Project Management Case Studies E-Book

Harold Kerzner

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 1232

Veröffentlichungsjahr: 2022

Beschreibung

The latest edition in the gold standard of project management case study collections

As a critical part of any successful, competitive business, project management sits at the intersection of several functional areas. And in the newly revised Sixth Edition of Project Management Case Studies, world-renowned project management professional Dr. Harold Kerzner delivers practical and in-depth coverage of project management in industries as varied as automotive, healthcare, government, manufacturing, communications, construction, chemical, aerospace, and more.

The latest edition of this bestselling book acts as the perfect supplement to any project management textbook or as an aid in the preparation for the PMP certification exam. The author includes new topics, like risk management, information sharing, scope changes, crisis dashboards, and innovation.

The Sixth Edition includes ten new case studies and a wide array of updates to existing cases to meet today’s industry standards and reflect the unique challenges facing modern project management professionals. This new edition:

• Features 10 new case studies from LEGO, NorthStar, Berlin Brandenburg Airport, and more
• Includes over 100 case studies drawn from real companies illustrating successful and poor implementation of project management
• Provides coverage of broad areas of project management as well as focused content on the automotive, healthcare, government, manufacturing, communications, construction, chemical, and aerospace industries
• Offers new topics including risk management, information sharing, scope changes, crisis dashboards, and innovation

Perfect for students taking courses on project management during their undergraduate degrees and at the graduate level as part of an MBA or graduate engineering program, Project Management Case Studies is also an indispensable resource for consulting and training companies who work with other professionals.

Leseprobe

Table of Contents

Cover

Title Page

Copyright

Dedication

Preface

Part 1: PROJECT MANAGEMENT METHODOLOGIES

Lakes Automotive

Ferris HealthCare, Inc.

Clark Faucet Company

Creating a Methodology

Honicker Corporation

Acquisition Problem

Zane Corporation

Part 2: IMPLEMENTATION OF PROJECT MANAGEMENT

Kombs Engineering

Williams Machine Tool Company

The Reluctant Workers

Macon, Inc.

Cordova Research Group

Cortez Plastics

The Enterprise Resource Planning Project

The Prioritization of Projects

Selling Executives on Project Management

The New CIO

The Invisible Sponsor

The Trade‐off Decision (A)

The Trade‐off Decision (B)

The Project Audit

Part 3: PROJECT MANAGEMENT CULTURES

Como Tool and Die (A)

Como Tool and Die (B)

Apache Metals, Inc.

Haller Specialty Manufacturing

Coronado Communications

Radiance International

The Executive Director

Redstone Inc.

Part 4: PROJECT MANAGEMENT ORGANIZATIONAL STRUCTURES

Quasar Communications, Inc.

Fargo Foods

Government Project Management

Falls Engineering

White Manufacturing

Martig Construction Company

Part 5: NEGOTIATING FOR RESOURCES

Ducor Chemical

American Electronics International

The Carlson Project

Communication Failures

Part 6: PROJECT ESTIMATING

Capital Industries

Small‐Project Cost Estimating at Percy Company

Cory Electric

Camden Construction Corporation

The Estimating Problem

The Singapore Software Group (A)

The Singapore Software Group (B)

The Singapore Software Group (C)

The Singapore Software Group (D)

To Bid or Not to Bid

Part 7: PROJECT PLANNING

Greyson Corporation

Teloxy Engineering (A)

Teloxy Engineering (B)

Payton Corporation

Kemko Manufacturing

Chance of a Lifetime

Part 8: PROJECT SCHEDULING

Crosby Manufacturing Corporation

The Scheduling Dilemma

Part 9: PROJECT EXECUTION

The Blue Spider Project

Corwin Corporation

Quantum Telecom

The Trophy Project

Margo Company

Project Overrun

The Automated Evaluation Project

The Rise, Fall, and Resurrection of Iridium: A Project Management Perspective

Health Care Partners, Inc.

McRoy Aerospace

The Poor Worker

The Prima Donna

The Team Meeting

The Management Control Freak

The Skills Inventory Project

Notes

Part 10: CONTROLLING PROJECTS

The Two‐Boss Problem

The Bathtub Period

Irresponsible Sponsors

The Need for Project Management Metrics (A)

The Need for Project Management Metrics (B)

The Need for Project Management Metrics (C)

The Need for Project Management Metrics (D)

The Need for Project Management Metrics (E)

The Need for Project Management Metrics (F)

The Need for Project Management Metrics (G)

The Need for Project Management Metrics (H)

Part 11: PROJECT RISK MANAGEMENT

The Space Shuttle

Challenger

Disaster

Packer Telecom

Luxor Technologies

Altex Corporation

Acme Corporation

The Risk Management Department

Sandora Company

Notes

Part 12: CONFLICT MANAGEMENT

Facilities Scheduling at Mayer Manufacturing

Scheduling the Safety Lab

Telestar International

The Problem with Priorities

Part 13: MORALITY AND ETHICS

The Project Management Lawsuit

Managing Crisis Projects

Is It Fraud?

