Evaluation 6r2h70
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The Group 1 The Group Ms. Heyde PJ202 14 April 2008 Evaluation of Project Woody 2000 Project Woody 2000 was not well conceived. Once Woody’s directors had decided that their manufacturing business would greatly benefit from expansion, they decided to meet with key personnel. This initial meeting was the necessary first step; however, the directors gave little thought as to who should attend this planning meeting. The production people were entirely left out of the discussion, and that oversight later led to many costly delays, adding to the final cost of the expansion. Spencer Moneysworth, Woody’s Vice President of Finance and istration, was chosen to take responsibility for Project Woody 2000. Due to the nature of the expansion project, he should have immediately asked Miles Faster, Woody’s Vice President of Production, and Bruce Sharpe, Woody’s Vice President of Sales and Estimating, to work closely with him in all aspects of sales and production. With contributions from these two professionals, Woody’s would have properly utilized the new equipment. With prior preparation, the production train specifications would have been correct, negating later or additiona l revisions. Also due to their poor planning and their lack of attention to details, they severely hampered Woody’s ongoing production, causing contractors to cancel their contracts and customers to cancel their orders. Lost sales put Woody’s in a bad financial situation. Project overrun became a reality when expenditures exceeded the budget with the project only about eighty-five percent complete. Woody's real objectives that could and should have been articulated were defining the parameters and scope of the expansion and the completion of the work for the seventeen million dollars allotted in Woody’s budget. The target date for completion should have been realistically set and contingencies for delays considered and outlined. The strategies that were put in place to achieve these objectives included Kim Cashman, Woody’s Controller, developing a monthly cash flow chart and the setting aside of funds for contingencies. Woody’s researched different developers only after Expert Industrial Developers (EID)
The Group 2 quoted a fixed-price three million dollars higher than the budget. Efforts to foresee and manage arising problems should have been foremost, and weekly meetings would have served to keep key personnel informed and coordinated in their efforts. Woody’s did not really ever fully evaluate their options. They did not have a plan from which everyone worked, so decisions were often made by one individual, solely based on his or her limited expertise and vision. With everyone not sharing one ultimate vision, the result was that of fragmented progress, impeded by costly miscalculations and oversights. Woody’s did consider progressive solutions from John Carpenter, Woody’s Director, but after their implementation, his ideas proved to be unnecessarily complicated. Despite his dedication and contributions, many older employees blamed him, perhaps unfairly, for the poor outcome of the project. The project’s success or failure could not be measured very accurately until, unfortunately, project overrun became a reality with the need for an additional line of credit. Abruptly, realizing the need, Woody’s employees went into firefighter mode and scrambled to get the project back on track. Eventually, they made progress as the new equipment came on stream. The plant was operational, but Woody’s mistakes were evident with the over-supply of commercial space, the under-utilization of equipment, the unmet delivery dates, the depleted inventories, and the low employee morale. The ultimate success of a project can only be measured at its completion. Woody’s included renovation of the President’s and Executive Vice President’s offices in the project, probably because they were updating the building anyway. Woody’s probably thought that having the on-hand contractors would allow for simultaneous completion of the expansion and renovation projects with less cost. If Woody’s had been top-notch planners, they could have easily combined and accomplished the two projects. As it was, Woody’s, most likely, would have fared better to tackle only one project at a time. The following page presents the Simple Project Scope Statement and the Project Woody 2000 Work Breakdown Structure (WBS). Such charts would have helped Woody’s to have and keep control of the expansion project.
