Location: Someplace, BC, Business: Furniture manufacturing, custom millwork, a privately held; number of employees approx. 850.

Major Shareholder: Emelia Hol were $181,000,000. In fiscal 199X, sales were $93,250,000 with net earnings of

Chairman & CEO President Executive Vice President Director

VP Production VP Finance and Administration VP Personnel VP Sales and Estimating Controller

I. Leadbetter (Ian) R. Schemers (Randy) A. Fowler (Alfred) I. Kontrak (Ivar) D. Rivett (Dave) B. Leakey (Bert) C. Droppe (Charlie) A. Dent (Amos) O. Volta (Olaf) E. Forgot (Eddie) W. Easley (Win)

Advantages Loyal staff Good reputation Customer base Core competence: supplying millworks to construction companies

Problems: Major discussions took place between Woody's family members then invol Cashman and Moneysworth advise not to move because there is enough s cashman and Moneysworth main reasons were to avoid costs of buying an

cashman and Moneysworth real reasons were to avoid moving 15 miles aw Final decision was made to stay where they are (the decision was not base

Timeline Early 1989 Spring 1989

Initial Parameters work, not including office renovation, was roughly es the total cost of the commit the company to a budget of $17 million as an absolute maximum production would be eighteen months from now Project Owner: Project Director

COMPANY PROFILE

BC, Business: Furniture manufacturing, custom millwork, and hardwood importer; federal charter 1960; of employees approx. 850. Major Shareholder: Emelia Holdings Ltd. At December 31, 199X, total assets fiscal 199X, sales were $93,250,000 with net earnings of $6,540,000. DIRECTORS Ron Carpenter Mrs. Emelia Carpenter Kim Qualey John Carpenter KEY PERSONNEL Miles Faster Spencer Moneysworth Molly Bussell Bruce Sharpe Kim Cashman

KEY PLAYERS
Woody's Project Manager Principal, Schemers and Plotters (S&P), industrial design consultants Director, Expert Industrial Developers (EID), industrial property developers and contractors EID's Project Manager I. Beam Construction Ltd., steel fabricators and installers Classic Cladding Co., cladding and roofing contractors I. C. Rain Ltd., water-proofing contractors Tinknockers Associates, mechanical contractors Zapp Electric Co., electrical contractors Piecemeal Corporation, equipment suppliers Project management consultants

Disadvantages Inability to cope with the increasing business (outsourcing) Moving into wide-range of production (counter tops, cabinets, etc.) all subcontracted work

pplying millworks to construction companies

k place between Woody's family members then involved only the controller (Kim Cashman and the VP of Fin sworth advise not to move because there is enough space on the property (although not convenient for expa sworth main reasons were to avoid costs of buying and selling properties and avoid the interruption to produ

sworth real reasons were to avoid moving 15 miles away from their residence (the nearest availabel space) ade to stay where they are (the decision was not based on scientific facts but on polarization of opinions and

Opportunity: Mini Boom in commercial industry, major airport expansion, and free-trade opportun Decision made to expand current space by 25% area The opportunity would also be taken to install air-conditioning and a dust-free paint and finishing s

work, not including office renovation, was roughly estimated at $17 million. Woody agreed to to a budget of $17 million as an absolute maximum for all proposed work and the target date for eighteen months from now Woody's personnel Spencer Moneysworth

No experience, recent graduate, vision of automation

At John Carpenter's insistence,

Complained about ineffeciency due to lack of manufacturing space, asked to move to a completely

Persuaded directors on expansion

and the VP of Finance and Administration (Spencer Moneysworth) onvenient for expansion) erruption to production while relocating their existing equipment

availabel space) on of opinions and arguments)

ee-trade opportunities south of the border

nt and finishing shop complete with additional compressor capacity. Equipment would include a semi-autom

rpenter's insistence, lured by longer production runs and higher and more consistent mark-ups, the company

move to a completely new facility

include a semi-automatic woodworking production train, requiring the development and installation of softw

tent mark-ups, the company has moved into subcontract work supplying and installing counter-tops, cabinet

ent and installation of software and hardware to run it. The President and Executive Vice Presidents' offices w

talling counter-tops, cabinets and similar fixtures for new commercial construction.

ive Vice Presidents' offices would also be renovated.