The Management Reserve

Jill's Dilemma

Notes

Part 14: MANAGING SCOPE CHANGES

The Berlin Brandenburg Airport

Sierra Telecom

Note

Part 15: WAGE AND SALARY ADMINISTRATION

Photolite Corporation (A)

Photolite Corporation (B)

Photolite Corporation (C)

Photolite Corporation (D)

First Security Bank of Cleveland

Jackson Industries

Part 16: TIME MANAGEMENT

Time Management Exercise

Part 17: MANAGING INNOVATION PROJECTS

The Government Think Tank

LXT International

Lego: Brand Management

Notes

Part 18: ASSESSING PROJECT MANAGEMENT MATURITY

Simone Engineering Company

NorthStar Software Company

Part 19: INDUSTRY SPECIFIC: CONSTRUCTION

Robert L. Frank Construction Company

The Lyle Construction Project

Part 20: INDUSTRY SPECIFIC: DISNEY THEME PARKS

Disney (A): Imagineering Project Management

Disney (B): Imagineering Project Management in Action: The Haunted Mansion

Disney (C): Disney Theme Parks and Enterprise Environmental Factors

Disney (D): The Globalization of Disneyland

Disney (E): Ocean Park Hong Kong: Competing against Disney

Notes

Part 21: INDUSTRY SPECIFIC: THE OLYMPIC GAMES

Olympics (A): Would You Want to Manage Projects for the City Hosting the Olympic Games?

Olympics (B): The Olympics, Project Management, and PMI's Code of Ethics and Professional Conduct

Olympics (C): Would you Want to Manage Projects for the Feeding of Athletes in the Olympic Village?

Olympics (D): Managing Health Risks for Some Olympic Venues

Notes

Part 22: INDUSTRY SPECIFIC: THE COMMERCIAL AIRCRAFT INDUSTRY

Boeing 787 Dreamliner Battery Issues

Airbus A380

Notes

Part 23: INDUSTRY SPECIFIC: AGILE/SCRUM PROJECT MANAGEMENT

Agile (A): Understanding Implementation Risks

Agile (B): Project Management Mind‐set

Agile (C): Managing and Reporting Project Agility

Index

End User License Agreement

List of Tables

Chapter 1

TABLE I ACQUISITION OBJECTIVES

Chapter 2

TABLE I POSSIBLE TRADE‐OFF IMPACTS

TABLE II OPTIONS CONSIDERED

TABLE I OPTIONS

Chapter 6

TABLE I COST POSITIONS

TABLE I PROPOSAL DATA SUMMARY (COST IN 10s OF 1,000s, US$)

TABLE I SALARY INFORMATION FOR 2011

TABLE II TYPICAL PROJECT PRICING SUMMARY

Chapter 8

TABLE I TYPICAL SCHEDULE (IN MONTHS)

Chapter 9

TABLE I PROPOSAL COST SUMMARIES

TABLE II PROJECTED COST SUMMARY AT THE END OF THE THIRD MONTH

TABLE III ESTIMATE OF TOTAL PROJECT COMPLETION COSTS

TABLE I COVENANTS ON THE CREDIT AGREEMENT

Chapter 10

TABLE I R&D TERMINATION COSTS AND REASONS FOR FAILURE

TABLE I CATEGORIZING THE METRICS

TABLE I CATEGORIZING THE METRICS

TABLE I FIVE VALUE COMPONENTS

TABLE II WEIGHTING FACTORS

TABLE III RANGE OF WEIGHTING VALUES

Chapter 11

TABLE I RISK CLASSIFICATION SYSTEM

TABLE II ABORT OPTIONS FOR SHUTTLE

TABLE III EROSION AND BLOW‐BY HISTORY (TEMPERATURE IN...

TABLE I LIKELIHOOD OF A TECHNICAL RISK

TABLE II IMPACT OF A TECHNICAL RISK EVENT

Chapter 13

TABLE I PUBLIC OPINION VIEW OF CRISIS MANAGEMENT

Chapter 15

TABLE I RATING EVALUATION TECHNIQUES AGAINST TYPES OF CONFLICT

Chapter 20

TABLE I CULTURAL DIFFERENCES BETWEEN JAPAN AND FRANCE

TABLE II IMPACT OF CULTURE ON THE EURO DISNEY ENTERPRISE ENVIRONMENTAL FACTORS

TABLE III ATTENDANCE FIGURES FOR 2008 TO 2013

TABLE IV 2013 10K SUPPORTING DATA

TABLE I TOKYO DISNEYLAND ATTENDANCE: 1983 TO 1997

TABLE II 2013 ATTENDANCE FIGURES FOR SELECTED THEME PARKS

Chapter 21

TABLE I REASONS FOR WANTING TO HOST THE OLYMPIC GAMES

TABLE II SHORT‐TERM PROFITABILITY OF SOME OLYMPIC GAMES

TABLE III LOSSES FROM SOME PREVIOUS OLYMPIC CITIES

TABLE IV HOST CITIES THAT EXPERIENCED FINANCIAL DISTRESS

TABLE V COST OF THE WORLDWIDE BROADCAST RIGHTS

TABLE I COMPARISON OF BEIJING SUMMER AND SOCHI WINTER OLYMPIC GAMES

TABLE II EXAMPLES OF VENUE COST ESCALATIONS

TABLE I FOOD QUANTITIES FOR THE LONDON 2012 OLYMPIC VILLAGE

TABLE II FOOD FACTS FROM THE 1996 OLYMPIC VILLAGE IN ATLANTA FOR 33 DAYS

TABLE III COST OF BEVERAGES

TABLE IV COST OF SNACKS

Chapter 22

TABLE I THREE AIRCRAFT SERVING THE LONG‐ AND MEDIUM‐DISTANCE MARKET

TABLE I A380 ORDERS AND DELIVERIES OF AIRLINES COMPANIES WORLDWIDE.