The Group 3 Simple Project Scope Statement: The project name: Woody 2000 The project charter: To supply well-designed, custom furniture, millwork, and hardwood imports The project owner: Ron Carpenter The project goals and objectives: To expand and modernize Woody’s manufacturing business with growth based on computer controlled automation The project non-goals (what is out of scope): To renovate the President’s and Executive Vice President’s offices The cost estimate: Seventeen million dollars The timeframe: Eighteen months
To be successful, Project Woody 2000 should have included a realistic budget, a reliable cash flow chart of expenditures, a workable timetable, a task responsibility chart, a progress chart, recommendations of the production people, methods of implementation, contractor suggestions and duties, utility s, renovation specifications, statements of any changes, and control policies. These inclusions in Project Woody 2000 would have helped ensure its success. Woody’s plans for managing the project were poor in scope. They did not view the project in its entirety with the necessary attention being paid to all the components. Even from the beginning, no real plan of action existed. From deciding how a contractor or contractors would be chosen to how they would
The Group 4 implement changes in plans , so much was left unresolved. Contractors should have been researched and valued on their abilities and resources to meet Woody’s needs. The project plan did not explain how the project and any changes w ould be controlled. A means of control has to be an intricate part of the project plan, so that complex elements can be skillfully combined, resulting in a reliable and able method. The issue of quality for any project should be how quickly and efficiently the project can be completed within a proposed budget. Ian Leadbetter, Woody’s Project Manager, did not invoke the specifications to ensure quality, because he did not have approval. To the theory of Woody’s poor project planning, neither Ian Leadbetter nor Spencer Moneysw orth was even conscious of the need for any review and approval procedures for specifications and shop drawings directly submitted by the suppliers of the production train. Ironically, both men were enjoying vacations, blissfully unaware, while Schemers and P lotters (S&P) and P iecemeal Corporation were awaiting their approval. This lapse in good judgment caused the delivery schedule to slip two weeks, contributing to a later scheduling conflict in tying-in the new services. Achieving success on this project would have required the implementation of proper procedures and planning to achieve a timely, inexpensive, and suitable project completion. Such quality control would have allowed for a more reasonable estimate of the cost and deadlines. Construction should have only commenced after Woody’s took the needs of the company into full , thus avoiding costly mistakes once construction had actually begun. Machine specifications should have been exact upon submission, so that they would have met codes and not have to be redone, causing delays and added expenses. Most of the problems encountered could have easily been contained with proper quality control. This project had many tasks that needed to be completed, but this process could have been simplified with certain milestones. The first milestone would be to have a fixed budget and sche dule for the project, so that everyone knows what needs to be done , when it needs to be done, and how much it will cost. The next milestone would consist of getting a contractor to sign and break ground, so that the project has a definite starting date. Finding and installing the correct machinery would be the next
The Group 5 milestone, so that the machinery will all inspections and meet appropriate utilization standards. Another milestone would be the “tie-in” of power and other utility connections. The penultimate milestone is the inspection and approval of the new building. The final milestone is actually moving into the new building and beginning production. The Project Woody 2000 Milestone Bar Chart, illustrated below, shows the proper milestones that Woody’s should have prepared, met, and recorded. By doing so, Woody’s would have stayed on track, saving themselves many setbacks.
If Woody’s had devised a good baseline plan, they could have charted their progress and have gained a better idea of what was yet to be accomplished. With a good baseline plan, Woody’s would have seen their delays, the cause of the delays, and would have had an opportunity to quickly correct the problems. Management could have been alerted before any small problems reached crisis level. They should have carefully managed and not regarded f loat time as time that they could waste. Early on, Woody’s could have used float time to research other potential contractors. Later in the project, they could have used it to get plans approved, meet for group discussions, make up for delays, or to bring attention to any other facets that might require extra attention. Intelligent usage of float time could have had a substantial impact on the project’s finish date.
The Group 6 Twenty-five million dollars would be an appropriate high-level guesstimate, based on the construction costs plus extra for expenditures. This estimate should have been presented at the time of the proposal to management for budget approval. As this project was only scheduled to take eighteen months, life-cycle costing should not have had a substantial impact. Kim Cashman should not have kept his cash flow chart a secret, as doing so might suggest that he was either stealing money or hiding his mistakes. Keeping such information hidden is never prudent, as doing so can cast suspicion on one’s motives or question one’s competence. Likewise, it robs the company of any clear idea of true expenditures. Impressed by the prestigious reputation of EID and, perhaps, a bit too confident in his own istrative abilities, Spencer Moneysworth made an unwise decision. Acting on his own accord, his brash decision not to include any of the production people in the decision-making process of the