A leading multinational corporation in the gaming industry planned to expand its operations to southern Europe, namely to Spain. Two project managers were assigned to achieve this goal: one project manager to establish a wholly owned subsidiary in the new market, another project manager to identify suitable locations for the new gaming outlets.
ESTABLISHING THE SUBSIDIARY IN SPAIN - THE 'PHYSICAL HARDWARE'
The first milestone of the project was the establishment of a local company as a wholly owned subsidiary of the gaming multinational including all administrative issues linked to this process, such as obtaining a licence to run a gaming company from the Spanish government. This was supposed to take approximately two months. Including the search for a reliable bilingual lawyer, this process finally took four months. On the financial side, a bank account needed to be opened, an independent external accountant had to be 178 contracted, and an audit firm had to be found. All these activities were planned to be finalized within two months. However, problems with the selected audit company occurred: in the first meeting with the audit company, the project manager noticed that in contrast to the written quotation, the selected audit company did not have multilingual employees. Therefore, another audit company had to be found and contracted. This activity took three months. As far as the infrastructure was concerned, suitable facilities for the newly established subsidiary needed to be identified and a rental contract signed.
Office supplies and furniture had to be purchased, and IT and telecommunication systems set up. Accommodation for the project managers had to be provided. The infrastructure related activities were planned to take roughly two months. A delay of one month was due to the plumber and the phone company. After five visits, the plumber had still not succeeded in installing the toilets in a way they could be used. To this day, the employees have to fight with a malfunctioning flushing system. The greatest challenge for the project manager, however, was the division of work at the phone company. To get three RADSL lines, he needed to fill in four forms for four different
departments of the phone company. After frequent calls, begging, and pleading, the
technicians in charge eventually came, one after the other, to fix the lines. Unfortunately,
they came at intervals of three to four weeks, which resulted in a lead-time of three
months until the phone connection was up and running.
In addition, insurance requirements needed to be identified and a contract with an
insurance company signed. The project manager responsible for the subsidiary
foundation had planned two weeks for this process. With intensive support by the
project manager the insurance company was able to complete process in five weeks,
although their normal process typically took nine to ten weeks.
ESTABLISHING THE SUBSIDIARY IN SPAIN - RECRUITING STAFF
The second major step was related to recruiting and training personnel, both in the new
subsidiary and in the outlets which were to be opened afterwards across the whole
country. Both responsible project managers estimated roughly two months for recruiting,
selecting, and training new employees for the subsidiary. They experienced the first
difficulties when they tried to find an appropriate Human Resources search company.
Amazingly, the differences in price and quality were huge on the Spanish market, much
greater than back home. Another hitch came with the first interviews they conducted.
They did so in Spanish and English. Much to their surprise, they discovered that 80 per
cent of the applicants had somewhat exaggerated their capabilities in their written CV.
For instance, some of them could not switch to English in the interview, or lacked other
skills that the two project managers could test during the interview. Consequently, the
two had to run many more interviews than originally expected and planned for, resulting
in another delay of one month.
EXPANSION - ESTABLISHING OUTLETS IN THE SPANISH
MARKET
The third milestone was the establishment of outlets in metropolitan areas of the new
market. Each shop opening was considered a sub-goal or sub-milestone. In order to
reach it, a bundle of measures needed to be conducted.
SUITABLE LOCATIONS
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The first set of actions was linked to the identification of suitable locations: definition of
criteria for a good location in the local market, selection of real estate agents and
property developers, selection of potential locations, closing of tenancy contracts, and
acquisition of municipal gaming permits based on police regulations.
NEW OUTLETS
The second set of actions was related to the design and equipment of the new outlets:
defining shop standards, designing the location of the machines and furniture, planning
the interior decoration, issuing the tender for the construction or refurbishment of the
building, application for a construction permit with the local community, granting of a
building permit, contract award to general contractor, implementation of a construction
plan, final acceptance by project manager, planning of outdoor advertising, approval of
outdoor advertising by local authorities, installing of outdoor advertising, furnishing the
outlet, contracts with utility companies.