List of Illustrations

Chapter 2

FIGURE I Recovery life‐cycle phases

FIGURE II Trade‐off categories

FIGURE I Levon's gap analysis

FIGURE II Project management performance trend

FIGURE III Increasing performance gap

FIGURE I The quality gap

Chapter 4

FIGURE I Project team organizational structure

FIGURE I Falls Engineering organizational chart

FIGURE I White Manufacturing Organizational Structure

Chapter 9

FIGURE I Organizational chart for Corwin Corporation

FIGURE I Typical satellite communication architecture

Chapter 10

FIGURE I Failure identification per life cycle phase

FIGURE I Differences between financial and project‐based metrics

FIGURE I Generic boundary box

FIGURE I Value metric report

FIGURE I Capacity lagging demand

FIGURE II Capacity increments of 10,000 yearly to meet demand

FIGURE III Capacity increments of 20,000 units every two years

FIGURE IV Using alternative sources of capacity increments yearly

Chapter 11

FIGURE I Solid rocket booster

FIGURE II Location of the O‐rings

FIGURE III Cross section showing the leak test port

FIGURE IV Field joint rotation

FIGURE V Ergonomics in the Workplace

Chapter 12

FIGURE I Mayer Manufacturing organizational structure

Chapter 13

FIGURE I Crisis management life‐cycle phases

Chapter 19

FIGURE I Frank organization

FIGURE II Frank purchasing organization

FIGURE III Floor plan—Lewis project teams

FIGURE I Atlay and Company organization chart

FIGURE II Lyle project team organizational chart

FIGURE III Atlay Company procurement department organizational chart

Chapter 20

FIGURE I Typical life‐cycle phases

FIGURE II The Invitation

Chapter 21

FIGURE I Life‐cycle phases for the Olympic Games

FIGURE II Anti‐Olympics Poster

FIGURE III Governance structure

Chapter 22

FIGURE 22.1 Airbus A380–800 superjumbo passenger placement seating.

FIGURE 22.2 The Airbus A380 versus the Boeing 747–400.

FIGURE 22.3 Global air passenger traffic trend, 1950 to 2014.

FIGURE 22.4 Typical organizational chart in an airplane project.

Chapter 23

FIGURE I Overlapping of methodologies

FIGURE II Creation of business value

Guide

Cover

Table of Contents

Title Page

Copyright

Dedication

Preface

Begin Reading

Index

End User License Agreement

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PROJECT MANAGEMENT CASE STUDIES

SIXTH EDITION

HAROLD KERZNER

This book is printed on acid‐free paper ∞.

Copyright © 2022 by John Wiley & Sons, Inc. All rights reserved

Published by John Wiley & Sons, Inc., Hoboken, New JerseyPublished simultaneously in CanadaPMI, CAPM, PMBOK, PMP and Project Management Professional are registered marks of the Project Management Institute, Inc.

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Library of Congress Cataloging‐in‐Publication Data:

Names: Kerzner, Harold, author. | John Wiley & Sons, publisher.

Title: Project management case studies / Harold Kerzner, Ph.D., Senior

Executive Director for Project Management, The International Institute for Learning, New York, New York.

Description: Sixth edition. | Hoboken, New Jersey : Wiley, [2022] | Includes index.

Identifiers: LCCN 2021020216 (print) | LCCN 2021020217 (ebook) | ISBN 9781119821991 (paperback) | ISBN 9781119822141 (adobe pdf) | ISBN 9781119822042 (epub)

Subjects: LCSH: Project management—Case studies.

Classification: LCC HD69.P75 K472 2022 (print) | LCC HD69.P75 (ebook) | DDC 658.4/04—dc23

LC record available at https://lccn.loc.gov/2021020216

LC ebook record available at https://lccn.loc.gov/2021020217

Cover Design: WileyCover Image: Wiley

To our beloved grandchildren,Stella, Sloane, Asher, and Sienna

Preface

Other than on‐the‐job training, case studies and situations are perhaps the best way to learn project management. Project managers pride themselves on finding solutions to problems and case studies are an excellent way for this to happen. Case studies require that the students investigate what 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 of case studies is applicable both to undergraduate‐ and graduate‐level project management courses, as well as training programs to pass various certification examinations in project management.

Situations are smaller case studies that focus on one or two points that need to be addressed, whereas case studies can focus on a multitude of interrelated issues. The table of contents identifies several broad categories for the cases and situations, but keep in mind that the larger case studies, such as Corwin Corporation, The Blue Spider Project, or the Rise, Fall, and Resurrection of Iridium, could have been listed under several topics. Some of the case studies, such as The Need for Metrics and The Singapore Software Group, are well suited for group exercises. Other smaller or minicases can be covered during the class period.

Several smaller cases or situations are included in this edition at the request of faculty members who asked for cases that could be discussed in class and worked on in a team environment. These smaller cases can be used as in‐class assignments or take‐home assignments.

Almost all of the cases and situations have “seed” questions, either in the case itself or in the instructor's teaching notes on the case to assist the reader in the analysis of the case. The seed questions from the instructor's manual will be provided by the instructor. An instructor's manual is available from John Wiley & Sons, Inc., only to faculty members who adopt the book for classroom use.

Almost all the case studies are factual. In most circumstances, the cases and situations have been taken from the author's consulting practice. The names of many of the companies and the people in the companies have been disguised for obvious reasons. Some educators prefer not to use case studies that are more than 10 or 20 years old. However, the circumstances surrounding many of these older cases and situations are the same today as they were years ago. Unfortunately, we seem to be repeating several of the mistakes made previously.