Moneysworth was keen to show his administrative abilities. He decided not to involve the production people time (on planning) Moneysworth immediately invited Expert Industrial Developers (EID) to quote on the plan knowledge of industrial work would result in a lower total project cost.

Meanwhile, Kim Cashman developed a monthly cash flow chart as follows. First he set aside one million for c months, with an intervening ten months at $1.4 million. He carefully locked the chart away in his drawer for company's normal book-keeping.

Upon Moneysworth's insistence, EID submitted a fixed-price quotation. It amounted to $20 million and an ei management that the price and schedule were excessive. (For their part, EID believed that Woody's would n negotiations followed in which EID offered to undertake the work based on a fully reimbursable contract.

Moneysworth started inquiries elsewhere but EID countered with an offer to do their own work on cost plus hourly rate covering direct wages or salaries, payroll burden, head-office overhead and profit. This rate wou employ Schemers and Plotters (S&P) for the building and industrial design work. Moneysworth felt that the p Woody's directors to proceed accordingly.

Problems: Not involving production department in the planning Hiring external consultants EID: one quotation only based on EID's reputation Only focus is on saving on costs Development of monthly cash flow chart based only on financial perspective 1 milion for contingency (almost 6% of budget) the project should be 18 months, the financial plan was based on a 10 month basis Recording actual cost under the company's normal book-keeping (not under the project-a misrepre The initial quotaion was on a fixed-price basis, more options should have been offered Financial plan developed before final quotation details The agreed upon fully reimbursable contract opened the door for many uncertainties and risks, de Assumption that hourly rate (agreed upon with EID) would be monitored effectively

nvolve the production people as they were always too busy and, anyway, that would only delay progress. So, not one f ers (EID) to quote on the planned expansion. He reasoned that this contractor's prominence on the industrial estate an

he set aside one million for contingencies. Then he assumed that expenditure would be one million in each of the first e chart away in his drawer for future reference. All actual costs associated with the project would be recorded as part o

unted to $20 million and an eighteen month schedule. After Moneysworth recovered from the shock, he persuaded Woo elieved that Woody's would need considerable help with their project planning and allowed for a number of uncertainti lly reimbursable contract.

their own work on cost plus but solicit fixed price quotations for all sub-trade work. Under this arrangement EID would ead and profit. This rate would extend to all engineering, procurement, construction and commissioning for which EID k. Moneysworth felt that the proposed hourly rate was reasonable and that the hours could be monitored effectively. H

month basis nder the project-a misrepresentation) e been offered

uncertainties and risks, demotivated the contractor, decreased their effeciency and effectiveness effectively

y delay progress. So, not one for wasting nce on the industrial estate and their

one million in each of the first and last ct would be recorded as part of the

m the shock, he persuaded Woody's ed for a number of uncertainties). Further

er this arrangement EID would be paid an commissioning for which EID would uld be monitored effectively. He persuaded

and effectiveness

A couple of months later as S&P commenced their preliminary designs and raised questions and issues for d suggested he use Ian Leadbetter, a bright young mechanical engineer who had specialized in programming asset to the project and gave Leadbetter responsibility for running the project. Ian was keen to demonstrate and experience (especially any understanding of "project life-cycle" and "control concepts") he readily accep

During the initial phases of the mechanical design, Ian Leadbetter made good progress on developing the ne Woody's should take over the procurement of the production train directly, since they were more knowledge change the production train specification to increase capacity. Because of this, the software program had to errors requiring increased debugging at startup.

