QUESTION ONE

$[40]$

CASE STUDY: THE GREEN COMPANY $$ PROJECT 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 pay check 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?

$1\mathrm{.}1$

When the project overruns, project $\_\_\_\_\_$ are affected.

$(1)$

$1\mathrm{.}2$

Phil$$s intentions are clear, and they are to identify $\_\_\_\_\_\_\_$earnt.

$(1)$

$1\mathrm{.}3$

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.

$(10)$

$1\mathrm{.}5$

Discuss six $(6)$ 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 the

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.

$(8)$