There are 11 new cases added in this edition. Seed questions in the case studies reflect upon some of the issues that project managers might face. The new cases, which are well suited for in‐class discussions and webinars, are:

Zane Corporation:

The case illustrates the challenges a company must face when their one‐size‐fits‐all approach can no longer be used for many of their newer projects.

Redstone, Inc.:

The company had been using project management successfully in their aerospace division, which focused only on large government contracts. When they decided to implement project management in their new commercial products division, they decided to staff key positions with people from the aerospace group even though the projects in the new division were much smaller and needed different tools and techniques.

Sandora Company:

The case discusses the impact that the enterprise environmental factors can have on the execution of a project.

Jill's Dilemma:

The case discusses the dilemma a project manager faces when told to withhold risk management information from the customer.

Berlin Brandenburg Airport:

The case illustrates what happens when governance fails on a large project and people do not consider the risk issues in sufficient detail.

Sierra Telecom:

The case illustrates the challenges a company faces on projects that may incur numerous scope changes.

The Government Think Tank:

This case study illustrates the challenges that the government has in trying to get competitors for government contracts to share information.

LXT International:

The case discusses the challenges a company has when trying to create a crisis dashboard to provide management with an insight on when to intervene in certain projects.

Lego: Brand Management:

This case study discusses the challenges Lego faces when innovation activities may have restrictions of having to satisfy the Lego brand image.

Simone Engineering Company:

The case illustrates the challenges a company faces when told that their proposal must identify their company's project management maturity level.

Northstar Software Company:

The case study illustrates how a company involved in IT projects might report their maturity level in project management if asked.

Harold Kerzner

Part 1PROJECT MANAGEMENT METHODOLOGIES

As companies approach some degree of maturity in project management, it becomes readily apparent to all that some sort of standardization approach is necessary for the way that projects are managed. The ideal solution might be to have a singular methodology for all projects, whether they are for new product development, information systems, or client services. Some organizations may find it necessary to maintain more than one methodology, however, such as one methodology for information systems and a second methodology for new product development.

The implementation and acceptance of a project management methodology can be difficult if the organization's culture provides a great deal of resistance toward the change. Strong executive leadership may be necessary such that the barriers to change can be overcome quickly. These barriers can exist at all levels of management as well as at the worker level. The changes may require that workers give up their comfort zones and seek out new social groups.

Lakes Automotive

Lakes Automotive is a Detroit‐based tier‐one supplier to the auto industry. Between 1995 and 1999, Lakes Automotive installed a project management methodology based on nine life‐cycle phases. For the next 10 years, all 60,000 employees worldwide accepted the methodology and used it. Management was pleased with the results. Also, Lakes Automotive's customer base was pleased with the methodology and provided Lakes Automotive with quality award recognition that everyone attributed to how well the project management methodology was executed.

In February 2015, Lakes Automotive decided to offer additional products to its customers. Lakes Automotive bought out another tier‐one supplier, Pelex Automotive Products (PAP). PAP also had a good project management reputation and also provided quality products. Many of its products were similar to those provided by Lakes Automotive.

Because the employees from both companies would be working together closely, a single project management methodology would be required that would be acceptable to both companies. PAP had a good methodology based on five life‐cycle phases. Both methodologies had advantages and disadvantages, and both were well liked by their customers.

QUESTIONS

How do companies combine methodologies?

How do you get employees to change work habits that have proven to be successful?

What influence should a customer have in redesigning a methodology that has proven to be successful?

What if the customers want the existing methodologies left intact?

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

Ferris HealthCare, Inc.

In July of 2014, senior management at Ferris recognized that its future growth could very well be determined by how quickly and how well it implemented project management. For the past several years, line managers had been functioning as project managers while still managing their line groups. The projects came out with the short end of the stick, most often late and over budget, because managers focused on line activities rather than project work. Everyone recognized that project management needed to be an established career path position and that some structured process had to be implemented for project management.

A consultant was brought into Ferris to provide initial project management training for 50 out of the 300 employees targeted for eventual project management training. Several of the employees thus trained were then placed on a committee with senior management to design a project management stage‐gate model for Ferris.

After two months of meetings, the committee identified the need for three different stage‐gate models: one for information systems, one for new products/ services provided, and one for bringing on board new corporate clients. There were several similarities among the three models. However, personal interests dictated the need for three methodologies, all based on rigid policies and procedures.

After a year of using three models, the company recognized it had a problem deciding how to assign the right project manager to the right project. Project managers had to be familiar with all three methodologies. The alternative, considered impractical, was to assign only those project managers familiar with that specific methodology.

After six months of meetings, the company consolidated the three methodologies into a single methodology, focusing more on guidelines than on policies and procedures. The entire organization appeared to support the new single methodology. A consultant was brought in to conduct the first three days of a four‐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 the new methodology. The success to failure ratio on projects increased dramatically.

QUESTIONS

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

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

Why do you believe the organization later was willing to accept a single methodology?

Why was the single methodology based on guidelines rather than policies and procedures?

Did it make sense to have the fourth day of the training program devoted to the methodology and immediately attached to the end of the three‐day program?

Why was the consultant not allowed to teach the methodology?