Neither Moneysworth nor Leadbetter was conscious of the need for any review and approval procedures for Corporation, the suppliers of the production train. In one two-week period, during which both Faster and Lea junior clerk's in-tray awaiting approval. For this reason alone, the delivery schedule slipped two weeks, cont

Problems Assigning the project leadership to Ian Leadbetter based only on his specialization (Lack of project Focus of Ian on software skills resulted in overlooking other important issues of vomtrol and projec Change in train production specifications to increase capacity after the software program has alrea Not involving the main stakeholders in the design phase (Piecemeal Corporation, S&P, and product Delay in approval of design drawings of equipment (the train) for two weeks, causing conflicts in la

sed questions and issues for decision, Moneysworth found he needed assistance to cope with the paper work. John Car d specialized in programming semi-automatic manufacturing machinery. Moneysworth realized that this knowledge wo . Ian was keen to demonstrate his software skills to his friend John Carpenter. So, while he lacked project managemen rol concepts") he readily accepted the responsibility.

progress on developing the necessary production line control software program. However, early in design EID suggest nce they were more knowledgeable of their requirements. Miles Faster jumped at the opportunity to get involved and d , the software program had to be mostly rewritten, severely limiting Leadbetter's time for managing the project. It also

w and approval procedures for specifications and shop drawings submitted directly by either S&P or by Eddie Forgot of P ring which both Faster and Leadbetter were on vacation, the manufacturing drawings for this critical long-lead equipme edule slipped two weeks, contributing to a later construction schedule conflict in tying-in the new services.

ecialization (Lack of project management training or experience) ssues of vomtrol and project life cycle software program has already been written (caused Ian's distraction from managing the project to rewriting rporation, S&P, and production train suppliers) weeks, causing conflicts in later stages

with the paper work. John Carpenter ealized that this knowledge would be an he lacked project management training

er, early in design EID suggested that portunity to get involved and decided to r managing the project. It also resulted in

her S&P or by Eddie Forgot of Piecemeal r this critical long-lead equipment sat in a the new services.

ging the project to rewriting the software). It also resulted in errors requiring increased debugging at startup

eased debugging at startup

Site clearing was tackled early on with little difficulty. However, as the main construction got into full swing specification made it necessary to add another five feet to the length of the new building. This was only disc foundations had been poured. The catalogue descriptions and specifications for other equipment selected we

Leadbetter was not entirely satisfied with the installation of the mechanical equipment for the dust-free pain equipment, workmanship and performance. However, since these documents had still not been formally app Dent of Tinknockers Associates, the mechanical sub-contractor. This led to strained relations on the site.

Another difficulty arose with the paint shop because the local inspection authority insisted that the standards.

Problems: Main construction started 8 months later change in specification resulted in need for additional 5 feet to the length of the new building (the The catalogue descriptions and specifications for other equipment selected were similarly not rece Ignoring the main contractor (EID) and dealing directly with the sub-contractor led to tense relation Finding that the paint shop does not meet the environmenntal regulations

onstruction got into full swing some eight months later, more significant problems began to appear. The change in prod ew building. This was only discovered when holding-down bolts for the new train were laid out on site, long after the pe r other equipment selected were similarly not received and reviewed until after the foundations had been poured.

uipment for the dust-free paint shop. As a registered mechanical engineer, he knew that the specifications governed th had still not been formally approved, he was loath to discuss the matter with Ivar Kontrak. Instead, he dealt directly w ained relations on the site.

n authority insisted that the surplus paint disposal arrangements be upgraded to meet the latest environme

gth of the new building (the discovery was made when holding down bolts long after the foundation has been cted were similarly not received and reviewed until after the foundations had been poured. ntractor led to tense relationships

to appear. The change in production train d out on site, long after the perimeter dations had been poured.

t the specifications governed the quality of ak. Instead, he dealt directly with Amos

meet the latest environmental

fter the foundation has been poured!) en poured.

Two years after the project was first launched, the time to get the plant into production rapidly approached. completion such as owner's inspection and acceptance of the building, or testing, dry-running and production certificate. Moreover, due to late delivery of the production train, the "tie-in" of power and other utility conn two weeks later.

