetings."

Phil Davies: "Look, Tim You're going to have to realize that in a project ronment, people think that they come first and that the project is second This is

envi-a wenvi-ay of life in our orgenvi-anizenvi-ationenvi-al form."

Tim Aston: "I've continually asked my people to come to me if they have lems I find that the people do not think that they need help and, therefore, do notwant it I just can't get my people to communicate more."

prob-Phil Davies: "The average age of our employees is about forty-six Most of ourpeople have been here for twenty years They're set in their ways You're the firstperson that we've hired in the past three years Some of our people may just re-sent seeing a thirty-year-old project manager."

20

The Reluctant Workers 21

Tim Aston:"I found one guy in the accounting department who has an excellenthead on his shoulders He's very interested in project management I asked hisboss if he'd release him for a position in project management, and his boss justlaughed at me, saying something to the effect that as long as that guy is doing agood job for him, he'll never be released for an assignment elsewhere in the com-pany His boss seems more worried about his personal empire than he does inwhat's best for the company

"We had a test scheduled for last week The customer's top management wasplanning on flying in for firsthand observations Two of my people said that theyhad programmed vacation days coming, and that they would not change, underany conditions One guy was going fishing and the other guy was planning tospend 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 ests We encourage social responsibilities and only hope that the outside interests

inter-do not interfere with their jobs

"There's one thing you should understand about our people With an averageage of forty-six, 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 youhave to work with and motivate Perhaps you should do some reading on humanbehavior."

Hyten Corporation

On June 5, 1998, a meeting was held at Hyten Corporation, between Bill Knapp,director of sales, and John Rich, director of engineering The purpose of the meet-ing was to discuss the development of a new product for a special customer ap-plication The requirements included a very difficult, tight-time schedule The key

to the success of the project would depend on timely completion of individualtasks by various departments

Bill Knapp: "The Business Development Department was established to providecoordination between departments, but they have not really helped They just sticktheir nose in when things are going good and mess everything up They have beenout to see several customers, giving them information and delivery dates that wecan't possibly meet."

John Rich: "I have several engineers who have MBA degrees and are pushinghard for better positions within engineering or management They keep talkingthat formal project management is what we should have at Hyten The informalapproach we use just doesn't work all the time But I'm not sure that just any type

of project management will work in our division."

Knapp: "Well,1wonder who Business Development will tap to coordinate thisproject?Itwould be better to get the manager from inside the organization instead

of hiring someone from outside."

22

The Automotive Components Division 23

Exhibit I Organizational chart of the automotive division, Hyten Corporation

COMPANY BACKGROUND

Hyten Company was founded in 1982 as a manufacturer of automotive nents During the Gulf War, the company began manufacturing electronic com-ponents for the military After the war, Hyten continued to prosper

compo-Hyten became one of the major component suppliers for the Space Program,but did not allow itself to become specialized When the Space Program declined,Hyten developed other product lines, including energy management, buildingproducts, and machine tools, to complement their automotive components andelectronics fields

Hyten has been a leader in the development of new products and processes.Annual sales are in excess of $600 million The Automotive ComponentsDivision is one of Hyten's rapidly expanding business areas (see the organiza-tional chart in Exhibit I)

THE AUTOMOTIVE COMPONENTS DIVISION

The management of both the Automotive Components Division and theCorporation itself is young and involved Hyten has enjoyed a period of continuousgrowth over the past fifteen years as a result of careful planning and having the rightpeople in the right positions at the right time This is emphasized by the fact thatwithin five years of joining Hyten, every major manager and division head has been

24 HYTEN CORPORATION

promoted to more responsibility within the corporation The management staff ofthe Automotive Components Division has an average age of forty and no one is overfifty Most of the middle managers have MBA degrees and a few have Ph.D.s.Currently, the Automotive Components Division has three manufacturing plants atvarious locations throughout the country Central offices and most of the nonpro-duction functions are located at the main plant There has been some effort by pastpresidents to give each separate plant some minimal level of purchasing, quality,manufacturing engineering and personnel functions

INFORMAL PROJECT MANAGEMENT AT HYTEN CORPORATION

The Automotive Components Division of Hyten Corporation has an informal tem of project management Itrevolves around each department handling theirown functional area of a given product development or project Projects havebeen frequent enough that a sequence of operations has been developed to take anew product from concept to market Each department knows its responsibilitiesand what it must contribute to a project

sys-A manager within the Business Development Department assumes informalproject coordination responsibility and calls periodic meetings of the departmentheads involved These meetings keep everyone advised of work status, changes tothe project, and any problem areas Budgeting of the project is based on the costanalysis developed after the initial design, while funding is allocated to eachfunctional department based on the degree of its involvement Funding for the ini-tial design phase is controlled through business development The customer hasvery little control over the funding, manpower, or work to be done The customer,however, dictates when the new product design must be available for integrationinto the vehicle design, and when the product must be available in productionquantities

