Why was Shimizu Selected by IBM - Case Study Example

Shimizu meets IBM Why was Shimizu selected by IBM IBM had been experiencing one of its greatest construction challenges when its prime semiconductor manufacturing facility required a modern technological center hence the need to meet a new occupancy within two years. Additionally, there was need for new vibration resistance and different levels of environmental purity unlike the previous years within the organization. In doing this, the IBM management required that the new building would able to be one of the best in the world. RECD was given the responsibility of looking for an exceptional semiconductor facility design firm. It was at this point that the Shimizu firm was considered for its accomplishment in designing and construction of facilities, which are semiconductor. The Shimizu firm is one of Japanese largest and oldest firms, which has excelled in designing and construction for many years. Shimizu credentials amazed RECD representatives. As compared to other construction and design firms in the United States, the Shimizu firm had the ability to conduct the operation. Additionally, the Shimizu firm has successfully managed to achieve class 1 capability for 0.5 particles to 0.3 microns. The organization also has a vibration table, which is large and allows it conduct structural seismic tests thus managing to develop state-of-the-art firm designs. In doing all this, the Shimizu firm had the ability to meet the needs of IBM. Selection process The selection process was done by the RECD representatives who started by reviewing the management systems of the Shimizu firm. In doing the management review, the representatives analyzed the firm’s planning, scheduling, cost estimates and the project control aspects. They found out that the management systems were similar to most firms in the United States. Generally, Shimizu firm is a construction firm and it construct designs which are prepared by other organizations. Given all these aspects, the RECD felt the need to employ Shimizu firm to design and develop the entire ASTC project. The main goal of this project was to establish a design concept, which would be based on the requirements of IBM and design criteria. The selection process was generally sound and ideal. Before recommending an organization to develop or establish a construction facility, it is always recommended to conduct an analysis of the firm first. Doing a management review is important in order to establish the exact capabilities and past records of the construction firm. What were the reasons behind some of the problems Shimizu encountered later on? The working relationship between the two firms was derailed by the cultural differences among various aspects. Additionally, there were problems in the administration whereby designing the contract took too much time during the negotiation process as compared to the U.S design firms. There were difficulties in Shimizu’s billings by the IBM due to the absence of the supporting details. Later on after Shimizu hired the HHN Inc. there were difficulties in the scheduling processes. The first difficulty was experienced in January 1987 when at least 50% of the drawings were to go through the bidding process. Instead, only 15% managed to be get through. Additionally, the increase in budget to about 40% was unexplained by the Shimizu firm. The original occupancy schedule dates were slipped. IBM argument was that it had not changed anything in the project requirements so they did not feel the need of increasing its budget. As a result, the Shimizu firm was kicked out. What were the reasons for a 40% increase in the cost estimate? Even though Shimizu could not explain the 40% increase on its initial budget, the rise in costs was because of the bidding purposes. In this case, 50% of the firm’s working drawings were to undergo through a bidding purpose. On the contrary, only 15% of the working drawing was complete. This aspect played a key role on the increasing cost estimates of the organization. With inputs from Shimizu firm, the IBM managed to establish the real reasons for increase in costs by the Shimizu firm. Some of the reasons for the increase in the construction costs was as a result of Shimizu difficult working experiences with various sub constructers in Eastern Fishkill. In this case, the sub constructers were more apprehensive when it comes to working with foreign contractors. There was the aspect of custom and language differences, which seemed to overwhelm IBM, Shimizu and Giffels while they were designing their work. Additionally, Shimizu had limited confidence with working with United States specialty products, supplies and manufacturers. Shimizu seemed to presume that the United States companies like the IBM firm and many more would accept the increase in budget costs, trusting the efforts of the Shimizu firm during the project. What were the expectations of IBM? Going through one of its greatest challenges in construction after its main manufacturing firm had the need to establish a modern technological center; IBM expectation was to establish a new occupancy within two years. Additionally, IBM had expectations to develop a new vibration resistance and different levels of environmental purity. To make this possible, the IBM management expected to develop one of the