These factors together resulted in a loss of several weeks of production. Customer delivery dates were misse elsewhere. Finished goods inventories were depleted to the point that other sales opportunities were also los

Problems: Project is already 2 years since launch project manager and Project director had no meaningful plan on the owner's acceptance and inspe They also failed to insist that EID obtain the building occupation certificate. due to late delivery of the production train, the "tie-in" of power and other utility connections sche Several weeks of production lost, missed customers' delivery dates, some contracts cancelled, sale

roduction rapidly approached. However, neither Moneysworth nor Leadbetter had prepared any meaningful planning fo ng, dry-running and production start-up of the production train. They also failed to insist that EID obtain the building o of power and other utility connections scheduled for the annual two-week maintenance shut-down could not in fact take

omer delivery dates were missed and some general contractors cancelled their contracts and placed their orders for mil ales opportunities were also lost in the special products areas on which Woodys reputation was based.

wner's acceptance and inspection of the building, testing, dry-running, production start up of the train

her utility connections scheduled for the annual two-week maintenance shut-down could not in fact tak me contracts cancelled, sales opportunties lost due to depleted finished goods inventories,harm to Woody's

red any meaningful planning for that EID obtain the building occupation hut-down could not in fact take place until

and placed their orders for millwork on was based.

n start up of the train

t-down could not in fact take place until two weeks later. ventories,harm to Woody's core value

Costs arising from these and other changes, including the costs of delays in completion, were charged to Wo and it was apparent to everyone that the project was at best only 85% complete. Cashman was forced to sc premium given Woody's credit rating. From then on, Woody's were in a fire fighting mode and their ability to an effort to get the plant operational.

During Woodys period of plant upgrading, construction activity in the region fell dramatically with general d effort to try to regain customer loyalty, it had only a marginal effect

Problems: Rising costs from changes and delays charged to Woody's account (project 85% complete with exp Additional loans with excessive rate of prime plus 2.5% Using money to solve every problem that arises (firefighting mode) Construction industry fell dramatically in the region negatively affecting demand for Woody's prod launching an expensive marketing campaign - bad timing

ompletion, were charged to Woody's account. Project overrun finally became reality when actual expenditures exceeded ete. Cashman was forced to scramble for an additional line of credit in project financing at prime plus 2-1/2%, an exce ghting mode and their ability to control the project diminished rapidly. They found themselves throwing money at every

ell dramatically with general demand for Woodys products falling similarly. Even though Sharpe launched an expensive

ject 85% complete with expenses exceeding budget)

ng demand for Woody's products

n actual expenditures exceeded the budget at prime plus 2-1/2%, an excessive elves throwing money at every problem in

Sharpe launched an expensive marketing

The net result was that when the new equipment eventually did come on stream, it was seriously under utili commercial space could have been foreseen even before the project started, especially the oversupply of ret older staff, was blamed for introducing these "new fangled and unnecessarily complicated ideas".

Because of this experience, Woody's President Emelia Carpenter retained project management consultant W extracting solid information because relevant data was scattered amongst various staff, who were not keen Most of the communication was on hand-written Speedy memos, many of which were undated. However, int

Problems:

Equipment under utilized production morale ebbed mijudjment of market needs project mananger blamed for the failure of the project as it was his idea to start with problems in extracting information from staff to conduct an appraisal (info written on speedy mem

am, it was seriously under utilized. Production morale ebbed. Some staff publicly voiced their view that the over-supply especially the oversupply of retail and hotel space, the prime source of Woody's contracts. John Carpenter, not a favori complicated ideas".

ect management consultant Win Easley of W. Easley Associates to conduct a post project appraisal. Easley had some d ious staff, who were not keen to reveal their short-comings. Only a few formal notes of early project meetings could be ch were undated. However, interviews with the key players elicited considerable information, as has been outlined abo

a to start with nfo written on speedy memos, undated, covering up shortcomings, etc.)

their view that the over-supply of s. John Carpenter, not a favorite with the

t appraisal. Easley had some difficulty in early project meetings could be traced. tion, as has been outlined above.

Project Appraisal Questionnaire

The purpose of project management is to achieve a successful project and all that this implies. So, if you we Win Easley, the project management consultant, what would you report? Specific issues for your considerati follow. You will not find all the answers written into the case study. Most of the answers are matters of opini and you will need to search my site for ways to approach many of them. 1. Project Concept and Strategy

a. b. c. d. e. 2. a. b. c. 3. a. b. c. 4. a. b. c. 5. a. b. c. d. 6. a. b. c. d. 7.

