Project Management: Work Breakdown Structure, Project Planning, and Risk Management - Case Study Example

PROJECT MANAGEMENT WORK BREAKDOWN STRUCTURE PROJECT PLANNING RISK MANAGEMENT WORK BREAKDOWN STRUCTURE The WBS has been summarized in theorganization chart keeping in mind some factors like: The WBS is a high level overview that can be broken down into smaller and smaller package of work until the Project Manager achieves the level of granularity that he/she wants. This granularity is to be obtained keeping in mind the realistic scenarios. For e.g. the first level of the WBS described above is the same as the project life cycle, Requirements, Design etc. The next levels of the WBS are broken down based on the work packages that are to be assigned to the team members. The packages must be designed in such a way that the deliverables are met. In a way, the WBS is the foundation of the project. The time and cost of the project are defined in terms of the work packages and estimated accordingly. The WBS and its Advantages in Project Planning Work Breakdown Structure (WBS) is a method used for dividing the project into small work packages, activities, and tasks. It is used to organize projects into systems, subsystems, discrete blocks, or summary reporting levels (Wysocki et al., 2003, pp. 135). Organizing project work into groups or categories originally falling into other groups or categories can generate meaningful reports on project activities, workflow, and task statuses. It is one of the most important tools used by project managers for project planning. Some of its advantages are the following: 1. It provides a complete list of project activities; 2. It defines a clear-cut responsibility of project team members; and 3. It provides a classification system for project work packages according to client needs. Work breakdown structure – by Discipline The above is a representation of the WBS according to the discipline. Work breakdown structure – by Phase The above chart is a representation of the Work Breakdown Structure (WBS) for the project. It represents a high to medium level summary and it can be refined further. A Case Study of Project Planning: Electrolux’ Refrigerators and Vacuum Cleaners Electrolux Group is considered the world’s largest manufacturer of appliances. It is the market leader in Europe and the third largest producer in the United States (AB Electrolux 2000 in Jerrard et al., 2002 pp. 11). Electrolux defined its core business areas into two in 2000, specifically consumer durables and professional products. Consumer durables consist of white goods, floor-care products, light-duty chainsaws, and garden equipment, while professional products include leisure appliances, chainsaws, food service and laundry equipment, landscape maintenance equipment, power cutters, and trimmers. The planning and design management processes of the business affect its size and complexity (Jerrard et al., pp. 11). Consumer durable products are mainly consisting of white goods such as refrigerators, cookers, freezers, air conditioners, and washing machines. Refrigeration products include brands such as Electrolux, AEG, Frigidaire, Kelvinator, Zanussi, and White Westinghouse, which are designed and manufactured in several European countries for world market. Electrolux Group’s new product development for industrial design consists of baseline procedures involving designers, practical use of products and retailers, product generation plan, and technology generation plan (Ibid, pp. 12). On the other hand, new product development for product category management involves team approaches across the division, ‘ideas’ internal market, and product generation plan (ibid). Prior to CPO, management time spent was approximately 5 percent of total management input into the project from the phase of specification to market launch. The industrialization and production phases expended 60% of total management time, while 35% was allocated to marketing. This description is said to be incorporated in conventional new product planning practice, which is however linked to perspectives in broader business strategy. Electrolux Group adopts the concept of primary development in its products, which refers to “the systematic testing of new technologies, production methods for the eventual creation of new and next generation products, production processes, and marketing” (ibid, pp. 16). Electrolux is aware that primary development projects are extremely varied and have a high degree of uncertainty, and it is because of this that these projects cannot pose as a sequential part of product developments working towards a fixed launch date. In planning a project for a new product concept of refrigeration and vacuum cleaners, Electrolux starts with development of new components and new technology, which has to be supported by conducting material research. From these, market scenario has to be considered along with general customer research from which new production processes will take place. Design concepts are undertaken with studies of new sales or distribution concepts alongside ascertaining particular standards (Britton 1993). In project planning, the primary development projects of Electrolux include support business strategy, which corresponds to an appropriate and logical extension of the Electrolux business strategy, complementing the Electrolux statement of vision and mission. The primary development projects must also be innovative, which should surprise customers in a positive way. Part of the added-value feature of Electrolux products involves the method for reducing production costs, or a strategy that makes people actively choose to do business with the company (Jerrard et al., 2003, pp. 17). Project planning also includes training of the production team, status, and test results, development of the instruction book, and the preparation and initiation of field-testing (ibid, p. 20). Pre-production stage of refrigerators and vacuum cleaners also involves process set-up and market launch. With finalizing preparations for production alongside the market launch details, Electrolux Group prints the instruction book and service instructions that go along each product. The company also ensures the devising of spare parts plan along with obtaining authority approvals. Project planning also involves preparing tools for project evaluation, which is informed by feedback from the market. It also determines how organization and production targets may be followed up. Electrolux Group is aware that the necessary information obtained in the evaluation phase of its product launch aids preparation for the ram-up to full production rates of the project. In its project planning, Electrolux utilizes the life cycle approach in which it estimates that between 80 to 90 percent of its products’ environmental impacts during their life cycles occurs not during the manufacturing or the disposal phases, but during the period that they are being used (Shopley et al., n. d.). It is for this reason that Electrolux Group sees its total approach as the best strategy in achieving its vision even during its planning stage. It oversees the product life cycle, which includes raw materials processing, refinement, usage, and recovery (ibid). This process starts with suppliers up to the adoption of value-adding process, which includes wastes and emissions. Electrolux incorporates the integration of the environment, began even during the planning stage, into its management strategy, alongside decision-making options that its employees take pertaining to the total life cycle of the products, such as refrigerators and vacuum cleaners. It is for this reason that the company has committed to ISO 14001 in 1995 with its goal to fully integrate ISO into its business planning strategy and implementation in order to make its products more sustainable. By using the frameworks of its Integrated Product Development Process (IPDP), it is able to deal with environmental questions, as IPDP provides tools in systematically incorporating environmental factors into their work (ibid). The Importance of Risk Management in Any Project A risk management plan has to be drawn up before the project starts and should be reviewed periodically. The following are some of the risks that are associated with this project: Scope: The scope of the project must be defined upfront and any changes to scope approved by all the stake holders and with due benefit to the consultant so that no one takes a financial hit. Business objectives: The business objectives must be articulated clearly so that your company does not end up with something that they did not want or needed Technical: Lack of technical know-how can impact the project Human resources: Attrition among the staff can result in an adverse impact on the project Co-ordination: Improper co-ordination and vaguely defined roles and responsibilities is another risk Software and technology risk Apart from the lack of technical know how, there is a marginal risk associated with the technology and software in terms of compatibility and interoperability Risk assessment The risk management plan for the project would be having the following items listed as potential risks and their mitigation plans: Resource risk: divided into two components in terms of knowledge acquisition and attrition risk. The first component is mitigated by training and knowledge sharing and the second component is mitigated by documenting the processes and knowledge management Scope creep: Any changes to scope must be approved by all the stakeholders with costs to be shared. Variance: Any variance in the budget due to time, cost or quality constraints (the “triple constraint”) should be dealt by all the stakeholders. This is to be done by regular status reporting and identification of potential issues to be resolved by the various stakeholders Technology: Any change in technology would pose an immediate risk to the project and it should be ensured that proper technology is selected for the same. Risk management is a structured approach in the management of uncertainty related to a threat, which involves risk assessment, strategies development, and mitigation of risks with the use of managerial resources (De Loach 2000). The threats generally involved in risk management are those caused by technology, environment, humans, organizations, and politics. Risk management is important because it enables the transfer of risk to another party, avoids the risks, and reduces its negative effects (ibid). Risks directly reduce cost effectiveness, profitability, quality, service, reputation, brand value, and earnings quality. Thus, without an effective risk management, an organization might succumb to downfall and might not persist in the global competition. It is for these reasons that companies should utilize risk management in their system and must give an important focus on this process. The Non-Accidental Release Program of the Association of American Railroads: A Case Study of Risk Management The Association of American Railroads (AAR) represents the North American railroad industry alongside advocating the interests of railroads in American public policy. By conducting research and facilitating the exchange of information among railroads, shippers, and customers, the AAR enables the railroad industry to become safe, productive, and efficient (ICF Consulting 