expansion project was short-sighted. His theory that they would offer no real insights into the manufacturing expansion was arrogant, not taking advantage of what made Woody’s so successful in the first place, its production employees. Knowledgeable employees are always a valuable resource , and they should always be viewed as such. Not to recognize and commend their contributions and talents is a foolish practice. Compounding his first mistake with yet another, Spencer Moneysworth immediately invited EID to quote on the planned expansion, based solely on their prominence as an industrial contractor and his own iration of their success. By not researching many contractors, Spencer Moneysworth limited Woody’s contracting alternatives. EID responded with an excessive price and schedule, maybe in part, due to their realization that Woody’s would need extensive help in planning the project, as they were unimpressed with the plans that Woody’s presented to them. EID’s estimate reflected their belief that so many aspects and concepts of Woody’s plans were incomplete, ill-conceived, and not clearly ascertained. EID may have also suspected that they were Woody’s first and only choice as contractor, as the project was not open to bids. If Spencer Moneysworth had taken advantage of that alternative, EID’s rates, schedule, and expertise could have been competitive ly and fairly compared with those of other potential contractors. Any potential subcontractors could have also been thoroughly considered. By istering
The Group 7 contracts that specifically suited Woody’s finances and schedule to contractors who could proficient ly meet the expansion needs, Spencer Moneysworth could have had a well-devised plan to follow a nd, ultimately, Woody’s would have had a much more successful outcome. Spencer Moneysworth was not noted for his tendency to place much value on detailed planning; therefore, Woody’s should have never allowed him to “carry the ball” as if he were the only player on the team! The expansion project was eventually completed. However, due to inadequate planning and poor istrative choices, the project requirements were not delivered as originally outlined. The project was disappointedly plagued by construction and production delays, budget overrun, additional expensive loans, over-inflated equipment utilization figures, over-supply of commercial space, and low employee and production morale. Without question, the greatest cost to Woody’s was the loss of their stellar reputation. Ironically, Woody’s need to expand was first conceived to meet the growing demand for their custom furniture and cabinetry; however, with the many problems encountered and endured, Woody’s lost many customers and contracts, thus negating their need for expansion. Rebuilding their once -prized and renowned reputation would, undoubtedly, take years. If they learned lessons from their unfortunate experience and embraced and incorporated professional solutions from now on, Woody’s would be able, once again, with determination, training seminars, hard work, and cohesiveness secure customer loyalty and confidence. Once accomplishing that goal, Woody’s would then re gain confidence and pride in their perception of their manufacturing and business savvy. Protecting a business’s good reputation is foremost and is, by far, an easier and less-costly prospect than the time-consuming task of rebuilding a damaged reputation. The Project Woody 2000 Project Organization Chart, illustrated on the next page, shows the real relationships between Woody’s directors, key personnel, project manager, contractors, suppliers, and consultants. Woody’s could have utilized s uch a chart to coordinate all players visibly, aiding in quickly determining the hierarchy of Project Woody 2000.
The Group 8
The Group 9 Ian Leadbetter, although a capable mechanical engineer, was ill-prepared to be Woody’s Project Manager and should have never been assigned such a responsibility. Ian Leadbetter’s specialization in programming semi-automatic manufacturing machinery could prove to be an asset to the project, but by Woody’s making him Project Manager, they over-extended him. Training of Ian Leadbetter in such concepts as “project life-cycle” and “control concepts” would have been beneficial, if rigid time constraints had not been so necessary. Someone more suited to the necessary qualifications should have been chosen as Woody’s Project Manager, or instead of such a person, a project management consultant should have been retained upfront and not been merely utilized to conduct a post pro ject appraisal. In addition, Ian Leadbetter had no prior experience in people management and communication coordination. When expansion became the vision, Woody’s Directors and Key Personnel, along with EID representatives should have met to thoroughly discuss and plan Project Woody 2000. They should have discussed all aspects of the project including objectives, schedules, designs, mechanical improvements, renovations, and budget restraints , and clear, concise goals should have been set. Woody’s Project Manager should ha ve assigned tasks with everyone reporting progress and openly presenting any problems incurred at scheduled meetings. A good baseline plan would have helped to make the most of the time allotted to the project. By setting realistic time goals and sticking to them, commitment is expected, and the value of such a commitment is more readily seen and respected. A clear indication of lost time needing to be regained is evident, encouraging people to be more diligent and efficient. Reminders of deadlines, critical dates, and current progress charts posted throughout Woody’s could have also kept everyone motivated, involved, and excited about the project. The value of a good baseline plan is paramount if a project is to stay within the necessary time and budget constra ints. The Project Woody 2000 Responsibility Chart for Effective Control, displayed on the next page, shows how tasks could have been effectively assigned in a visual format, offering quick reference. Guessing at task assignments is a risky proposition and undoubtedly adds confusion to any project.