Project Scope

Project Planning

Quality

Planning and Scheduling

Cost Estimating

Contracting for Engineering and Construction Services

a. b. c. d. 8. Communication and People Management

a. b. c. d. 9. Progress Monitoring and Control

a. b. c. d. 10. Cost Control a. b. c. d. 11. Risk Identification and Management

a. b. c. 12. Facility Startup and Project Closeout

a. b. c.

oject Appraisal Questionnaire

purpose of project management is to achieve a successful project and all that this implies. So, if you were Easley, the project management consultant, what would you report? Specific issues for your consideration w. You will not find all the answers written into the case study. Most of the answers are matters of opinion you will need to search my site for ways to approach many of them.

Project Concept and Strategy

Was the Woody 2000 project well conceived? Give reasons for your opinion. What were Woody's real objectives that could and should have been articulated? What strategies were there for achieving these objectives? What would you recommend? Did they consider other solutions? Give Examples. How would you gauge the project's success? Could success be measured? If so, when? Project Scope

Why do you suppose renovation of the President and Executive Vice President's offices were included in the project and was that a good idea? Write a simple project scope statement. Develop a work breakdown structure. Project Planning What should be included in a Woody 2000 project plan? What use would it be? Evaluate Woody's plans for managing the project, including their approach to contracting for professional services and construction work. What would you have done and would that change for successive phases of the project? Did the project plan explain how the project and any changes would be controlled? Should this be part of the plan? Give reasons.

Quality

How should quality be approached, and what does it mean? Why did Leadbetter not invoke the specifications to ensure quality? What was the result? What is the importance of Quality to a project like this? Planning and Scheduling

Identify and describe a set of project schedule milestones from project concept to project completion. Illustrate your milestones on a simple bar chart scaled to the information provided in the Case Study. Would a good baseline plan have helped to show that the project would not meet its schedule? If so, how? How should float on the critical path have been managed? Would this have helped to complete on time? Cost Estimating

Develop a high-level estimate by "guesstimation". How should the estimate be presented? Is life-cycle costing a factor on this project? Cashman kept his cash flow chart a secret. Why, and what would you have done? Contracting for Engineering and Construction Services

What were the contracting alternatives open to Woody's? Which would have been best and what would that have involved?

How should the contract(s) be organized and tendered? How should they be administered? Were the original Woody 2000 project requirements delivered? Communication and People Management

Draw a project organization chart. What were the real relationships? Should Leadbetter have been left to run the project? Would training have helped? How should the Woody 2000 project plan be communicated and when? What communication (coordination) would you expect to see during execution? Progress Monitoring and Control

Would a good baseline plan have helped to make up time? Draw a responsibility chart for effective control. What would you have done when you saw that the project would not meets its schedule? Project records were apparently poor. What records should have been kept and how? Cost Control Why was EID's first price so high? Was their position reasonable? When did Woody's know they were in trouble with over expenditure? What was the result? How should the project budget and expenditures be set out for cost control? Draw a simple flow chart for processing changes? Risk Identification and Management

How did EID handle their risks? Was this effective? What might they have done? List Woody's actual surprises and add other possible surprises. What was, or should have been, done to prepare for and respond to them? Were there changes? What were the impacts? Facility Startup and Project Closeout

How was startup managed on the Woody project? How should it have been managed? The Woody 2000 project was evidently not well run. Why? Give reasons for your opinion. Develop a list of "Key Success Indicators" that could and should have been measured on completion. Rank them in order of priority for this project.