Clark Faucet Company

BACKGROUND

By 2010, Clark Faucet Company had grown into the third largest supplier of faucets for both commercial and home use. Competition was fierce. Consumers would evaluate faucets on artistic design and quality. Each faucet had to be available in at least 25 different colors. Commercial buyers seemed more interested in the cost than the average consumer, who viewed the faucet as an object of art, irrespective of price.

Clark Faucet Company did not spend a great deal of money advertising on the radio, television, or Internet. Some money was allocated for ads in professional journals. Most of Clark's advertising and marketing funds were allocated to the two semiannual 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 opportunity to display the new products at these trade shows could easily result in a six‐ to 12‐month window of lost revenue.

CULTURE

Clark Faucet had a noncooperative culture. Marketing and engineering would never talk to one another. Engineering wanted the freedom to design new products, whereas marketing wanted final approval to make sure that what was designed could be sold.

The conflict between marketing and engineering became so fierce that early attempts to implement project management failed. Nobody wanted to be the project manager. Functional team members refused to attend team meetings and spent most of their time working on their own pet projects rather than on the required work. Their line managers also showed little interest in supporting project management.

Project management became so disliked that the procurement manager refused to assign any of his employees to project teams. Instead, he mandated that all project work come through him. He eventually built a virtual brick wall around his employees. He claimed that this would protect them from the continuous conflicts between engineering and marketing.

THE EXECUTIVE DECISION

The executive council mandated that another attempt to implement good project management practices must occur quickly. Project management would be needed not only for new product development but also for specialty products and enhancements. The vice presidents for marketing and engineering reluctantly agreed to try to patch up their differences but did not appear confident that any changes would take place.

Strange as it may seem, no one could identify the initial cause of the conflicts or how the trouble actually began. Senior management hired an external consultant to identify the problems, provide recommendations and alternatives, and act 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. If marketing would stay out of engineering, we could get our job done.”

“Marketing doesn't understand that there's more work for us to do other than just new product development.”

“Marketing personnel should spend their time at the country club and in bar rooms. This will allow us in engineering to finish our work uninterrupted!”

“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 the problem is that marketing doesn't know what they want up front. This leads to change after change. Why can't we get a good definition at the beginning of each project?”

MARKETING INTERVIEWS

These comments were made during marketing interviews:

“Our livelihood rests on income generated from trade shows. Since new product development is four to six months in duration, we have to beat up on engineering to make sure that our marketing schedules are met. Why can't engineering understand the importance of these trade shows?”

“Because of the time required to develop new products [four–six months], we sometimes have to rush into projects without having a good definition of what is required. When a customer at a trade show gives us an idea for a new product, we rush to get the project under way for introduction at the next trade show. We then go back to the customer and ask for more clarification and/or specifications. Sometimes we must work with the customer for months to get the information we need. I know that this is a problem for engineering, but it cannot be helped.”

The consultant wrestled with the comments but was still somewhat perplexed. “Why doesn't engineering understand marketing's problems?” pondered the consultant. In a follow‐up interview with an engineering manager, the following comment was made: “We are currently working on 375 different projects in engineering, and that includes those that marketing requested. Why can't marketing understand our problems?”

QUESTIONS

What is the critical issue?

What can be done about it?

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

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

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

What might happen if benchmarking studies indicate that either marketing or engineering are at fault?

Should a single methodology for project management have a process for the prioritization of projects, or should some committee external to the methodology accomplish this?

Creating a Methodology

BACKGROUND

John Compton, the president of the company, expressed his feelings quite bluntly at the executive staff meeting. He said:

We are no longer competitive in the marketplace. Almost all of the requests for proposal that we want to bid on have a requirement that we must identify in the proposal the project management methodology we will use on the contract should we be awarded the contract. We have no project management methodology. We have just a few templates we use based upon the PMBOK®Guide. All of our competitors have methodologies, but not us.

I have been asking for a methodology to be developed for more than a year now, and all I get are excuses. Some of you are obviously afraid that you might lose power and authority once the methodology is up and running. That may be true, but losing some power and authority is obviously better than losing your job. In six months I want to see a methodology in use on all projects or I will handle the situation myself. I simply cannot believe that my executive staff is afraid to develop a project management methodology.

CRITICAL ISSUES

The executive staff knew this day was inevitable; they had to take the initiative in the implementation of a project management methodology. Last year, a consultant was brought in to conduct a morning three‐hour session on the benefits of project management and the value of an enterprise project management (EPM) methodology. As part of the session, the consultant explained that the time needed to develop and implement an EPM system can be shortened if the company has a project management office (PMO) in place to take the lead role. The consultant also explained that whichever executive gets control of the PMO may become more powerful than other executives because he or she now controls all of the project management intellectual property. The executive staff fully understood the implication of this and therefore were reluctant to visibly support project management until they could see how their organization would be affected. In the meantime, project management suffered.

Reluctantly, a PMO was formed reporting to the chief information officer. The PMO was comprised of a handful of experienced project managers that could, it was hoped, take the lead in the development of a methodology. The PMO concluded that five steps had to be done initially. After the five steps were done, the executive committee would receive a final briefing on what had been accomplished. The final briefing would be in addition to the monthly updates and progress reports. The PMO believed that getting executive support and sign‐offs in a timely manner would be difficult.

The first step that needed to be done was the establishment of the number of life‐cycle phases. Some people interviewed wanted 10 to 12 life‐cycle phases. That meant that there would be 10 to 12 gate‐review meetings, and the project managers would spend a great deal of time preparing paperwork for the gate‐review meetings rather than managing the project. The decision was then made to have no more than six life‐cycle phases.

