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Analysis - Case Study Example

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Case Study Analysis Background Sydney Water Corporation is a New South Wales state owned corporation. In 1997-98, the corporation decided to introduce a customer information billing system (CIBS). For the purpose, tenders were invited and later on the tender was granted to Pricewaterhouse Coopers Consulting (PwC) with an approved project funding of $ 38.2 million…
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Download file to see previous pages By the End of October 2002, the project was terminated. However, from the report of the Auditor General, it was found that as against the expected $ 38.2 million expenditure, the new project estimate was $ 135.1 million, out of which $ 61 million was already spent. Auditor General found serious issues regarding the corporate governance in Sydney Water. First of all, the reporting of the management to the Board on important issues was not detailed and timely. In addition, the Board did not oversee the project as it was supposed to do. Thirdly, the issues were not properly disclosed in the Annual Report 2002. 1. Cultural attitude within Sydney Water It is evident from the report of the Auditor General that the cultural attitude within Sydney Waters was not befitting a well-functioning organization. One of the main factors that become evident is the widespread belief in the Sydney Water that outsourcing of major projects will transfer all the risks to the contractor and that there is no need of the user cooperation in the process (Review of Sydney Water’s Customer Information and Billing System, 2003). The GM-Customer Service was of the opinion that by paying a premium to PwC, the fixed price contract would give a strong legal backup to Sydney Water. The same view was expressed by the Audit Committee and the whole Sydney Water management. So, they were not so keen in updating their risk management process, and were not interested in following up the DMR recommendations. Another issue is poor record keeping. Some important documents that were found missing in the Auditor General’s review were final business case, tendering processes, and net present value calculations for the project (ibid). Another point is the totally lethargic attitude exhibited by the Board of Directors. It is a well-known fact that the Board is directly responsible to the stakeholders, and hence is responsible to act in a manner that protects the interests of stakeholders. Hence, it is for the board to deal with challenges and issues relating to corporate governance, corporate social responsibility and corporate ethics. As a part of this, it is the responsibility of the directors to make sure that proper books of account are kept. However, in the case of Sydney Water, it can be seen that the board failed to control the whole procedure in a proper way. Firstly, it initiated the process without a proper architecture framework in place, and then failed to avail and analyze the progress of the project. When its managing director, steering committee, and other responsible ones failed to function as directed, it failed to take necessary actions to ensure compliance with the company strategies. In addition, one can observe that officers ranging from the project manager, the steering committee, and general managers of customer service acted in a lethargic and careless way. They failed to provide adequate reports and to follow the usual procedures of communication in the group. On the one hand, there was lack of common consensus about the responsibilities of each stakeholder, and on the other, they did not care about the interest of the company and its stakeholders. In the words of Schwalbe (2008, p.6), a successful project should meet its scope goal, cost goal, and time goal. It is very evident that the CIBS project failed to meet all the three goals. To meet these ends, the management should show good human resource ...Download file to see next pagesRead More
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