Question 2 - Case Study

Structural Change and the Pitfalls of Project Management

Consulting Group Bhd is a global company in providing management services to a wide

variety of clients. Services that it provides include payroll, resource planning

recruitment, information management and financial planning The business was well

established and is known for its excellent service. Its directors are concerned that they do

not have adequate control over all the management services it provides. Consulting

Group Bd is structured along formal functional lines with a director responsible for each

service. Increasingly, customers require a more comprehensive service in which the

functional boundaries which the company has established in its structure are crossed. The

directors consider the functional structure currently employed no longer enables

Consulting Group Bd to service its customers' needs effectively.

The Consulting Group Bhd's existing computer system was inadequate and was

increasingly breaking down. The accounting system could not provide the managers with

anything beyond basic reports, outlining the departments' expenses. The company

decided to purchase a new computer system and accounting system. Jack was selected to

oversee the entire project and liaise with the appointed vendor. The company is very keen

to see this project completed before the year end consolidation exercise begins in six

months time.

A Request for Proposal (RFP) was sent to several computer systems vendors and the

vendors responded with elaborate proposals. The steering committee reviewed the,

proposals and the contract was awarded to CS Sdn Bd for the purchase of the computer-

hardware, accounting software and implementation services. In the contract, CS Sdn Bhd

was responsible for managing the

training, hardware installation

software

implementation, and hardware support. The implementation budget of RM 70,000

covered project management, and miscellaneous technical support expenses to get the

system live. This amount was included in the negotiated contract price and was estimated

to cover a six month implementation period. A ten-week schedule for implementing the

accounting modules was agreed upon in the contract. The expected date for the

accounting system to be fully operational live was early June. Consulting Group Bhd

relied on CS Sn Bh to appoint an appropriate project manager. The installation of the

new computer equipment started in January 2007, and progressed steadily until

completion in February 2007. CS Sdn Bhd contracted Peter from a computer recruitment

agency in March 2007 to handle the project, as they were short of staff. Peter had project

management experience, and will report to Jack and refer any major decisions to him

Training on the general ledger module started in April 2007. Peter realised that the users

were having trouble with the computer system, and their lack of familiarity with

computers did not help. Peter had asked Jack to provide a technical support person from

CS Sdn Bhd to spend extra time training and supporting the users, and this was approved.

Jack saw Peter only twice each week and when asked about the progress of the project,

Peter responded positively about the system, the staff and the prospects for meeting the

"live" deadline. Jack was concemed about the amount of time Peter was spending

managing the project, as the budget was based on a part-time project manager.

Apparently, Jack had always experienced problems in persuading Peter to discuss

progress, and has received only one written progress report during the project. Following

concerns about the speed of progress, a review of the work outstanding carried out at the

end of May 2007, identified a further 60 man-days of work required in one area which

had not been included in the implementation schedule. This was related to the problems

in obtaining specialised forms and making custom modification to one of the accounting

modules.

CS Sin Bhd submitted an invoice for RM 68,000 for the implementation costs until end

of May 2007, and did not provide a breakdown of the hours spent.

The head of quality assurance at Consulting Group Bid raised concerns that there was no

formal approach to managing the project. She mentioned that the project manager could

have applied a methodology, such as PRINCE 2 to manage the project.

Jack was unhappy about being left in the dark by the project manager and called an

emergency meeting

Minutes of the Project Team Meeting (emergency meeting requested by Jack)

1. In attendance: Peter (project manager), Jack (project coordinator), George (project

sponsor), Anne (team leader), project team members.

The following points were discussed:

Peter had not spoken to the team leader, Anne for over a month, following their

heated discussion about the accuracy of the team's data input into the new system

Jack commented that his earlier requests for working overtime to enter the invoices

into the new system went largely ignored.

Anne commented that there was no assurance that the team members would not get

paid for overtime.

Peter spent extra time working with the users, but they still complained that there was

not enough time to learn the new system

Staff found Peter assertive and demanding to ensure that they completed any

assigned project tasks.

Several of the staff mentioned that they felt increasingly uncomfortable working with

Peter.

Further planning issues were raised by the staff, including the comment that We

need hands-on project management - regular meetings, not just once a month the day

before the board meeting

Jack was asked by the George to justify the current cost overruns recorded on the

project.

Recommend an organisational structure which may enable Consulting Group Bhd

to meet its customers' needs more effectively. Justify your answer using facts

from the case.

