Three years ago, the Sharp Printing $($SP$)$ strategic management group set a goal of having a color laser

printer available for the consumer and small business market for less than $$250.$ A few months later the senior

management met off$-$site to discuss the new product. The results of this meeting were a set of general

technical specifications along with major deliverables, a product launch date, and a cost estimate based on

prior experience.

Shortly afterward a meeting was arranged for middle management explaining the project goals, major

responsibilities, project start date, and importance of meeting the product launch date within the cost

estimate. Members of all departments involved attended the meeting. Excitement was high. Although

everyone saw the risks as high, the promised rewards for the company and the personnel were emblazoned in

their minds. A few participants questioned the legitimacy of the project duration and cost estimates. A couple

of R&D people were worried about the technology required to produce the high$-$quality product for less than

$$200.$ But given the excitement of the moment, everyone agreed the project was worth doing and doable. The

color laser printer project was to have the highest project priority in the company.

Lauren was selected to be the project manager. She had $15$ years of experience in printer design and

manufacture, which included successful management of several projects related to printers for commercial

markets. Since she was one of those uncomfortable with the project cost and time estimates, she felt getting

good bottom$-$up time and cost estimates for the deliverables was her first concern. She quickly had a meeting

with the significant stakeholders to create a WBS identifying the work packages and organization unit

responsible for implementing the work packages. Lauren stressed that she wanted time and cost estimates

from those who would do the work or were the most knowledgeable, if possible. Getting estimates from more

than one source was encouraged. Estimates were due in two weeks.

The compiled estimates were placed in the WBS$/$OBS$.$ The corresponding cost estimate was in error. The cost

estimate was $$1,250,000$ over the top$-$down senior management estimate; this represented about a $20$

percent overrun! Furthermore, the bottom$-$up time estimate based on the project network was four months

longer than the top management time estimate. Another meeting was scheduled with the significant

stakeholders to check the estimates and to brainstorm for alternative solutions. At this meeting everyone

agreed the bottom$-$up cost and time estimates appeared to be accurate. Following is some of the suggestions

from the brainstorming session.

Change scope.

Outsource technology design.

Use the priority matrix $($found in Chapter $4)$ to get top management to clarify their priorities.

Partner with another organization or build a research consortium to share costs and to share the newly

developed technology and production methods.

Cancel the project.

Commission a break$-$even study for the laser printer.

Very little in the way of concrete savings was identified, although there was consensus that time could be

compressed to the market launch date, but at additional costs.

Lauren met with the marketing $($Connor$),$ production $($Kim$),$ and design $($Gage$)$ managers, who yielded some

ideas for cutting costs, but nothing significant enough to have a large impact. Gage remarked, "I would not

want to be the one to deliver the message to top management that their cost estimate is $$2,500,000$ off!

Good luck, Lauren."

A$.$ At this point, what would you do if you were the project manager? $($Be specific and explain your answers$)$

B$.$ Was top management acting correctly in developing an estimate?

C$.$ What estimating techniques should be used for a mission$-$critical project such as this? $($Be specific and

explain your answers$)$