The Group 10
Realizing that the project was falling behind schedule, it would have been wise to have touched base with everyone involved in the project with the emphasis based on making sure that the project did not fall even further behind. Neither vacations nor leaves of absence would have been granted during this crucial time. Any employees causing delays through poor decisions or work practices would have been reprimanded and instructed as to the changes that were to be incorporated. Complete files and computer records should have been kept of all things concerning Project Woody 2000. Files should have contained formal notes, dated memos, financial records, contractor correspondence, copies of contracts, and any other relevant information. EID’s original estimate was based on their perceived weaknesses in Woody’s planning of the project. EID overpriced the estimate; however, they did so to compensate for the perceived weaknesses in
The Group 11 planning. That being said, it was not EID’s job to make compensations for planning that Woody’s did not contract them to do. EID’s primary goal, while creating this estimate, should have been to determine the cost of construction while adhering to Woody’s schedule. This being said, EID was certainly unreasonable with the creation of their estimate from a financial stand point and, especially, from a scheduling standpoint. The over-expenditure was not evident to Woody’s until they fell two weeks behind schedule . This situation only opened their eyes to a possible over-expenditure. They were not fully aware of the project overrun until expenditures actually exceeded their budget with the project only eighty-five percent complete at best. Woody’s was forced to scramble to meet an excessive on an additional line of credit for project financing. It was an expensive prospect with Woody’s throwing money at every problem, trying to get the plant operational. Unfortunately, at this time, Woody’s saw a dramatic fall in construction activity in the region, as well as in the general demand for Woody’s products. Bruce Sharpe launched an expensive marketing campaign shortly after this in an effort to regain customer loyalty, but it had only a marginal effect. The project budget should have taken into a larger percentage for contingencies. Delays and unbudgeted expenditures were the primary problems with the budget. While these additions to the expenditure budget would certainly have helped to remedy Woody’s situation, they would have not solved the problems. The only real solution in handling any project’s budget is careful planning backed by careful spending. Keeping contingencies in mind is the core of ensuring that budget overrun does not occur to the detriment of not only the current project but also to the business itself. A company’s good credit rating, taking years to establish, can be substantially, and, sometimes, irrevocably compromised. The Project Woody 2000 Processing Changes Flow Chart, shown on the following page, depicts the appropriate method of incorporating changes into a project’s framework. If Woody’s had incorporated additions and depletions using even a simple flow chart, changes could have been considered, planned, and implemented without jeopardizing the integrity of Project Woody 2000.
The Group 12
EID handled their risks by accepting an hourly wage instead of using their proposed budget. They thought that the hourly wage suggestion would appeal to Woody’s, and it did. However, it worked out even better for EID, allowing them to contract S&P without paying them out of pocket. EID also suggested that Woody's should take over the procurement of the pr oduction train directly, having more production experience. EID’s suggestion placed more risk and responsibility on Woody’s shoulders and
The Group 13 off their own. EID’s overall risk planning proved very beneficial for them; however, EID was at a disadvantage, in some ways, as they were working with Woody’s poorly designed and defined plan. Woody’s poor planning and poor project management lead to several surprises during the construction period. The first surprise was EID’s excessive estimate. Woody’s should have obtained several estimates from several contractors, choosing the one that suited their needs best. A second surprise occurred when EID suggested that Woody’s handle the procurement of the production train. Miles Faster’s change to the train capacity severely limited Ian Leadbetter’s time for managing the project. Better communication coordination or simply allowing EID to continue to manage the production train would not have cost Woody’s valuable time. The next surprise was the two weeks’ delay resulting from several incidents, most notably, Spencer Moneysworth’s and Ian Leadbetter’s lack of meaningful planning. Finally, the worst surprise of all happened when the costs from the previous ly mentioned delays where charged to Woody’s . Another possible surprise could have occurred if EID, unhappy with all the delays, had pulled out from the project, citing Woody’s incompetency as a reason or excuse to pull out of the project. Any number of other possible surprises ranging from inclement weather to an epidemic flu outbreak could have adversely affected Project Woody 2000. Risk can never be completely eliminated; however, through proper preparation and intelligent management, surprises can be kept to a minimum and, if encountered, can be thwarted quickly before becoming insurmountable. Other than adding expenditures that were not budgeted, Woody’s really did not deviate from their poor planning. They did not implement the needed changes, always hampering the construction project. Unbudgeted equipment purchases were not even utilized to their fullest extent. Every time Woody’s omitted critical information, many problems arose, and changes had to be made. By that time, changes of any sort were expensive options. Startup was a key issue for Woody’s, as they poorly managed and planned it. They made no concrete plans for Woody’s inspection and acceptance of the building, testing, dry-running, or production start-up of the production train. Without plans in place, weeks of production were lost, and several contractors cancelled their contracts with Woody’s and placed their orders for millwork elsewhere.