The second step was to decide whether the methodology should be designed around rigid policies and procedures or go the more informal route of using forms, guidelines, checklists, and templates. The PMO felt that project managers needed some degree of freedom in dealing with clients and therefore the more informal approach would work best. Also, clients were asking to have the methodology designed around client business needs, and the more informal approach would provide the flexibility to do this.

The third step was to see what could be salvaged from the existing templates and checklists. The company had a few templates and checklists but not all project managers used them. The decision was made to develop a standardized set of documents in accordance with the information in the PMBOK®Guide. The project managers could then select whatever forms, guidelines, templates, and checklists were appropriate for a particular project and client.

The fourth step would be to develop a means for capturing best practices using the EPM system. Clients were now requiring in their requests for proposal that best practices on a project must be captured and shared with the client prior to the close out of the project. Most of the people in the PMO believed that this could be done using forms or checklists at the final project debriefing meeting.

The fifth step involved education and training. The project managers and functional organizations that would staff the projects would need to be trained in the use of the new methodology. The PMO believed that a one‐day training program would suffice and the functional organizations could easily release their people for a one‐day training session.

QUESTIONS

What can you determine about the corporate culture from the fact that they waited this long to consider the development of an EPM system?

Can a PMO accelerate the implementation process?

Is it acceptable for the PMO to report to the chief information officer, or should it report to someone else?

Why is it best to have six or fewer life‐cycle phases in an EPM system?

Is it best to design an EPM system around flexible or inflexible elements? Generally, when first developing an EPM system, do companies prefer to use formal or informal designs?

Should an EPM system have the capability of capturing best practices?

Honicker Corporation

BACKGROUND

Honicker Corporation was well recognized as a high‐quality manufacturer of dashboards for automobiles and trucks. Although it serviced mainly U.S. automotive and truck manufacturers, the opportunity to expand to a worldwide supplier was quite apparent. The company's reputation was well known worldwide, but it was plagued for years with ultraconservative senior management leadership that prevented growth into the international marketplace.

When the new management team came on board in 2009, the conservatism disappeared. Honicker was cash rich, had large borrowing power and lines of credit with financial institutions, and received an AA‐quality rating on its small amount of corporate debt. Rather than expand by building manufacturing facilities in various countries, Honicker decided to go the fast route by acquiring four companies around the world: Alpha, Beta, Gamma, and Delta Companies.

Each of the four acquired companies serviced mainly its own geographic area. The senior management team in each of the four companies knew the culture in their geographic area and had a good reputation with their clients and local stakeholders. The decision was made by Honicker to leave each company's senior management teams intact, provided that the necessary changes, as established by corporate, could be implemented.

Honicker wanted each company to have the manufacturing capability to supply parts to any Honicker client worldwide. But doing this was easier said than done. Honicker had an EPM methodology that worked well. Honicker understood project management and so did the majority of Honicker's clients and stakeholders in the United States. Honicker recognized that the biggest challenge would be to get all of the divisions at the same level of project management maturity and using the same corporate‐wide EPM system or a modified version of it. It was expected that each of the four acquired companies might want some changes to be made.

The four acquired divisions were all at different levels of project management maturity. Alpha did have an EPM system and believed that its approach to project management was superior to the one that Honicker was using. Beta Company was just beginning to learn project management but did not have any formal EPM system, although it did have a few project management templates that were being used for status reporting to its customers. Gamma and Delta Companies were clueless about project management.

To make matters worse, laws in each of the countries where the acquired companies were located created other stakeholders that had to be serviced, and all of these stakeholders were at different levels of project management maturity. In some countries government stakeholders were actively involved because of employment procurement laws; in other countries government stakeholders were passive participants unless health, safety, or environmental laws were broken.

It would certainly be a formidable task to develop an EPM system that would satisfy all of the newly acquired companies, their clients, and their stakeholders.

ESTABLISHING THE TEAM

Honicker knew that there would be significant challenges in getting a project management agreement in a short amount of time. Honicker also knew that there is never an acquisition of equals; there is always a “landlord” and “tenants,” and Honicker is the landlord. But acting as a landlord and exerting influence in the process could alienate some of the acquired companies and do more harm than good. Honicker's approach was to treat this as a project and to treat each company, along with its clients and local stakeholders, as project stakeholders. Using stakeholder relations management practices would be essential to getting an agreement on the project management approach.

Honicker requested that each company assign three people to the project management implementation team that would be headed up by Honicker personnel. The ideal team member, as suggested by Honicker, would have some knowledge and/or experience in project management and be authorized by their senior levels of management to make decisions for their company. The representatives should also understand the stakeholder needs from their clients and local stakeholders. Honicker wanted an understanding to be reached as early as possible that each company would agree to use the methodology that was finally decided on by the team.

Senior management in each of the four companies sent a letter of understanding to Honicker promising to assign the most qualified personnel and agreeing to use the methodology that was agreed on. Each stated that its company understood the importance of this project.

The first part of the project would be to come to an agreement on the methodology. The second part of the project would be to invite clients and stakeholders to see the methodology and provide feedback. This was essential since the clients and stakeholders eventually would be interfacing with the methodology.

KICKOFF MEETING

Honicker had hoped that the team could come to an agreement on a companywide EPM system within six months. But after the kickoff meeting was over, Honicker realized that it would probably be two years before an agreement would be reached on the EPM system. Several issues became apparent at the first meeting:

Each company had different time requirements for the project.

Each company saw the importance of the project differently.

