Case Study Crosby Manufacturing Corporation
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Library of Congress Cataloging-in-Publication Data:
Kerzner, Harold. Project management : case studies / Harold Kerzner. — 2nd ed.
p. cm. Includes bibliographical references and index. ISBN-13: 978-0-471-75167-0 (pbk.) ISBN-10: 0-471-75167-7 (pbk.) 1. Project management–Case studies. I. Title.
HD69.P75K472 2006 658.4�04–dc22 2002028892
20050182537 Printed in the United States of America
10 9 8 7 6 5 4 3 2 1
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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 � Hyten Corporation 22 � Macon, Inc. 35 � Continental Computer Corporation 37 � Goshe Corporation 43 � Acorn Industries 49 � MIS Project Management at First National Bank 56 � Cordova Research Group 70 � Cortez Plastics 71 � L. P. Manning Corporation 72 � Project Firecracker 74
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� Phillip Condit and Boeing 777: From Design and Development to Production and Sales 81
� AMP of Canada (A) 105 � AMP of Canada (B) (see handout provided by instructor) � AMP of Canada (C) (see handout 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)
(see handout provided by instructor) � An International Project Manager’s Day (C)
(see handout provided by instructor) � An International Project Manager’s Day (D)
(see handout 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 231
5 NEGOTIATING FOR RESOURCES 235
� Ducor Chemical 237 � American Electronics International 241 � The Carlson Project 245
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6 PROJECT ESTIMATING 247
� Capital Industries 249 � Polyproducts Incorporated 251 � Small Project Cost Estimating at Percy Company 258 � Cory Electric 259 � Camden Construction Corporation 263
7 PROJECT PLANNING 267
� Greyson Corporation 269 � Teloxy Engineering (A) 274 � Teloxy Engineering (B) 276 � Payton Corporation 277 � Spin Master Toys (A): Finding A Manufacturer for E-Chargers 279 � Spin Master Toys (B): A New E-Chargers’ Supplier
(see handout provided by instructor) � Spin Master Toys (C): Keeping E-Chargers’ Wings On
(see handout provided by instructor)
8 PROJECT SCHEDULING 293
� Crosby Manufacturing Corporation 295
9 PROJECT EXECUTION 299
� The Blue Spider Project 301 � Corwin Corporation 317 � Quantum Telecom 329 � 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.: Electrical/Electronic Systems Engineering 388
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11 PROJECT RISK MANAGEMENT 401
� The Space Shuttle Challenger Disaster 403 � The Space Shuttle Columbia Disaster 453 � Packer Telecom 460 � Luxor Technologies 462 � Altex Corporation 466 � Acme Corporation 470
12 CONFLICT MANAGEMENT 473
� 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 � Photolite Corporation (B) 566 � Photolite Corporation (C) 569 � Photolite Corporation (D) 574 � First Security Bank of Cleveland 580 � Jackson Industries 583
16 TIME MANAGEMENT 587
� Time Management Exercise 589
17 INDUSTRY SPECIFIC: CONSTRUCTION 613
� Robert L. Frank Construction Company 615 � The Lyle Construction Project 652
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� Hong Kong and Shanghai Banking Corporation Limited: Hongkong Bank Headquarters (A) 635
� Hong Kong and Shanghai Banking Corporation Limited: Hongkong Bank Headquarters (B) (see handout provided by instructor)
� Hong Kong and Shanghai Banking Corporation Limited: Hongkong Bank Headquarters (C) (see handout provided by instructor)
� Hong Kong and Shanghai Banking Corporation Limited: Hongkong Bank Headquarters (C1) (see handout provided by instructor)
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Other than on-the-job training, case studies and situations are perhaps the best way to learn project management. Case studies allow the students to apply the knowledge learned in lectures. 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 cases 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 by the Project Management Institute.
Situations are smaller case studies and usually focus on one or two specific points that need to be addressed, whereas case studies focus on a multitude of problems. 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 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 the reader in the analysis of the case. An instructor’s manual is available from John Wiley & 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 edu- cators prefer not to use case studies dated back to the 1970s and 1980s. It would
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be easy just to change the dates but inappropriate in the eyes of the author. The circumstances surrounding these cases and situations are the same today as they were 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 the text are always appreciated. The author can be contacted at
Phone: 216-765-8090 e-mail: firstname.lastname@example.org
Harold Kerzner Baldwin-Wallace College
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PROJECT MANAGEMENT METHODOLOGIES
As companies approach some degree of maturity in project management, it be- comes readily apparent to all that some sort of standardization approach is neces- sary 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 develop- ment, information systems, or client services. Some organizations may find it nec- essary 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 to- ward the change. Strong executive leadership may be necessary such that the bar- riers 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 work- ers give up their comfort zones and seek out new social groups.
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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. 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 be- lieved was attributed to how well the project management methodology was executed.
In February 2000, 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 singular 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.
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1. How do companies combine methodologies? 2. How do you get employees to change work habits that have proven to be
successful? 3. What influence should a customer have in redesigning a methodology that has
proven 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?
4 LAKES AUTOMOTIVE
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Ferris HealthCare, Inc.
In July of 1999, senior management at Ferris recognized that its future growth could 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 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 proj- ect 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 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 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 upon 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 man- agers had to be familiar with all three methodologies. The alternative, considered
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impractical, was to assign only those project managers familiar with that specific methodology.
After six months of meetings, the company consolidated the three method- 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 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.
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 singular
methodology? 4. Why was the singular methodology based on guidelines rather than policies
and procedures? 5. 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? 6. Why was the consultant not allowed to teach the methodology?
6 FERRIS HEALTHCARE, INC.
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Clark Faucet Company
By 1999, 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 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 on the 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 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 opportu- nity to display the new products at these trade shows could easily result in a six- to twelve-month window of lost revenue.
Clark Faucet had a noncooperative culture. Marketing and engineering would never talk to one another. Engineering wanted the freedom to design new products,
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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 the re- quired work. Their line managers also showed little interest in supporting project management.
Project management became so disliked that the procurement manager re- fused to assign any of his employees to project teams. Instead, he mandated that all project work come through him. He eventually built up a large brick wall around his employees. He claimed that this would protect them from the contin- uous 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 en- hancements. The vice presidents for marketing and engineering reluctantly agreed to try and patch up their differences, but did not appear confident that any changes 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 consul- tant to identify the problems, provide recommendations and alternatives, and act as a mediator. The consultant’s process would have to begin with interviews.
The following comments were made during engineering interviews:
� “We are loaded down with work. If marketing would stay out of engi- neering, 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 uninter- rupted!”
8 CLARK FAUCET COMPANY
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� “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?”
� “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 [4 –6 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 underway for introduction at the next trade show. We then go back to the customer and ask for more clar- ification and/or specifications. Sometimes we must work with the cus- tomer 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 per- plexed. “Why doesn’t engineering understand marketing’s problems?” pondered the consultant. In a follow-up interview with an engineering manager, the fol- lowing comment was made:
“We are currently working on 375 different projects in engineering, and that includes those which marketing requested. Why can’t marketing understand our problems?”
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? What
steps would you recommend? 4. Given the current noncooperative culture, how long will it take to achieve a
good cooperative project management culture, and even excellence?
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5. What obstacles exist in getting marketing and engineering to agree to a singu- lar methodology for project management?
6. What might happen if benchmarking studies indicate that either marketing or engineering are at fault?
7. Should a singular methodology for project management have a process for the prioritization of projects or should some committee external to the methodol- ogy accomplish this?