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Case Study 2.

1 Rolls-Royce Corporation
Rolls-Royce is an example of a case based on new strategic opportunities and an organizations desire to capitalize on market and technological developments. As one of the premier manufacturers of jet engines of the commercial and military markets, Rolls-Royce is facing an opportunity to piggy back off Airbuss newest airframe design, the A-380, an enormous airplane capable of flying up to 750 people. The case also demonstrates the manner in which Rolls-Royce must identify and manage their key stakeholder group for maximum effectiveness.

Questions: 1) Who are Rolls principal project management stakeholders? How would you design stakeholder management strategies to address their concerns? Among the companys biggest stakeholders are its direct customers, the commercial airframe manufacturers (Boeing and Airbus), as well as those supplying aircraft for military uses. Rolls-Royce also must work closely with national governments who subsidize their airlines by resorting to creative financing, long-term contracts, or asset-based trading deals. Among Rolls-Royces other key stakeholders are its labor force, which must be highly trained, its competitors (technical advances by a competitors must be immediately matched by Rolls-Royce), suppliers of parts and equipment, and so forth. Students discussing this case can create a large and very diverse stakeholder list. It is useful to illustrate how the desires of some stakeholders may be in direct opposition to the needs or expectations of others, making the point that stakeholder management is often a creative juggling act.

2) Given the financial risks inherent in developing a jet engine, make an argument, either pro or con, for Rolls to develop strategic partnerships with other jet engine manufacturers in a manner similar to Airbuss consortium arrangement. What are the benefits and drawbacks from such an arrangement?

In answering this question, it is helpful to first identify the tremendous barriers to entry and risk factors associated with manufacturing jet engines. What would Rolls-Royce gain from a

consortium arrangement? What could they potentially lose? The arguments can add up on both sides of the ledger so the instructor can steer this discussion to include issues of stakeholder management, corporate strategy, and even culture, by highlighting the problems with blending conflicting cultures under a consortium arrangement.

Case Study 3.1: Keflavik Paper Company


Keflavik Paper is an organization that has lately been facing serious problems with the results of its projects. Specifically, the companys project development record has been spotty: While some projects have been delivered on time, others have been late. Budgets are routinely overrun, and product performance has been inconsistent, with the results of some projects yielding good returns and others losing money. They have hired a consultant to investigate some of the principle causes that are underlying these problems and he believes that the primary problem is not how project are run but how they are selected in the first place. Specifically, there is little attention paid to the need to consider strategic fit and portfolio management in selecting new projects. This case is intended to get students thinking of alternative screening measures that could potentially be used when deciding whether or not to invest in a new project.

Questions: 1. Keflavik Paper presents a good example of the dangers of excessive reliance on one screening technique (discounted cash flows). How might excessive or exclusive reliance on other screening methods discussed in this chapter lead to similar problems?

Some measures that allow us to screen projects may lead to the wrong conclusions; for example, suppose that we selected projects in construction settings for their aesthetic appeal and ability to promote our name across the industry. If insufficient attention was then paid to issues such as cost of the project or safety concerns, we may be selecting projects that will ultimately damage our reputation or drive us out of business. Instructors should probe

various screening techniques for their strengths and weaknesses to ultimately demonstrate that effective screening methods usually rely on multiple, complementary measures for selecting projects. 2. Assume that you are responsible for maintaining Keflaviks project portfolio. Name some key criteria that you believe should be used in evaluating all new projects before they are added to the current portfolio.

Students can use this as a brain-storming exercise. Among the criteria they could list are: 1) relationship to current projects or products the company carries, 2) new market penetration potential, 3) technological feasibility, and 4) cost of development. This is a short list and students could potentially add several other criteria to it.

3. What does this case demonstrate about the affect of poor project screening methods on a firms ability to manage its projects effectively? The firms ad hoc approach to project selection demonstrates that even taking on projects that could yield strong cash flows may injure the organization due to its inability to manage them well. Further, it highlights the dangers of using either a single or one heavily-weighted criterion for project selection. Successful project portfolios are consciously constructed and managed as a coherent whole, not simply a collection of diverse opportunities.