The Group 14 Customers cancelled orders, inventories were depleted, and Woody’s bright reputation faded. They could have easily managed this phase properly if Spencer Moneysworth and Ian Leadbetter had scheduled Woody’s inspection and acceptance in time. This failure, along with their additional failures in lining up the proper utilities and scheduling the testing and dry-run, was a critical error. Project Woody 2000 was poorly run by Woody’s, and it had fundamental errors in the initial planning that led to more critical problems down the line. A lack of documentation seems to have been a key mishap. Another large problem was the fact that a lack of communication between EID, S&P, and Woody’s was constant and crippling. These problems, combined with Spencer Moneysworth’s and Ian Leadbetter’s poor planning during the startup phase of construction, contributed to the project’s downfa ll. By far, the largest issue would be the lack of initial project planning. Extensive planning should have occurred long before the breaking of ground and the starting of construction. A very precise plan was crucial to the project’s success, yet no one at Woody’s recognized the value of such planning. Woody’s paid dearly for this failure. Listed below in order of priority are the “Key Success Indicators” that would have been wise for Woody’s to designate as vital objectives. Key Success Indicators : 1. Completion of construction on time 2. Completion of construction within the budget 3. Meeting all construction milestones on time 4. Beginning construction on time 5. Finalization of budget and schedule
The Group 2 quoted a fixed-price three million dollars higher than the budget. Efforts to foresee and manage arising problems should have been foremost, and weekly meetings would have served to keep key personnel informed and coordinated in their efforts. Woody’s did not really ever fully evaluate their options. They did not have a plan from which everyone worked, so decisions were often made by one individual, solely based on his or her limited expertise and vision. With everyone not sharing one ultimate vision, the result was that of fragmented progress, impeded by costly miscalculations and oversights. Woody’s did consider progressive solutions from John Carpenter, Woody’s Director, but after their implementation, his ideas proved to be unnecessarily complicated. Despite his dedication and contributions, many older employees blamed him, perhaps unfairly, for the poor outcome of the project. The project’s success or failure could not be measured very accurately until, unfortunately, project overrun became a reality with the need for an additional line of credit. Abruptly, realizing the need, Woody’s employees went into firefighter mode and scrambled to get the project back on track. Eventually, they made progress as the new equipment came on stream. The plant was operational, but Woody’s mistakes were evident with the over-supply of commercial space, the under-utilization of equipment, the unmet delivery dates, the depleted inventories, and the low employee morale. The ultimate success of a project can only be measured at its completion. Woody’s included renovation of the President’s and Executive Vice President’s offices in the project, probably because they were updating the building anyway. Woody’s probably thought that having the on-hand contractors would allow for simultaneous completion of the expansion and renovation projects with less cost. If Woody’s had been top-notch planners, they could have easily combined and accomplished the two projects. As it was, Woody’s, most likely, would have fared better to tackle only one project at a time. The following page presents the Simple Project Scope Statement and the Project Woody 2000 Work Breakdown Structure (WBS). Such charts would have helped Woody’s to have and keep control of the expansion project.
The Group 3 Simple Project Scope Statement: The project name: Woody 2000 The project charter: To supply well-designed, custom furniture, millwork, and hardwood imports The project owner: Ron Carpenter The project goals and objectives: To expand and modernize Woody’s manufacturing business with growth based on computer controlled automation The project non-goals (what is out of scope): To renovate the President’s and Executive Vice President’s offices The cost estimate: Seventeen million dollars The timeframe: Eighteen months
To be successful, Project Woody 2000 should have included a realistic budget, a reliable cash flow chart of expenditures, a workable timetable, a task responsibility chart, a progress chart, recommendations of the production people, methods of implementation, contractor suggestions and duties, utility s, renovation specifications, statements of any changes, and control policies. These inclusions in Project Woody 2000 would have helped ensure its success. Woody’s plans for managing the project were poor in scope. They did not view the project in its entirety with the necessary attention being paid to all the components. Even from the beginning, no real plan of action existed. From deciding how a contractor or contractors would be chosen to how they would
The Group 4 implement changes in plans , so much was left unresolved. Contractors should have been researched and valued on their abilities and resources to meet Woody’s needs. The project plan did not explain how the project and any changes w ould be controlled. A means of control has to be an intricate part of the project plan, so that complex elements can be skillfully combined, resulting in a reliable and able method. The issue of quality for any project should be how quickly and efficiently the project can be completed within a proposed budget. Ian Leadbetter, Woody’s Project Manager, did not invoke the specifications to ensure quality, because he did not have approval. To the theory of Woody’s poor project planning, neither Ian Leadbetter nor Spencer Moneysw orth was even conscious of the need for any review and approval procedures for specifications and shop drawings directly submitted by the suppliers of the production train. Ironically, both men were enjoying vacations, blissfully unaware, while Schemers and P lotters (S&P) and P iecemeal Corporation were awaiting their approval. This lapse in good judgment caused the delivery schedule to slip two weeks, contributing to a later scheduling conflict in tying-in the new services. Achieving success on this project would have required the implementation of proper procedures and planning to achieve a timely, inexpensive, and suitable project completion. Such quality control would have allowed for a more reasonable estimate of the cost and deadlines. Construction should have only commenced after Woody’s took the needs of the company into full , thus avoiding costly mistakes once construction had actually begun. Machine specifications should have been exact upon submission, so that they would have met codes and not have to be redone, causing delays and added expenses. Most of the problems encountered could have easily been contained with proper quality control. This project had many tasks that needed to be completed, but this process could have been simplified with certain milestones. The first milestone would be to have a fixed budget and sche dule for the project, so that everyone knows what needs to be done , when it needs to be done, and how much it will cost. The next milestone would consist of getting a contractor to sign and break ground, so that the project has a definite starting date. Finding and installing the correct machinery would be the next
The Group 5 milestone, so that the machinery will all inspections and meet appropriate utilization standards. Another milestone would be the “tie-in” of power and other utility connections. The penultimate milestone is the inspection and approval of the new building. The final milestone is actually moving into the new building and beginning production. The Project Woody 2000 Milestone Bar Chart, illustrated below, shows the proper milestones that Woody’s should have prepared, met, and recorded. By doing so, Woody’s would have stayed on track, saving themselves many setbacks.