PLC Stage

Concept

Planning

Design

Construction

Launch

Control

Evaluation

Problem, Cause, and Consequences

The initiative to launch the project was influenced by the owner's son, Jhon, based on business exp

Advise by Cashman and Moneysworth not to move were not totally justified and based on: 1- there property, costs of buying and selling properties and, 3- to avoid the interruption of production wh 2- to avoid equipment The underlying reasons may have been to avoid moving 15 miles away from the staff's residence ( space) Final decision to stay where they are was not properly formulated, merely a result of polarization o Not involving production department in the planning Hiring external consultants EID: one quotation only based on EID's reputation Only focus is on saving on costs Development of monthly cash flow chart based only on financial perspective 1 milion for contingency (almost 6% of budget) the project should be 18 months, the financial plan was based on a 10 month basis Recording actual cost under the company's normal book-keeping (not under the project-a misrepre The initial quotaion was on a fixed-price basis, more options should have been offered Financial plan developed before final quotation details door for many uncertainties and risks, de The agreed upon fully reimbursable contract opened the decreased their effeciency and effectiveness Assumption that hourly rate (agreed upon with EID) would be monitored effectively Assigning the project leadership to Ian Leadbetter based only on his specialization (Lack of project experience) Change in train production specifications to increase capacity after the software program has alrea Focus of Ian on from managing the project to rewriting the important It also resulted in errors requ Ian's distractionsoftware skills resulted in overlooking other software). issues of vomtrol and projec at startup Not involving the main stakeholders in the design phase (Piecemeal Corporation, S&P, and product Delay in approval of design drawings of equipment (the train) for two weeks, causing conflicts in la Main construction started 8 months later change in specification resulted in need for additional 5 feet to the length of the new building (the holding down bolts long after the foundation has been poured!) The catalogue descriptions and specifications for other equipment selected were similarly not rece after the foundations had been poured. Ignoring the main contractor (EID) and dealing directly with the sub-contractor led to tense relation Finding that the paint shop does not meet the environmenntal regulations Project manager 2 years since launch project is alreadyand Project director had no meaningful plan on the owner's acceptance and inspe testing, dry-running, production start up of the train They also failed to insist that EID obtain the the "tie-in" of power certificate.utility connections sche due to late delivery of the production train, building occupation and other week maintenance shut-down could not in fact take place until two weeks later. Several weeks of production lost, missed customers' delivery dates, some contracts cancelled, sale depleted finished goods inventories,harm to Woody's core value Rising costs from changes and delays charged to Woody's account (project 85% complete with exp Additional loans with excessive rate of prime plus 2.5% Using money to solve every problem that arises (firefighting mode) Construction industry fell dramatically in the region negatively affecting demand for Woody's prod launching an expensive marketing campaign - bad timing Equipment under utilized production morale ebbed mijudjment of market needs project mananger blamed for the failure staff to conduct an was his idea to written on speedy mem problems in extracting information from of the project as it appraisal (info start with shortcomings, etc.)

Solution and new consequences

son, Jhon, based on business expansion ambitions in an

y justified and based on: 1- there is enough space on the the interruption of production while relocating their existing away from the staff's residence (the nearest availabel merely a result of polarization of opinions and arguments reputation

erspective

a 10 month basis (not under the project-a misrepresentation) d have been offered

many uncertainties and risks, demotivated the contractor,

itored effectively his specialization (Lack of project management training or

r the software program has already been written (caused tant It also of vomtrol errors requiring increased debugging are). issues resulted in and project life cycle

al Corporation, S&P, and production train suppliers) two weeks, causing conflicts in later stages

e length of the new building (the discovery was made when selected were similarly not received and reviewed until

b-contractor led to tense relationships ulations

he owner's acceptance and inspection of the building,

ertificate.utility connections scheduled for the annual twond other ls, some contracts cancelled, sales opportunties lost due to two weeks later.

t (project 85% complete with expenses exceeding budget)

e) fecting demand for Woody's products

s idea to written on speedy memos, undated, covering up sal (info start with

consequences

Activity A B C D E F G H I J K

Dependency Duration 1 A 2 B 2 C 2 A 3 D 1 3 2 1 2 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Jan-89 Feb-89 Mar-89 Apr-89 May-89 Jun-89 Jul-89 Aug-89 Sep-89 Oct-89 Nov-89 Dec-89 Jan-90 Feb-90 Mar-90 Apr-90 May-90 Jun-90 Jul-90 Aug-90 Sep-90 Oct-90 Nov-90 Dec-90 Jan-91 Feb-91 Mar-91 Apr-91 May-91 Jun-91 Jul-91 Aug-91