ProjectManagement Case Study
Backgroundof the Company
TheXYZ Woodworking Company falls under the category of SME andundertakes the making of custom furniture and cabinets. It has itsheadquarters in Chicago Illinois. While Roy Smith is the CEO andchairman of the company, his relatively young wife Rachel Smithundertake the running of the company. Since its inception in 1994,the company has managed to build its reputation as far as theproduction of well constructed and attractively designed furniture isconcerned. The furniture is manufactured using indigenous softwoodand imported or exotic hardwoods. In essence, the company currentlyproduces custom furniture on order, as well as for varied lines offurniture targeting retailers and wholesalers. Needless to say, thecompany has managed to build a loyal workforce and staff, with Roy’sson, Roy Smith Junior joining the workforce after obtaining abusiness administration degree from a university in Europe. Junior,as he is commonly known in the company has implied upon his fatherthat the company should expand or shift altogether to subcontractwork of installing and supplying cabinets, countertops and othersimilar fixtures pertaining to new commercial construction, which hasexperienced a boom in the recent times. Since its inception, XYZ hasprimarily gained a reputation for the supply of millwork to theconstruction industry.
In2009, Chicago and other parts of Illinois experienced a substantialboom in the commercial construction. Given the likelihood for airportexpansion, as well as free trade opportunities, the VP sales andestimating persuaded the company’s directors that there existed animmense potential for growth in the expansion of the manufacturingbusiness. The VP production often complained that the productionefficiency of the company was being hindered by the deficiency ofmanufacturing space, in which case he opined that Junior should movetoo entirely new and considerably more modern facilities. Junior hada growth vision for the company that was founded on computercontrolled automation, in which case he brought up the idea to hisfather, who then talked it over with Rachel who, in turn, brought inthe Controller and VP production to the debate. These two felt thatwhile the current location was not the most convenient or appropriatefor plant expansion, they should remain in the same place since thereexisted spare space on the property. This was bound to eliminate thecosts of selling and buying property and, most importantly, avert thepossibility for interrupting production as a result of the relocationof the existing equipment. Further, the closest potential locationthat was offered at an attractive price was more than 15 miles fromthe residential area where a large proportion of them live. Thisissue brought up immense polarization, in which case Roy called ameeting of key personnel and the directors so as to resolve it. Theyvisited the factory floor and held a highly charged meeting, where itwas resolved that staying in the current location was the mostappropriate thing.
Conceptof the Project
Further,there was a unanimous agreement that more production capacity equalto 25% of the current floor area will be added. Other additions wouldinclude installation of air conditioning, additional compressorcapacity, as well as a dust-free paint. The equipment would includesemi-automatic woodworking production train that necessitated theinstallation and development of hardware and software that would runthe same. Other changes included the renovation of the president andexecutive VPs offices. Given that the estimates for total work costwas $17 million, Roy committed $17 million as the absolute maximumfor the total proposed work, with the entire project taking 18months.
Thefinance and administration VP was keen on wasting no time, in whichcase he did not involve the production department and instead choseto higher Expert Industrial Developers (EID) to provide a quote forthe expansion. EID provided a fixed-price quotation that amounted to$20 million within the same schedule. This was based on the notionthat XYZ would require considerable assistance. Nevertheless, EIDeventually offered to do the work on cost-plus basis but requestfixed price quotation pertaining to every other sub-trade work. Thismeant that EID would be paid hourly rates that covered direct wages,head-office overhead, profit and payroll burden, with the ratecovering every other construction, commissioning, procurement andengineering for which EID would hire Plotters Inc. for the industrialdesign and building work.
Monthslater, Plotters Inc brought preliminary designs and raised issues andquestions for decision, in which case a young engineer named Erickwas given the task of running the project. as much as Erick wasdeficient of project management experience and training, he acceptedthe task. While he made good progress in the development of therequired production line control software program, EID suggested thatthe company should directly take over production train procurement asit was more knowledgeable of the necessary requirements. The VPproduction, eager to get involved, opted to modify the specificationof the production train so as to enhance capacity, therebynecessitating the rewriting of the software and limiting Erick’stime in project management. Further, it caused errors thatnecessitated increased debugging. The VPs for production, finance andadministration were not aware of the necessity for review andapproval for specifications, in which case manufacturing drawingsstayed at a junior clerk’s in-tray for weeks awaiting approval asthe two were on vacation. This caused delay in the delivery schedule.
Whilesite clearance was done on time, the modification in the productiontrain specification necessitated the increase of the new building’slength. Erick was dissatisfied with the mechanical equipmentinstallation but failed to talk the VP’s of Production, planningand finance as a result of the delayed approval. This strainedrelations between key players. Delays in the preparation ofmeaningful completion planning caused loss of production for a numberof weeks. This resulted in the cancellation of some contracts ascustomer sought other manufacturers. There was also increased cost ofupgrade, and diminished demand for the company’s products. As muchas the project was eventually completed, the new equipment becameseriously under-utilized, causing a drop in the morale of staff.Junior was castigated particularly by the older staff for introducingthe fangled and unnecessarily complicated ideas.
Needlessto say, there were numerous indicators of problems with the project.First, it was evident that the collaboration and participation ofworkers in the project was grossly inhibited, thereby diminishingtheir job satisfaction in the entity. This is bound to case adecrease in morale (Ramakrishna43). Further, it was evident that there was a breakdown ofcommunication between the varied individuals in the company(Ramakrishna36). For instance, Erick failed to communicate the need for approvalof the industrial plans, thereby causing a delay in the constructionand installation of equipment. A large number of costs could havebeen avoided in this case. Nevertheless, varied recommendations canbe made for the same. First, it is imperative that a clear commandstructure is established so as to avert the possibility of overlap ofauthority. This would increase supervision and monitoring ofprogress, thereby eliminating delays such as the ones caused byfailure to approve the necessary documents (Lewis 45). In addition,it is imperative that an oversight committee is created with clearinstructions pertaining to the requirements of the project and thetimeline (Lewis 46). This will prevent cases of individuals changingspecifications just because they are eager to participate, withoutconsulting other players.
Lewis,James P. Fundamentalsof Project Management.New York: American Management Association, 2007. Print
Ramakrishna,Kamaraju. TheEssentials of Project Management.New Delhi: PHI Learning, 2010. Print.
ProjectManagement Case Study