If Woody’s had devised a good baseline plan, they could have charted their progress and have gained a better idea of what was yet to be accomplished. With a good baseline plan, Woody’s would have seen their delays, the cause of the delays, and would have had an opportunity to quickly correct the problems. Management could have been alerted before any small problems reached crisis level. They should have carefully managed and not regarded f loat time as time that they could waste. Early on, Woody’s could have used float time to research other potential contractors. Later in the project, they could have used it to get plans approved, meet for group discussions, make up for delays, or to bring attention to any other facets that might require extra attention. Intelligent usage of float time could have had a substantial impact on the project’s finish date.
The Group 6 Twenty-five million dollars would be an appropriate high-level guesstimate, based on the construction costs plus extra for expenditures. This estimate should have been presented at the time of the proposal to management for budget approval. As this project was only scheduled to take eighteen months, life-cycle costing should not have had a substantial impact. Kim Cashman should not have kept his cash flow chart a secret, as doing so might suggest that he was either stealing money or hiding his mistakes. Keeping such information hidden is never prudent, as doing so can cast suspicion on one’s motives or question one’s competence. Likewise, it robs the company of any clear idea of true expenditures. Impressed by the prestigious reputation of EID and, perhaps, a bit too confident in his own istrative abilities, Spencer Moneysworth made an unwise decision. Acting on his own accord, his brash decision not to include any of the production people in the decision-making process of the expansion project was short-sighted. His theory that they would offer no real insights into the manufacturing expansion was arrogant, not taking advantage of what made Woody’s so successful in the first place, its production employees. Knowledgeable employees are always a valuable resource , and they should always be viewed as such. Not to recognize and commend their contributions and talents is a foolish practice. Compounding his first mistake with yet another, Spencer Moneysworth immediately invited EID to quote on the planned expansion, based solely on their prominence as an industrial contractor and his own iration of their success. By not researching many contractors, Spencer Moneysworth limited Woody’s contracting alternatives. EID responded with an excessive price and schedule, maybe in part, due to their realization that Woody’s would need extensive help in planning the project, as they were unimpressed with the plans that Woody’s presented to them. EID’s estimate reflected their belief that so many aspects and concepts of Woody’s plans were incomplete, ill-conceived, and not clearly ascertained. EID may have also suspected that they were Woody’s first and only choice as contractor, as the project was not open to bids. If Spencer Moneysworth had taken advantage of that alternative, EID’s rates, schedule, and expertise could have been competitive ly and fairly compared with those of other potential contractors. Any potential subcontractors could have also been thoroughly considered. By istering
The Group 7 contracts that specifically suited Woody’s finances and schedule to contractors who could proficient ly meet the expansion needs, Spencer Moneysworth could have had a well-devised plan to follow a nd, ultimately, Woody’s would have had a much more successful outcome. Spencer Moneysworth was not noted for his tendency to place much value on detailed planning; therefore, Woody’s should have never allowed him to “carry the ball” as if he were the only player on the team! The expansion project was eventually completed. However, due to inadequate planning and poor istrative choices, the project requirements were not delivered as originally outlined. The project was disappointedly plagued by construction and production delays, budget overrun, additional expensive loans, over-inflated equipment utilization figures, over-supply of commercial space, and low employee and production morale. Without question, the greatest cost to Woody’s was the loss of their stellar reputation. Ironically, Woody’s need to expand was first conceived to meet the growing demand for their custom furniture and cabinetry; however, with the many problems encountered and endured, Woody’s lost many customers and contracts, thus negating their need for expansion. Rebuilding their once -prized and renowned reputation would, undoubtedly, take years. If they learned lessons from their unfortunate experience and embraced and incorporated professional solutions from now on, Woody’s would be able, once again, with determination, training seminars, hard work, and cohesiveness secure customer loyalty and confidence. Once accomplishing that goal, Woody’s would then re gain confidence and pride in their perception of their manufacturing and business savvy. Protecting a business’s good reputation is foremost and is, by far, an easier and less-costly prospect than the time-consuming task of rebuilding a damaged reputation. The Project Woody 2000 Project Organization Chart, illustrated on the next page, shows the real relationships between Woody’s directors, key personnel, project manager, contractors, suppliers, and consultants. Woody’s could have utilized s uch a chart to coordinate all players visibly, aiding in quickly determining the hierarchy of Project Woody 2000.