On average, achieving these activities was planned to take eight months. In the end,
it took the project manager 14 months due to a low degree of reliability and a high level
of red tape encountered at all levels - from local municipalities to central governmental
authorities. To give one example: he could not believe it when he made an appointment
with the planning office at 09:00 a.m. and the officer eventually showed up at 11.30,
commenting that he had just some coffee. Another shock for the project manager was
the fact that an important planning officer went on holiday for three weeks. When he
asked for his holiday replacement, he was told that there was none. So the project
manager had to wait three weeks until the person in charge returned from his vacation.
The construction companies also posed a challenge to the project manager. When he
heard from them ' No hay problema !' (no problem), he knew they were running into
difficulties. Headquarters pushed him to announce the opening dates for outlets well in
advance. However, the deadlines were not taken at all seriously by the construction
companies. Even though he followed up personally, and supervised the work, it still took
much longer than agreed. Dates were seen as non-binding. They would do their best to
meet the deadlines, but if not, it couldn't be helped. Headquarters did not understand at
all what was happening, and why the planned opening dates could not be firmly adhered
to. Needless to say each delay in opening an outlet meant a cost in the sense of lost
profit.
Another budget issue was caused by the semi-legal practices of some construction
firms. All materials used needed to be checked on site because the invoices tended to list
more expensive materials. The project manager spent a lot of time controlling all the
details of the invoices, and still the costs exceeded the budget.
GAMING MACHINES
In parallel to the second set of activities, a third series of actions was to be carried out
related to the gaming machines: the composition of a suitable mix of machines, ordering
the machines, importing the machines to Spain, processing payment, getting the
calibration and local approval of gaming machines, adapting the configuration of the
machines to local demand. For instance, roulette was known to be quite popular with
Spanish gamblers. All those activities were forecasted to be finalized within six weeks.
Due to long procedures for customs' clearance and other bureaucratic issues, the tasks
were only completed after eight weeks.
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SERVICE AND MAINTENANCE
Last but not least, the project manager had to take care of a fourth bundle of activities:
service and maintenance partners needed to be selected and contracted. A security
concept needed to be outlined and implemented, a very important issue in the gaming
industry as a lot of cash is involved. In parallel, marketing activities needed to be
ramped up. At home, it would take the project manager about four weeks to complete
those tasks. However, he did not account for problems with the information flow
between headquarters and the subsidiary in Spain on one hand and between the new
outlet and headquarters on the other, which led to another delay of four weeks.
Despite their language skills, and although they each worked until they fell over, the
project managers were still very much behind schedule and over budget. What a pain ...
Task and question
1 Create two Gantt charts: one for the original planning, and one for the actual
project. (Note: Not all scheduling details are in the text - just refer to the available
data.)
2 What are the particularities in this case in terms of planning time, cost, and quality,
due to the fact that this is an international project?
FURTHER READING
Benator, Barry and Thumann, Albert (2003) Project Management and Leadership Skills for
Engineering and Construction Projects . Lilburn: The Fairmont Press Inc. ( Chapters 3 ,
4 , 5 , and 6 offer a good overview on scheduling fundamentals, financial management
and cost estimating. Moreover, the authors touch on the role of computer tools in the
planning process. Concrete examples and checklists for construction and high-tech
projects are provided.)
Goldratt, Eliyahu M. (1997) Critical Chain . Great Barrington: The North River Press (Goes
beyond classical scheduling and Goldratt criticizes scheduling techniques. In his
opinion, human behaviour is not sufficiently taken into account.)
Huemann, Martina (2004) 'Improving quality in projects and programs'. In Morris, Peter
W.G. and Pinto, Jeffrey K. (eds) The Wiley Guide to Managing Projects . Hoboken, NJ:
John Wiley & Sons, pp. 903-936. (Provides a comprehensive yet concise overview of
improvement methods focusing on quality as a process, including quality audit and
certification systems such as ISO.)
Portny, Stanley, Mantel, Samuel J., Meredith, Jack R., Shafer, Scott M. and Margaret M.
Sutton (2008) Project Management: Planning, Scheduling, and Controlling Projects .
Hoboken, NJ: John Wiley & Sons. (This book is pedagogically well thought through and
structured. Apart from a good overview of relevant planning tools it contains additional
features to use the tools and practise the techniques.)