ON ONE $[40]$

CASE STUDY: THE GREEN COMPANY $$ POJECT OVERRUN

Functional manager: $$Our problem was that the customer could not provide us with a fixed set of specifications, because the final set of specifications depended on OSHA and EPA requirements, which could not be confirmed until initial testing of the new plant. Our people, therefore, were asked to commit to man$-$hours before specifications could be reviewed. $$Six months after project go$-$ahead, Green Company issued the final specifications. We had to remake $6,000$ production units because they did not live up to the new specifications.$$ Project manager: $$The customer was willing to pay for the remake units. This was established in the contract. Unfortunately, our contract people didn$$t tell me that we were still liable for the penalty payments if we didn$$t adhere to the original schedule.$$ Phil Graham: $$Don$$t you feel that misinterpretation of the terms and conditions is your responsibility?$$ Project manager: $$I guess I$$ll have to take some of the blame.$$

Functional manager: $$We need specific documentation on what to do in case of specification changes. I don$$t think that our people realize that user approval of specification is not a contract agreed to in blood. Specifications can change, even in the middle of a project. Our people must understand that, as well as the necessary procedures for implementing change.$$ Phil Graham: $$I$$ve heard that the functional employees on the assembly line are grumbling about the Green Project. What$$s their gripe?$$ Functional manager: $$We were directed to cut out all overtime on all projects. But when the Green Project got into trouble, overtime became a way of life. For nine months, the functional employees on the Green Project had as much over time as they wanted. This made the functional employees on other projects very unhappy. $$To make matters worse, the functional employees got used to a big take home paycheck and started living beyond their means. When the project ended, so did their overtime. Now, they claim that we should give them the opportunity for more overtime. Everybody hates us$.$

Phil Graham: $$Well$,$ now we know the causes of the problem. Any recommendations for cures and future prevention activities?$$

QUESTION $1$

$[40]$

$1\mathrm{.}1$ When the project overruns, project $\_\_\_\_?$ are affected.

$(1)$

$1\mathrm{.}2$ Phil$$s intentions are clear, and they are to identify $\_\_\_\_\_?$ learnt.

$(1)$

$1\mathrm{.}3$

Identify three major things from the exercise that Phil conducted with stakeholders which contributed to the overrun $($time and cost$).(6)$

$1\mathrm{.}4$

The assumption is that $$The Green Company$$ did not follow the project life cycle because one of the key stages in the life cycle is $$Planning$,$ which could have assisted in many of the key things that were overlooked. Help Phil and the stakeholders by evaluating the importance$/$benefits of project life cycle to them. $(12)$

$1\mathrm{.}5$

Discuss five $(5)$ disadvantages of the project life cycle. $(6)$

$1\mathrm{.}6$

Part of the reasons for cost escalation is scope that is not well documented. Assist Green Company to write a process on the major points to look for when documenting scope. $(8)$

$1\mathrm{.}7$

Further summarise what should be included in a scope management plan. $(8)$