The Group 8
The Group 9 Ian Leadbetter, although a capable mechanical engineer, was ill-prepared to be Woody’s Project Manager and should have never been assigned such a responsibility. Ian Leadbetter’s specialization in programming semi-automatic manufacturing machinery could prove to be an asset to the project, but by Woody’s making him Project Manager, they over-extended him. Training of Ian Leadbetter in such concepts as “project life-cycle” and “control concepts” would have been beneficial, if rigid time constraints had not been so necessary. Someone more suited to the necessary qualifications should have been chosen as Woody’s Project Manager, or instead of such a person, a project management consultant should have been retained upfront and not been merely utilized to conduct a post pro ject appraisal. In addition, Ian Leadbetter had no prior experience in people management and communication coordination. When expansion became the vision, Woody’s Directors and Key Personnel, along with EID representatives should have met to thoroughly discuss and plan Project Woody 2000. They should have discussed all aspects of the project including objectives, schedules, designs, mechanical improvements, renovations, and budget restraints , and clear, concise goals should have been set. Woody’s Project Manager should ha ve assigned tasks with everyone reporting progress and openly presenting any problems incurred at scheduled meetings. A good baseline plan would have helped to make the most of the time allotted to the project. By setting realistic time goals and sticking to them, commitment is expected, and the value of such a commitment is more readily seen and respected. A clear indication of lost time needing to be regained is evident, encouraging people to be more diligent and efficient. Reminders of deadlines, critical dates, and current progress charts posted throughout Woody’s could have also kept everyone motivated, involved, and excited about the project. The value of a good baseline plan is paramount if a project is to stay within the necessary time and budget constra ints. The Project Woody 2000 Responsibility Chart for Effective Control, displayed on the next page, shows how tasks could have been effectively assigned in a visual format, offering quick reference. Guessing at task assignments is a risky proposition and undoubtedly adds confusion to any project.
The Group 10
Realizing that the project was falling behind schedule, it would have been wise to have touched base with everyone involved in the project with the emphasis based on making sure that the project did not fall even further behind. Neither vacations nor leaves of absence would have been granted during this crucial time. Any employees causing delays through poor decisions or work practices would have been reprimanded and instructed as to the changes that were to be incorporated. Complete files and computer records should have been kept of all things concerning Project Woody 2000. Files should have contained formal notes, dated memos, financial records, contractor correspondence, copies of contracts, and any other relevant information. EID’s original estimate was based on their perceived weaknesses in Woody’s planning of the project. EID overpriced the estimate; however, they did so to compensate for the perceived weaknesses in
The Group 11 planning. That being said, it was not EID’s job to make compensations for planning that Woody’s did not contract them to do. EID’s primary goal, while creating this estimate, should have been to determine the cost of construction while adhering to Woody’s schedule. This being said, EID was certainly unreasonable with the creation of their estimate from a financial stand point and, especially, from a scheduling standpoint. The over-expenditure was not evident to Woody’s until they fell two weeks behind schedule . This situation only opened their eyes to a possible over-expenditure. They were not fully aware of the project overrun until expenditures actually exceeded their budget with the project only eighty-five percent complete at best. Woody’s was forced to scramble to meet an excessive on an additional line of credit for project financing. It was an expensive prospect with Woody’s throwing money at every problem, trying to get the plant operational. Unfortunately, at this time, Woody’s saw a dramatic fall in construction activity in the region, as well as in the general demand for Woody’s products. Bruce Sharpe launched an expensive marketing campaign shortly after this in an effort to regain customer loyalty, but it had only a marginal effect. The project budget should have taken into a larger percentage for contingencies. Delays and unbudgeted expenditures were the primary problems with the budget. While these additions to the expenditure budget would certainly have helped to remedy Woody’s situation, they would have not solved the problems. The only real solution in handling any project’s budget is careful planning backed by careful spending. Keeping contingencies in mind is the core of ensuring that budget overrun does not occur to the detriment of not only the current project but also to the business itself. A company’s good credit rating, taking years to establish, can be substantially, and, sometimes, irrevocably compromised. The Project Woody 2000 Processing Changes Flow Chart, shown on the following page, depicts the appropriate method of incorporating changes into a project’s framework. If Woody’s had incorporated additions and depletions using even a simple flow chart, changes could have been considered, planned, and implemented without jeopardizing the integrity of Project Woody 2000.