Case Study 3.2: Project Selection at Nova Western, Inc.


This case presents an example that is common, in which different screening methods may yield different findings. In this case, two projects are competing for funding; Project Janus, championed by the organizations Software Development group and Project Gemini, which as the backing of their Business Applications organization. Using a weighted scoring model, it appears that Project Gemini offers the best alternative in terms of the criteria employed. On the other hand, when a Discounted Cash Flow approach is used, the results suggest that

Project Janus will earn greater returns on initial investment. Instructors can use this case to illustrate the fact that many times, selection models will point to conflicting results, particularly when financial models are paired with non-financial approaches.

Instructors can fashion a debate from this case, in which they assign one team to serve as champions for Project Janus and the other for Project Gemini. It serves as a valuable exercise for requiring students to commit to one approach or another, defend their positions, and also examine these competing models for their strengths and weaknesses.

Questions:

1. Phyllis has called you into her office to help her make sense of the contradictions in project evaluation. How would you explain the reasons for this divergence of opinion from one technique to the next? What are the strengths and weaknesses of each screening method?

The chapter notes several strengths and weaknesses of each project screening method and these should be considered in this case. It is not uncommon for financial and non-financial screening methods to yield competing information; thus, an argument could be made that using only these two methods is insufficient and in fact, an enhanced screening model should be developed for Nova that considers these factors are part of an overall, larger model of choice. Those instructors familiar with Expert Choice software could set up this case as an exercise using the Analytical Hierarchy Process (AHP) discussed in the chapter.

2. Choose the project that you feel, based on the above analysis, Nova Western should select. Defend your choice.

A reasonable case could be made for selecting either Project Janus or Project Gemini. For example though Project Janus offers a higher net present value for your initial investment, the payoff period is two years longer than Project Gemini, suggesting that if the firm does not wish to tie its money up too long, Gemini might be a reasonable alternative choice. Likewise, the weighted criteria model seems to favor Project Gemini. Students should be encouraged to consider the criteria Nova employed in project selection. Are they reasonable, or should other factors be considered as well?

3. What does the above case suggest to you about the use of project selection methods in organizations? How would you resolve the contradictions found in this example?

A successful screening model is often a comprehensive one. Simplistic models typically yield simplistic answers and their consistency from method to method is questionable. As the chapter demonstrates, most effective screening techniques used in organizations today are complex, multi-faceted and comprehensive in nature. One simple solution to this case might be to use the results of the discounted cash flow analysis as an additional factor in the weighted scoring model, whereby net present value becomes an additional selection criterion to consider along with the other factors already listed. Likewise, students should be asked to consider if any of the criteria in the scoring model represent must items that cannot be compromised, such as safety. Finally, student may point out that the factor, Potential Profit ranks both projects identical. However, the DCF model shows that Project Janus might reasonably be ranked higher. Ask students how this reevaluation might change final results.

Case Study 5.1: Calcuttas Metro Calcuttas Metro project is a true story of a project disaster, when measured against schedule and budget. The case lists a number of problems with a project that was relatively modest in scope (10 miles of track and 17 stations) but ended up costing over $5 billion dollars and taking 23 years to complete. The case is enjoyable for students because, using 20/20 hindsight, several of the problems they encountered seem to be obvious. It is useful to send students to the internet to research Bostons Big Dig harbor tunnel project and develop some comparisons and contrasts between that project (which is also well over budget and behind schedule) and the Calcutta metro case. For example, the Big Digs final cost is expected to be $14.6 billion and one of the two tunnels has become leaking! Students can be directed to an interesting website for the Boston project at http://www.tollroadsnews.com/cgibin/a.cgi/6S2C!DOMEdmcEIJ61nsxIA. It presents a useful starting point to their own analysis of the Calcutta project.

Questions:

1) Assume that you are the mayor of Calcutta soliciting bids for the construction of the Metro. How would you construct a Statement of Work for the project to encourage efficient and creative means for undertaking this project?