Each company had its own culture and wanted to be sure that the final design was a good fit with that culture.

Each company saw the status and power of the project manager differently.

Despite the letters of understanding, two of the companies, Gamma and Delta, did not understand their role and relationship with Honicker on this project.

Alpha wanted to micromanage the project, believing that everyone should use its methodology.

Senior management at Honicker asked the Honicker representatives at the kickoff meeting to prepare a confidential memo on their opinion of the first meeting with the team. The Honicker personnel prepared a memo including the following comments:

Not all of the representatives at the meeting openly expressed their true feelings about the project.

It was quite apparent that some of the companies would like to see the project fail.

Some of the companies were afraid that the implementation of the new EPM system would result in a shift in power and authority.

Some people were afraid that the new EPM system would show that fewer resources were needed in the functional organization, thus causing a downsizing of personnel and a reduction in bonuses that were currently based on headcount in functional groups.

Some seemed apprehensive that the implementation of the new system would cause a change in the company's culture and working relationships with their clients.

Some seemed afraid of learning a new system and being pressured into using it.

It was obvious that this would be no easy task. Honicker had to get to know all companies better and understand their needs and expectations. Honicker management had to show them that their opinions were of value and find ways to win their support.

QUESTIONS

What are Honicker's options now?

What would you recommend that Honicker do first?

What if, after all attempts, Gamma and Delta companies refuse to come on board?

What if Alpha Company is adamant that its approach is best and refuses to budge?

What if Gamma and Delta Companies argue that their clients and stakeholders have not readily accepted the project management approach and they wish to be left alone with regard to dealing with their clients?

Under what conditions would Honicker decide to back away and let each company do its own thing?

How easy or difficult is it to get several geographically dispersed companies to agree to the same culture and methodology?

If all four companies were willing to cooperate with one another, how long do you think it would take for an agreement on and acceptance to use the new EPM system?

Which stakeholders may be powerful and which are not?

Which stakeholder(s) may have the power to kill this project?

What can Honicker do to win their support?

If Honicker cannot win their support, then how should Honicker manage the opposition?

What if all four companies agree to the project management methodology and then some client stakeholders show a lack of support for use of the methodology?

Acquisition Problem

BACKGROUND

All companies strive for growth. Strategic plans are prepared identifying new products and services to be developed and new markets to be penetrated. Many of these plans require mergers and acquisitions to obtain the strategic goals and objectives rapidly. Yet often even the best‐prepared strategic plans fail when based on mergers and acquisitions. Too many executives view strategic planning for a merger or acquisition as planning only and often give little consideration to implementation, which takes place when both companies are actually combined. Implementation success is vital during any merger and acquisition process.

PLANNING FOR GROWTH

Companies can grow in two ways—internally or externally. With internal growth, companies cultivate their resources from within and may spend years attaining their strategic targets and marketplace positioning. Since time may be an unavailable luxury, meticulous care must be given to make sure that all new developments fit the corporate project management methodology and culture.

External growth is significantly more complex. External growth can be obtained through mergers, acquisitions, and joint ventures. Companies can purchase the expertise they need very quickly through mergers and acquisitions. Some companies execute occasional acquisitions while other companies have sufficient access to capital such that they can perform continuous acquisitions. However, once again, companies often neglect to consider the impact on project management after the acquisition is made. Best practices in project management may not be transferable from one company to another. The impact on project management systems resulting from mergers and acquisitions is often irreversible, whereas joint ventures can be terminated.

Project management often suffers after the actual merger or acquisition. Mergers and acquisitions allow companies to achieve strategic targets at a speed not easily achievable through internal growth, provided the sharing or combining of assets and capabilities can be done quickly and effectively. This synergistic effect can produce opportunities that a firm might be hard‐pressed to develop by itself.

Mergers and acquisitions focus on two components: preacquisition decision making and postacquisition integration of processes. Wall Street and financial institutions appear to be interested more in the near‐term financial impact of the acquisition rather than the long‐term value that can be achieved through combined or better project management and integrated processes. During the mid‐1990s, companies rushed into acquisitions in less time than the company required for a capital expenditure approval. Virtually no consideration was given to the impact on project management and on whether project management knowledge and best practices would be transferable. The result appears to have been more failures than successes.

When a firm rushes into an acquisition, often very little time and effort are spent on postacquisition integration. Yet this is where the real impact of the acquisition is felt. Immediately after an acquisition, each firm markets and sells products to each other's customers. This may appease the stockholders, but only in the short term. In the long term, new products and services will need to be developed to satisfy both markets. Without an integrated project management system where both parties can share the same intellectual property and work together, this may be difficult to achieve.

When sufficient time is spent on preacquisition decision making, both firms look at combining processes, sharing resources, transferring intellectual property, and the overall management of combined operations. If these issues are not addressed in the preacquisition phase, then the unrealistic expectations may lead to unwanted results during the postacquisition integration phase.

STRATEGIC TIMING ISSUE

Lenore Industries had been in existence for more than 50 years and served as a strategic supplier of parts to the automobile industry. Lenore's market share was second only to its largest competitor, Belle Manufacturing. Lenore believed that the economic woes of the U.S. automobile industry between 2008 and 2010 would reverse themselves by the middle of the next decade and that strategic opportunities for growth were at hand.

The stock prices of almost all of the automotive suppliers were grossly depressed. Lenore's stock price was also near a 10‐year low. But Lenore had rather large cash reserves and believed that the timing was right to make one or more strategic acquisitions before the market place turned around. With this in mind, Lenore decided to purchase its largest competitor, Belle Manufacturing.