THE BUSINESS DEVELOPMENT DEPARTMENT

The Business Development Department, separate from Marketing/Sales, tions as a steering group for deciding which new products or customer requestsare to be pursued and which are to be dropped Factors which they consider inmaking these decisions are: (1) the company's long- and short-term businessplans, (2) current sales forecasts, (3) economic and industry indicators, (4) profitpotential, (5) internal capabilities (both volume and technology), and (6) what thecustomer is willing to pay versus estimated cost

func-Introduction of Formal Project Management at Hyten Corporation 25

The duties of Business Development also include the coordination of a

proj-ect or new product from initial design through market availability In this

capac-ity, they have no formal authority over either functional managers or functionalemployees They act strictly on an informal basis to keep the project moving, givestatus reports, and report on potential problems They are also responsible for theselection of the plant that will be used to manufacture the product

The functions of Business Development were formerly handled as a jointstaff function where all the directors would periodically meet to formulate short-range plans and solve problems associated with new products The departmentwas formally organized three years ago by the then-38-year-old president as arecognition of the need for project management within the AutomotiveComponents Division

Manpower for the Business Development Department was taken from bothoutside the company and from within the division This was done to honor theCorporation's commitment to hire people from the outside only after it was de-termined that there were no qualified people internally (an area that for years hasbeen a sore spot to the younger managers and engineers)

When the Business Development Department was organized, its level of thority and responsibility was limited However, the Department's authority andresponsibility have subsequently expanded, though at a slow rate This was done

au-so as not to alienate the functional managers who were concerned that projectmanagement would undermine their "empire."

INTRODUCTION OF FORMAL PROJECT MANAGEMENT

AT HYTEN CORPORATION

On July 10, 1998, Wilbur Donley was hired into the Business DevelopmentDepartment to direct new product development efforts Prior to joining Hyten, heworked as project manager with a company that supplied aircraft hardware to thegovernment He had worked both as an assistant project manager and as a projectmanager for five years prior to joining Hyten

Shortly after his arrival, he convinced upper management to examine the idea

of expanding the Business Development group and giving them responsibility forformal project management An outside consulting firm was hired to give an in-depth seminar on project management to all management and supervisor em-ployees in the Division

Prior to the seminar, Donley talked to Frank Harrel, manager of quality andreliability, and George Hub, manager of manufacturing engineering, about theirproblems and what they thought of project management

Frank Harrel is thirty-seven years old, has an MBA degree, and has been withHyten for five years He was hired as an industrial engineer and three years ago

26 HYTEN CORPORATION

was promoted to manager of quality and reliability George Hub is forty-fiveyears old and has been with Hyten for twelve years as manager of manufacturingengineering

Wilbur Donley: "Well, Frank, what do you see as potential problems to thetimely completion of projects within the Automotive Components Division?"

Frank Harrel: "The usual material movement problems we always have Wemonitor all incoming materials in samples and production quantities, as well asin-process checking of production and finished goods on a sampling basis Wethen move to I00 percent inspection if any discrepancies are found Marketingand Manufacturing people don't realize how much time is required to inspect foreither internal or customer deviations Our current manpower requires that sched-ules be juggled to accommodate 100 percent inspection levels on 'hot items.' Weseem to be getting more and more items at the last minute that must be done onovertime."

Donley: "What are you suggesting? A coordination of effort with marketing,purchasing, production scheduling, and the manufacturing function to allow yourdepartment to perform their routine work and still be able to accommodate a lim-ited amount of high-level work on 'hot' jobs?"

Harrel: "Precisely, but we have no formal contact with these people More openlines of communication would be of benefit to everyone."

Donley: "We are going to introduce a more formal type of project managementthan has been used in the past so that all departments who are involved will ac-tively participate in the planning cycle of the project That way they will remainaware of how they affect the function of other departments and prevent overlap-ping of work We should be able to stay on schedule and get better cooperation."

Harrel: "Good, I'll be looking forward to the departure from the usual method

of handling a new project Hopefully, it will work much better and result in fewerproblems."

Donley: "How do you feel, George, about improving the coordination of workamong various departments through a formal project manager?"

George Hub: "Frankly, if it improves communication between departments,I'm all in favor of the change Under our present system, I am asked to make es-timates of cost and lead times to implement a new product When the project be-gins, the Product Design group starts making changes that require new cost fig-ures and lead times These changes result in cost overruns and in not meetingschedule dates Typically, these changes continue right up to the production startdate Manufacturing appears to be the bad guy for not meeting the scheduled startdate We need someone to coordinate the work of various departments to prevent

Personnel Department's View of Project Management 27

this continuous redoing of various jobs We will at least have a chance at meetingthe schedule, reducing cost, and improving the attitude of my people."

PERSONNEL DEPARTMENT'S VIEW OF

PROJECT MANAGEMENT

After the seminar on project management, a discussion was held between SueLyons, director of personnel, and Jason Finney, assistant director of personnel.The discussion was about changing the organization structure from informalproject management to formal project management

Sue Lyons: "Changing over would not be an easy road There are several matters

to be taken under consideration."