The Group 12
EID handled their risks by accepting an hourly wage instead of using their proposed budget. They thought that the hourly wage suggestion would appeal to Woody’s, and it did. However, it worked out even better for EID, allowing them to contract S&P without paying them out of pocket. EID also suggested that Woody's should take over the procurement of the pr oduction train directly, having more production experience. EID’s suggestion placed more risk and responsibility on Woody’s shoulders and
The Group 13 off their own. EID’s overall risk planning proved very beneficial for them; however, EID was at a disadvantage, in some ways, as they were working with Woody’s poorly designed and defined plan. Woody’s poor planning and poor project management lead to several surprises during the construction period. The first surprise was EID’s excessive estimate. Woody’s should have obtained several estimates from several contractors, choosing the one that suited their needs best. A second surprise occurred when EID suggested that Woody’s handle the procurement of the production train. Miles Faster’s change to the train capacity severely limited Ian Leadbetter’s time for managing the project. Better communication coordination or simply allowing EID to continue to manage the production train would not have cost Woody’s valuable time. The next surprise was the two weeks’ delay resulting from several incidents, most notably, Spencer Moneysworth’s and Ian Leadbetter’s lack of meaningful planning. Finally, the worst surprise of all happened when the costs from the previous ly mentioned delays where charged to Woody’s . Another possible surprise could have occurred if EID, unhappy with all the delays, had pulled out from the project, citing Woody’s incompetency as a reason or excuse to pull out of the project. Any number of other possible surprises ranging from inclement weather to an epidemic flu outbreak could have adversely affected Project Woody 2000. Risk can never be completely eliminated; however, through proper preparation and intelligent management, surprises can be kept to a minimum and, if encountered, can be thwarted quickly before becoming insurmountable. Other than adding expenditures that were not budgeted, Woody’s really did not deviate from their poor planning. They did not implement the needed changes, always hampering the construction project. Unbudgeted equipment purchases were not even utilized to their fullest extent. Every time Woody’s omitted critical information, many problems arose, and changes had to be made. By that time, changes of any sort were expensive options. Startup was a key issue for Woody’s, as they poorly managed and planned it. They made no concrete plans for Woody’s inspection and acceptance of the building, testing, dry-running, or production start-up of the production train. Without plans in place, weeks of production were lost, and several contractors cancelled their contracts with Woody’s and placed their orders for millwork elsewhere.
The Group 14 Customers cancelled orders, inventories were depleted, and Woody’s bright reputation faded. They could have easily managed this phase properly if Spencer Moneysworth and Ian Leadbetter had scheduled Woody’s inspection and acceptance in time. This failure, along with their additional failures in lining up the proper utilities and scheduling the testing and dry-run, was a critical error. Project Woody 2000 was poorly run by Woody’s, and it had fundamental errors in the initial planning that led to more critical problems down the line. A lack of documentation seems to have been a key mishap. Another large problem was the fact that a lack of communication between EID, S&P, and Woody’s was constant and crippling. These problems, combined with Spencer Moneysworth’s and Ian Leadbetter’s poor planning during the startup phase of construction, contributed to the project’s downfa ll. By far, the largest issue would be the lack of initial project planning. Extensive planning should have occurred long before the breaking of ground and the starting of construction. A very precise plan was crucial to the project’s success, yet no one at Woody’s recognized the value of such planning. Woody’s paid dearly for this failure. Listed below in order of priority are the “Key Success Indicators” that would have been wise for Woody’s to designate as vital objectives. Key Success Indicators : 1. Completion of construction on time 2. Completion of construction within the budget 3. Meeting all construction milestones on time 4. Beginning construction on time 5. Finalization of budget and schedule
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