PREACQUISITION DECISION MAKING

Senior management at Lenore fully understood that the reason for most acquisitions is to satisfy strategic and/or financial objectives. Table I shows the six reasons identified by senior management at Lenore for the acquisition of Belle Manufacturing and the most likely impact on Lenore's strategic and financial objectives. The strategic objectives are somewhat longer term than the financial objectives, which are under pressure from stockholders and creditors for quick returns.

Lenore's senior management fully understood the long‐term benefits of the acquisition, which were:

Economies of combined operations

Assured supply or demand for products and services

Additional intellectual property, which may have been impossible to obtain otherwise

Direct control over cost, quality, and schedule rather than being at the mercy of a supplier or distributor

Creation of new products and services

Putting pressure on competitors by creating synergies

Cutting costs by eliminating duplicated steps

TABLE IACQUISITION OBJECTIVES

Reason for Acquisitions

Strategic Objective

Financial Objective

Increase customer base

Bigger market share

Bigger cash flow

Increase capabilities

Become a business solution provider

Larger profit margins

Increase competitiveness

Eliminate costly steps and redundancy

Stable earnings

Decrease time‐to‐market for new products

Market leadership

Rapid earnings growth

Decrease time to market for enhancements

Broad product lines

Stable earnings

Closer to customers

Better price–quality–service mix

Sole‐source or single‐source procurement

Lenore submitted an offer to purchase Belle Manufacturing. After several rounds of negotiations, Belle's board of directors and Belle's stockholders agreed to the acquisition. Three months later, the acquisition was completed.

POSTACQUISITION INTEGRATION

The essential purpose of any merger or acquisition is to create lasting value and value that would not exist had the companies remained separate. The achievement of these benefits, as well as attaining the strategic and financial objectives, could rest on how well the project management value‐added chains of both firms are integrated, especially the methodologies within their chains. Unless the methodologies and cultures of both firms can be integrated, and reasonably fast, the objectives may not be achieved as planned.

Lenore's decision to purchase Belle Manufacturing never considered the compatibility of their respective project management approaches. Project management integration failures occurred soon after the acquisition happened. Lenore had established an integration team and asked the integration team for a briefing on what critical issues were preventing successful integration.

The integration team identified five serious problems that were preventing successful integration of their project management approaches:

Lenore and Belle have different project management methodologies.

Lenore and Belle have different cultures and integration is complex.

There are wage and salary disparities.

Lenore overestimated the project management capability of Belle's personnel.

There are significant differences in functional and project management leadership.

It was now apparent to Lenore that these common failures resulted because the acquisition simply cannot occur without organizational and cultural changes that are often disruptive in nature. Lenore had rushed into the acquisition with lightning speed but with little regard for how the project management value‐added chains would be combined.

The first common problem area was inability to combine project management methodologies within the project management value‐added chains. This occurred for four reasons:

A poor undherstanding of each other's project management practices prior to the acquisition

No clear direction during the preacquisition phase on how the integration would take place

Unproven project management leadership in one or both firms

The existence of a persistent attitude of “we–them”

Some methodologies may be so complex that a great amount of time is needed for integration to occur, especially if each organization has a different set of clients and different types of projects. As an example, a company developed a project management methodology to provide products and services for large publicly held companies. The company then acquired a small firm that sold exclusively to government agencies. The company realized too late that integration of the methodologies would be almost impossible because of requirements imposed by government agencies for doing business with the government. The methodologies were never integrated and the firm servicing government clients was allowed to function as a subsidiary, with its own specialized products and services. The expected synergy never took place.

Some methodologies simply cannot be integrated. It may be more prudent to allow the organizations to function separately than to miss windows of opportunity in the marketplace. In such cases, pockets of project management may exist as separate entities throughout a large corporation.

Lenore knew that Belle Manufacturing services many clients outside of the United States but did not realize that Belle maintained a different methodology for those clients. Lenore was hoping to establish just one methodology to service all clients.

The second major problem area was the existence of differing cultures. Although project management can be viewed as a series of related processes, it is the working culture of the organization that must eventually execute these processes. Resistance by the corporate culture to effectively support project management can cause the best plans to fail. Sources for the problems with differing cultures include a culture that:

Has limited project management expertise (i.e., missing competencies) in one or both firms

Is resistant to change

Is resistant to technology transfer

Is resistant to transfer of any type of intellectual property

Will not allow for a reduction in cycle time

Will not allow for the elimination of costly steps

Must reinvent the wheel

Views project criticism as personal criticism

Integrating two cultures can be equally difficult during favorable and unfavorable economic times. People may resist any changes to their work habits or comfort zones, even though they recognize that the company will benefit by the changes.

Multinational mergers and acquisitions are equally difficult to integrate because of cultural differences. Several years ago, an American automotive supplier acquired a European firm. The American company supported project management vigorously and encouraged its employees to become certified in project management. The European firm provided very little support for project management and discouraged its workers from becoming certified, arguing that its European clients do not regard project management as highly as do General Motors, Ford, and Chrysler. The European subsidiary saw no need for project management. Unable to combine the methodologies, the American parent company slowly replaced the European executives with American executives to drive home the need for a single project management approach across all divisions. It took almost five years for the complete transformation to take place. The American parent company believed that the resistance in the European division was more of a fear of change in its comfort zone than a lack of interest by its European customers.