(10 marks)

Critically appraise the suitability of the PRINCE 2 methodology in managing the

project in the case above.

(15 marks)

Tutorial 7 Question 2 - Case Study Structural Change and the Pitfalls of Project Management Consulting Group Bhd is a global company in providing management services to a wide variety of clients. Services that it provides include payroll, resource planning, recruitment, information management and financial planning. The business was well established and is known for its excellent service. Its directors are concerned that they do not have adequate control over all the management services it provides. Consulting Group Bhd is structured along formal functional lines with a director responsible for each service. Increasingly, customers require a more comprehensive service in which the functional boundaries which the company has established in its structure are crossed. The directors consider the functional structure currently employed no longer enables Consulting Group Bhd to service its customers' needs effectively. The Consulting Group Bhd's existing computer system was inadequate and was increasingly breaking down. The accounting system could not provide the managers with anything beyond basic reports, outlining the departments' expenses. The company decided to purchase a new computer system and accounting system. Jack was selected to oversee the entire project and liaise with the appointed vendor. The company is very keen to see this project completed before the year end consolidation exercise begins in six months time A Request for Proposal (RFP) was sent to several computer systems vendors and the vendors responded with elaborate proposals. The steering committee reviewed the proposals and the contract was awarded to CS Sdn Bhd for the purchase of the computer hardware, accounting software and implementation services. In the contract, CS Sdn Bhd was responsible for managing the training hardware installation software implementation, and hardware support. The implementation budget of RM 70.000 covered project management, and miscellaneous technical support expenses to get the system live. This amount was included in the negotiated contract price and was estimated to cover a six month implementation period. A ten-week schedule for implementing the accounting modules was agreed upon in the contract. The expected date for the accounting system to be fully operational live was early June. Consulting Group Bhd relied on CS Sdn Bhd to appoint an appropriate project manager. The installation of the new computer equipment started in January 2007, and progressed steadily until completion in February 2007. CS Sdn Bhd contracted Peter from a computer recruitment agency in March 2007 to handle the project, as they were short of staff. Peter had project management experience, and will report to Jack and refer any major decisions to him. Training on the general ledger module started in April 2007. Peter realised that the users were having trouble with the computer system and their lack of familiarity with computers did not help. Peter had asked Jack to provide a technical support person from CS Sdn Bhd to spend extra time training and supporting the users, and this was approved. Jack saw Peter only twice each week and when asked about the progress of the project, Peter responded positively about the system the staff and the prospects for meeting the "live" deadline Jack was concemed about the amount of time Peter was spending managing the project, as the budget was based on a part-time project manager. Apparently, Jack had always experienced problems in persuading Peter to discuss progress, and has received only one written progress report during the project. Following concerns about the speed of progress, a review of the work outstanding carried out at the end of May 2007, identified a further 60 man-days of work required in one area which had not been included in the implementation schedule. This was related to the problems in obtaining specialised forms and making custom modification to one of the accounting modules CS Sdn Bhd submitted an invoice for RM 68.000 for the implementation costs until end of May 2007, and did not provide a breakdown of the hours spent. The head of quality assurance at Consulting Group Bhd raised concems that there was no formal approach to managing the project. She mentioned that the project manager could have applied a methodology, such as PRINCE 2 to manage the project. Jack was unhappy about being left in the dark by the project manager and called an emergency meeting Minutes of the Project Team Meeting (emergency meeting requested by Jack) 1. In attendance: Peter (project manager), Jack (project coordinator). George project sponsor). Anne (team leader) project team members. The following points were discussed Peter had not spoken to the team leader, Anne for over a month. following their heated discussion about the accuracy of the team's data input into the new system Jack commented that his earlier requests for working overtime to enter the invoices into the new system went largely ignored. Anne commented that there was no assurance that the team members would not get paid for overtime Peter spent extra time working with the users, but they still complained that there was not enough time to learn the new system Staff found Peter assertive and demanding to ensure that they completed any assigned project tasks. Several of the staff mentioned that they felt increasingly uncomfortable working with Peter Further planning issues were raised by the staff including the comment that "We need hands-on project management - regular meetings, not just once a month the day before the board meeting." Jack was asked by the George to justify the current cost overruns recorded on the project Required: (a) Recommend an organisational structure which may enable Consulting Group Bhd to meet its customers' needs more effectively. Justify your answer using facts from the case. (10 marks) (b) Critically appraise the suitability of the PRINCE 2 methodology in managing the project in the case above. (15 marks)