best buildings in the world at its premises. What were the expectations of Shimizu? Shimizu firm was expected to develop a design with its concept based upon the requirements of IBM. In constructing the design, the firm was expected to meet the design criteria of IBM. How could each have understood the other better? To meet its expectations, the IBM needed the help of the Shimizu firm towards the development of a modern technological center. The Shimizu firm also had to develop a new occupancy for IBM within two years. For the purposes of meeting their goals and targets, the two organizations had to work together in harmony without disputes. Good cooperation by the two organizations would enable the firms meet their targets and expectations towards a common goal. To understand each other better, both companies need to establish a working relationship. Shimizu being a construction firm, which constructs designs that are mostly prepared by other organizations, would need a lot of support from its employer company and by so doing, both companies would understand each other. Honesty is also a vital aspect towards achieving a common goal and understanding each other. In IBM vs. Shimizu case, there was the aspect of dishonesty where the Shimizu firm was not honest at some point thus leading to the termination of the contract. What does “a phased basis” of undertaking a project mean? Generally, the aspect of phased basis in project undertaking entails the relocation or closure strategy especially where adverse findings dictate. In project management, this aspect is mostly done in line with a firm’s needs and budget. Phasing is mostly appropriate during project management where the organization undertakes various actions for staff in building. Shimizu does not recommend this approach because as a result quality may be compromised. Do you agree? Give reasons for your answer Generally, the Shimizu firm was against the idea of phased basis during the project undertaking. Being an experienced firm in matters to do with construction and designing, the firm felt that this aspect would generally lower the quality of the project and their entire work. I agree with Shimizu way of thinking in conducting the project. Phased basis generally lowers productivity and effectiveness of a project. The closure strategy aspect is never advised when it comes to construction or project management. If you were working for Shimizu, what would you be interested in learning from the US construction industry? From the case study, it is quite evident that Shimizu as a construction company failed in its mission to complete the intended project forcing IBM to hire a different firm to complete the project. As a constructor working with the Shimizu firm, there are various aspects to learn from the United States construction firms. Most of US construction industries are generally good and have the aspect of having a strong niche. Having a unique niche is always important for any construction company that seeks to establish itself in the construction industry. Having the uniqueness aspect in the construction industry is what I would be looking forward to. From the study, it is clear that Shimizu firm failed to manage its accounts effectively during the construction of the project hence the need for increase in construction costs. As a Shimizu construction company, I would like to learn the aspect of effective management of accounts. Effective management of construction cost was the main reason as to why IBM firm cut its relations with Shimizu construction firm. Therefore, effective management of construction accounts would be important in order to complete a project on time and effectively. Lastly, I would like to learn the aspect of good cooperation with consultants, on the ground workers and the employer company. Shimizu firm was always reluctant to conduct consultations with employer organizations because it is never part of its corporate policies. On the contrary, the United States construction firms are always easy and allow consultations before the beginning of their projects. Consulting before the beginning of the project is always important and ensures effectiveness of the project. If you were working for an US company involved in this project (say, Walsh) what would you be interested in learning from Shimizu, a Japanese construction company In as much as the Japanese company failed to complete the project, there are a lot of positivity that can be borrowed from the company. The Shimizu firm is a big company and has been in the industry for many years, which means that their levels of experiences are high. The company’s credentials are high and that is why the IBM firm opted to work with them. The Shimizu firm managed to beat off competition from rival companies hence winning the contract to work with IBM. Being a Japanese company, the company works with various international companies from different cultures and regions. This is one aspect is one of the many interests that I admire about the company. Reference Committee on the International Construction Industry, John W. Fisher, Building Research Board, National Research Council (U.S.).(1988). Commission on Engineering and Technical Systems. Building for Tomorrow: Global Enterprise and the U.S. Construction Industry. Washington, D.C.: National Academies, 1988 Read More