Students can be asked to use the sample Statement of Work (SOW) from the chapter to begin developing their own set of details and specifications for the projects scope. How would they redesign the scope to minimize the disruptions that digging a metro through a densely populated city are bound to create? Among the interesting elements of this problem are the identification of significant risks of all types. How do they account for them? Also, what about resource requirements? It is useful to get students thinking in terms of a society with huge amounts of manpower but limited machinery means to engage in a project of this scope? How are these various factors each accounted for?

2) How much of the problems the Metro project faced were the result of a poorly conceived project scope and how much was due to simple bad luck? Defend your position.

This question allows people to debate the two perspectives. Certainly, there is always some bad luck associated with large projects, like the Calcutta Metro. The question becomes whether or not such bad luck should be factored into the initial scope statement and expectations for project development. For example, while it is not the fault of the project organization that they kept hitting gas and water pipes due to poorly charted infrastructure, the lack of these maps should have been taken into consideration when they originally developed the timeframe for completion. Without detailed drawings, they were bound to hit these mains. Further, common sense might suggest that when the organization provided comprehensive housing, wages, and benefits (including school for workers children) for employees, they were bound to work at a pace that allowed them to maximize those benefits (in this case, 23 years).

Case Study 5.2: Project Management at Dotcom.com

This case is based on a true story and illustrates some of the key challenges that IT organizations face when they attempt to develop solutions for clients. Many of these clients understand their problems but dont see how to create an appropriate solution. Others, however, think they understand their needs but find the solutions generated for them to be inadequate or simply addressing the wrong issues. It is a classic story of cope definition that many IT organizations routinely deal with when trying to satisfy the needs of clients.

Questions: 1. How would you begin redesigning Dotcom.coms project management processes to minimize the problems they are experiencing with poor scope management?

One suggestion might be the inclusion on the project team of a representative of the client. It appears that one key problem lies in the fact that project teams talk to the customer and then go away to develop the solution in a vacuum. Then, at the back end of the development cycle, the customer is presented with a project solution that many times does not satisfy them. This lack of communication is a key factor in the problems the company is experiencing with their projects. 2. How do the companys consulting clients contribute to the problems with scope creep? If you were to hold a meeting with a potential customer, what message would you want them to clearly understand?

Customers often do not recognize the link between project changes and cost. They may assume that the project contract gives them unlimited rights to suggest or demand any changes after the project was developed, or that the IT solution presented to them is only a working model and subject to modifications. Without good communication between the project organization and their clients, these misunderstandings will escalate as the consulting firm demands more money for the changes and the clients argue that they will not pay for modifications because the project firm did not do it right the first time. Why should we pay for your mistakes,? is a comment commonly expressed by customers. The key message that the customers must understand is the need to maintain strong lines of communication and develop some milestones that allow for reality checks throughout the development cycle. There should be no surprises at the time of delivery.

3. How do you balance the need to involve clients with the equally important need to freeze project scope in order to complete the project in a timely fashion?

This may be the key conundrum in managing IT projects and is a great point of departure for in-class discussion. Students are usually quick to point the finger of blame; either at the IT firm for not getting clear information or at the customer for not providing it. Instructors can set up a point/counter-point discussion on the causes of IT project failure and how many are linked precisely to this problem and the failure to resolve it as early in the project contract as possible.

4. Why are configuration management and project change control so difficult to perform in the midst of a complex software development project such as those undertaken by Dotcom.com?

One of the keys to configuration management is communication between customer and client as both parties observe early versions of the system and identify the needed modifications. The problem for IT organizations is that they are loath to grant too much power to modify the system in mid-development for fear that the initially contracted terms will become meaningless through multiple changes orders. They desire spec freeze precisely for the reason that customers hate it. Hence, configuration management is difficult because it is hard for customers, who are not sophisticated with IT technologies, to identify relevant points when configuration management should occur. Their lack of understanding of the development process often makes it hard to create good a priori change controls processes. Instead, they usually simply react (negatively) to perceived inadequacies of the solution, after installation.

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