2000, pp. 4). The Non-accidental releases (NARs) are concerns of the AAR because NARs can produce operational deficiencies that have the potential to lead to large-scale accidents or releases if left unchecked or unmonitored. Consequently, NARs can be a concern of employees, the environments and the customers because of the risks it can potentially pose on their safety. Further, NARs can cause cost risks for the railroad industry, which may be causes of shipment delays, employee injuries, environmental clean-up fees, and even evacuation events in some cases. The AAR was able to prevent the occurrences of all mentioned risks by modeling its NAR program after a very successful Canadian NAR program, significantly resulting in 32% decrease in tank car. It also established the US NAR prevention program in 1995 in a pursuit to decrease the frequency of NARs in the United States. It has commissioned the services of railroad industry Haz Mat experts in its AAR Haz Mat Committee, which leads the U. S. NAR Prevention program and organizes Haz Mat handling training sessions (ICF Consulting 2000). In its risk management strategies, the NAR Program aimed to reduce the frequency of NARs throughout North America by 25 percent by 1998 and 50 percent by 2000, with 1995 posing as base year of this intent. In order to reach this purpose, the AAR established a NAR committee, as well as a comprehensive outreach program and a performance-tracking system. The NAR committee was involved in important tasks such as program direction, evaluation of results, and assistance in the development of guidance material. The NAR Program acknowledged that to achieve its goals, it must raise awareness among all involved players; thus, it sought the involvement of shippers, car owners, carriers, trade associations, component suppliers, receivers, and regulatory agencies. Thus, the NAR Program activities, which were geared toward achieving its goals for 1998 and 2000, included the following (ibid): √ Raising awareness (workshops for unloaders and loaders, NAR technical discussions and development of educational materials, distributing ‘action packages” to companies that experience NARs, etc.); √ Encouraging improvements (awards for shippers with the lowest frequency of NARs, promoting proper handling of tank cars that carry hazardous materials, etc.); √ Communication of results; and √ Collecting and distributing NAR data The wide range of activities that the AAR conducts alongside the priority given to the NAR Program indicates a risk reduction culture that the AAR has established (ibid). However, it was posited in the case study that the effectiveness of the NAR Program might be limited since non-AAR companies are the ones that carry out preventive actions and the NAR Committee has limited allocated resources with the character of its efforts being voluntary. Action Packages that were carried out represent a good example of NAR Program risk reduction actions (ICF Consulting 2000), but it was pointed out that the company level should also adopt specific risk reduction actions. The NAR Program also utilized strong programs emphasizing on good communication, unique to which is the fact that risk reduction information for NARs are provided to customers. Some of the key observations pointing out to the risk management system that the NAR Program adopts include control points and maintaining appropriate documentation. Control points are areas where application of control may be established in order to prevent, eliminate, or reduce risk. There are some places that may be considered risk control points within the NAR Program, and they mainly occur not within the AAR level of the NAR Program, but at the company. They include design of vents, protection of tank car valves with dome cover, securing tank car fittings, loading procedures, and management commitment. Decisions as to when to provide Action Package, the action steps that require recommendation to the company, alongside follow-up activities with the companies are risk control points. The NAR Project also acknowledges the maintenance of appropriate documentation of all analyses, data, results, decisions, and other information relative to an organization’s risk management system, allowing for room for learning from experience. The importance of proper documentation is seen in the successes or failures traceable to decisions and actions. Significant to this are annual reports published by the AAR, bearing the summary of results of the NAR Program alongside its effectiveness in reducing the potential for NARs frequency. References AB Electrolux, 2000. Annual Report 2000, Stockholm. Britton, G. A. and Parker, J. 1993. An explication of the viable system model for project management. Springer Netherlands. Vol. 6, No. 1, pp. 21-51. De Loach, J. W., 2000. Enterprise-wide risk management: strategies for linking risk and opportunity. Financial Times Prentice Hall: London; Tokyo. ICF Consulting, 2000. Three case studies for the risk management framework for hazardous materials transportation. Fairfax, Virginia. Jerrard, Robert, Hans, David, and Ingram, Jack, 2002. Design Management Case Studies. Routledge. Pritchard, CL, 1999. How to build a work breakdown structure. ESI International. Shopley, Jonathan B., and Ross, Howard B., n. d. Environmental performance and business success: the Electrolux experience. Retrieved from http://www.adlittle.de/downloads/prism/1996/1996_Q4_24-28.pdf. Wysocki, Robert K., Beck, Robert Jr., Crane David B., 2003. Effective project management. Second Edition. Wiley Computer Publishing. Zachman, J. A., 1987. A framework for information systems architecture. IBM Systems Journal. Vol. 26 (3), pp. 6-23. Read More