Woody 2000: Construction, Startup, and Control - Essay Example

? Woody 2000: Construction, Startup, and Control (Add (Add (Add Introduction The Custom Woodworking Company, a small to medium sized firm engaged in custom furniture and cabinet making, is headquartered at Industrial Estates, Someplace, BC (Max’s Project Management Wisdom, n.d). The company commenced its operations in 1954 and currently deals in furniture sub-contract works, supplying and installing counter-tops, cabinets, and other fixtures. This paper will critically analyze the ‘Project Woody 2000’, which was one of the remarkable steps of Woody in its business expansion strategies. Project Analysis From the case context, it is clear that Woody adopted a reimbursable contract for addressing the ‘Woody Project 2000’ (Max’s Project Management Wisdom, n.d). However, the contractor could not deliver original Woody 2000 project requirements. Although Woody’s management agreed to pay a total sum of $17 million, Expert Industrial Developers (EID) found this sum insufficient for completing the project successfully, and hence EID agreed to undertake the contract on a reimbursable basis. There were other contracting alternatives open to the organization, including lump sum, guaranteed maximum price, and unit cost contracts. Among these, lump sum contract was not suitable for Woody since the company was not ready to pay $20 million, which had been the cost estimated by the EID for the successful completion of the project. Here, the unit cost contract also could not be used, since it was not possible to calculate the total value of the contract on the basis of multiplication of identical units of work done by a fixed unit cost. Therefore, I strongly believe that the guaranteed maximum price contracting option would be best for the company to work on the project. The guaranteed maximum price contract can be considered as a combination of lump sum and cost plus fee contract. Under this contract, “the owner is protected by the guarantee of a maximum price and yet receives the benefit of any realized savings” (Jackson, 2010, p.113). While practicing this contracting option, it would be advisable for Woody to share any cost savings with the EID in order to foster the contractor to work as efficiently as possible. The diagram given below indicates the Woody’s current project organization chart. The chart clearly indicates that the project was performed on the responsibility of Woody’s VP financing and administration head, Spencer Moneysworth. However, he alone could not handle such a huge project, and hence he sought the assistance of Ian Leadbetter, an engineer skilled in programming semi-automatic manufacturing machinery. Evidently, Leadbetter should not have been left to run the project, because he had insufficient project management experience. If he possessed proper training, Leadbetter could develop better project management skills and thereby complete the project within stipulated time and cost frame. The project should have been properly communicated to production people, as they knew more about the actual needs of the concern. If Woody’s management had involved production people in the project, it would have been completed successfully. The project development manager should collect periodical information from production workers once the project is executed. A good baseline plan would have aided Woody to make up time. A good baseline plan would particularly set time frames for completing each chapter of the project and there would not be any delay in finishing different project phases (SCVF Project Management, 2012). Furthermore, a potential baseline plan would effectively distribute the project work among project team members, and hence each individual would get a clear view about his duties and responsibilities. The following responsibility chart would suggest some potential strategies for ensuring effective control over the project. According to this chart, the organization should not allow Leadbetter to run the project. Leadbetter must be assigned with the responsibility of hardware development only. Similarly, Miles Faster should get more involvement in the project, as he is able to define Woody’s production needs properly. It would have been better for the Woody’s management to limit the scope of the project when it had been identified that the project would not meet its schedule. As per the view of Heldman (2011), the organization should have maintained project records such as memos, correspondence, and other documents regarding the project, and these records must have been kept in a project notebook, project website, or CDs. It seems that EID’s first price ($20 million) was higher than what was expected ($17 million) by the Woody’s management. The EID’s quotation price was so high because the firm thought that Woody’s would need increased assistance with their project planning; in addition, the EID made provisions for a number of uncertainties (Max’s Project Management Wisdom, n.d). The EID’s quotation price seems reasonable since such a huge project was most likely to face numerous unforeseen contingencies. The case study clearly indicates that Woody knew they were in trouble with over-expenditure only when the time to get the plant into operation came two years after the launch of the project. As a result, actual expenditure exceeded the budget and costs of delays in project completion were charged to Woody’s account (Max’s Project Management Wisdom, n.d). Eventually, the company lost its control over the project and was forced to raise huge amount of additional funds to get the plant operational. In order to avoid those issues and to ensure effective cost control, the project budget and expenditures should be clearly set out on the ground of different project phases’ duration. The following flow chart illustrates necessary processing changes that should have been made to control project costs and to complete the project successfully as planned earlier. The case context reflects that EID handled their risks by undertaking the project based on a fully reimbursable contract. “Under this arrangement EID would be paid an hourly rate covering direct wages or salaries, payroll burden, head office overhead and profit” (Max’s Project Management Wisdom, n.d). Through this contract, EID could avoid its risk factors to a great extent. The company never expected that the project expenditures would overrun the project budget. In addition, Woody did not think that its project development process might adversely affect the firm’s productivity and customers’ loyalty. The company should have allotted adequate financial resources to meet such unexpected contingencies and thereby keep the business running despite disruptive events. The project greatly changed the way Woody operates, and hence the company could not deliver it products in time. Admittedly, this situation seriously affected the organization’s market stature. Conclusion From the above discussion, it is clear that unplanned and uncoordinated project development process negatively impacted Woody’s overall business. Lack of change management practices also contributed to the failure of the project. References Heldman, K. (2011). PMP: Project management professional exam- study guide. Indianapolis: John Wiley & Sons. Jackson, B. J. (2010). Construction management jump start: The best first step toward a career in construction management. Indianapolis: John Wiley & Sons. Max’s Project Management Wisdom (n.d). Project Management Case Study: The Custom Woodworking Company-Woody 200 Project. Retrieved from http://www.maxwideman.com/papers/woody2000/control.htm SCVF Project Management. (2012). Problems with Woody Project: Problems with plan. Retrieved from http://scvfprojectmanagement.wikispaces.com/Problems+with+Woody+Project Read More