Jason Finney: "I think we should stop going to outside sources for competentpeople to manage new projects that are established within Business Development.There are several competent people at Hyten who have MBA's in Systems/ProjectManagement With that background and their familiarity with company opera-tions, it would be to the company's advantage if we selected personnel fromwithin our organization."

Lyons: "Problems will develop whether we choose someone form inside thecompany or from an outside source."

Finney: "However, if the company continues to hire outsiders into BusinessDevelopment to head new projects, competent people at Hyten are going to startfiltering to places of new employment."

Lyons: "You are right about the filtration Whoever is chosen to be a projectmanager must have qualifications that will get the job done He or she should notonly know the technical aspect behind the project, but should also be able to workwith people and understand their needs Project managers have to show concernfor team members and provide them with work challenge Project managers mustwork in a dynamic environment This often requires the implementation of change.Project managers must be able to live with change and provide necessary leader-ship to implement the change.Itis the project manager's responsibility to develop

an atmosphere to allow people to adapt to the changing work environment

"In our department alone, the changes to be made will be very crucial to thehappiness of the employees and the success of projects They must feel they arebeing given a square deal, especially in the evaluation procedure Who will do theevaluation? Will the functional manager be solely responsible for the evaluationwhen, in fact, he or she might never see the functional employee for the duration

in an awkward position Any employee will have the tendency of bending towardthe individual who signs his or her promotion and evaluation form This can in-fluence the project manager into recommending an evaluation below par regard-less of how the functional employee performs There is also the situation wherethe employee is on the project for only a couple of weeks, and spends most of his

or her time working alone, never getting a chance to know the project manager.The project manager will probably give the functional employee an average rat-ing, even though the employee has done an excellent job This results from verylittle contact Then what do you do when the project manager allows personalfeelings to influence his or her evaluation of a functional employee? A projectmanager who knows the functional employee personally might be tempted to give

a strong or weak recommendation, regardless of performance."

Finney: "You seem to be aware of many difficulties that project managementmight bring."

Lyons: "Not really, but I've been doing a lot of homework since 1 attended thatseminar on project management Itwas a good seminar, and since there is notmuch written on the topic, I've been making a few phone calls to other colleaguesfor their opinions on project management."

Finney: "What have you learned from these phone calls?"

Lyons: "That there are more personnel problems involved What do you do in thissituation? The project manager makes an excellent recommendation to the functionalmanager The functional employee is aware of the appraisal and feels he or she should

be given an above average pay increase to match the excellent job appraisal, but thefunctional manager fails to do so One personnel manager from another company in-corporating project management ran into problems when the project manager gave anemployee of one grade level responsibilities of a higher grade level The employee did

an outstanding job taking on the responsibilities of a higher grade level and expected

a large salary increase or a promotion."

Finney: "Well, that's fair, isn't it?"

Personnel Department's View of Project Management 29

Lyons: "Yes, it seems fair enough, but that's not what happened The functionalmanager gave an average evaluation and argued that the project manager had nobusiness giving the functional employee added responsibility without first check-ing with him So, then what you have is a disgruntled employee ready to seek em-ployment elsewhere Also, there are some functional managers who will only giveabove-average pay increases to those employees who stay in the functional de-partment and make that manager look good."

Lyons: "Right now I can see several changes that would need to take place Thefirst major change would have to be attitudes toward formal project managementand hiring procedures We do have project management here at Hyten but on aninformal basis.Ifwe could administer it formally, 1 feel we could do the company

a great service.Ifwe seek project managers from within, we could save on timeand money 1 could devote more time and effort on wage and salary grades andjob descriptions We would need to revise our evaluation forms-presently theyare not adequate Maybe we should develop more than one evaluation form: onefor the project manager to fill out and give to the functional manager, and a sec-ond form to be completed by the functional manager for submission to Personnel."

Finney: "That might cause new problems Should the project manager fill outhis or her evaluation during or after project completion?"

Lyons: "Itwould have go be after project completion That wayan employeewho felt unfairly evaluated would not feel tempted to screw up the project.Ifanemployee felt the work wasn't justly evaluated, that employee might decide not

to show up for a few days-these few days of absence could be most crucial fortimely project completion."

Finney: "How will you handle evaluation of employees who work on severalprojects at the same time? This could be a problem if employees are really enthusi-astic about one project over another They could do a terrific job on the project theyare interested in and slack off on other projects You could also have functional peo-ple working on departmental jobs but charging their time to the project overhead.Don't we have exempt and nonexempt people charging to projects?"

Lyons: "See what 1 mean? We can't just jump into project management and pect a bed of roses There will have to be changes We can't put the cart beforethe horse."

ex-Finney: "I realize that, Sue, but we do have several MBA people working here

at Hyten who have been exposed to project management 1 think that if we startputting our heads together and take a systematic approach to this matter, we will

be able to pull this project together nicely."