Management of Custom Wood Working Company - Case Study Example

Engineering Project Management Project Management Methodology 1. Introduction/Background The selected project management case study involves a real-life project for small-to-medium sized Custom Wood Working Company in Vancouver, Canada in year 2000. As a custom furniture and cabinet maker with main office in one Industrial Estates, the company gained their reputation from well-designed and finely constructed furniture. Due to major airport expansion and free trade opportunities, the company decided to expand and construct an additional more modern manufacturing plant with computer controlled facilities. The agreed budget for the plant expansion is $17 million with construction time of about 18 months. The project was headed by the company’s VP for Finance and Administration who hired a new Project Manager, a mechanical engineer with no project management experience and understanding of project life-cycle and control concepts, based on his close-friend’s recommendation. There was good progress during the initial phase of the project until everyone jumped to the opportunity to get involve and decide for the project. The following sections describe the project methodology used in the Custom Wood Working Company plant expansion project, discussion of the key stages of the project, and analysis of the success/failure of the project in terms of project management. 2. Project Management Methodology The project management methodology used in this case study somewhat resembles traditional project management such as PMBOK schedule and project deliverables are developed, activities planned, quality standards set, and cost of project estimated (Saladis & Kerzner, 2011, p.80). Moreover, analysis of the case study suggest that project management did set the objectives during the planning stage and stated problems that needs to be address similar to PMBOK guidelines. However, there seems inadequate project monitoring and control which is an essential element of the project management process (Saladis & Kerzner, 2011, p.93) as evidenced by several failures and unwanted results. For instance, there was construction planning and cash flow but they were not monitored and eventually failed due to lack of control in the design and construction process (Wideman, 2002, p.1-10). Moreover, the project management methodology employed in this study is definitely not structured project management as PRINCE2 since it did not employ the fundamental principles of project management such as requisite activities, management deliverables, and associated responsibilities (Hedeman et al, 2010, p.9). According to PMI (2008), an effective project manager applies knowledge, skills, tools, and techniques in order to accomplish and meet the requirements set for the project (p.6). Similarly, PRINCE2 also recognized that in order to succeed, the project manager himself must be fully knowledgeable of project objectives and able to monitor and control consistency in project delivery (TSO, 2009, p.5). Moreover, since the Custom Wood Working Company plant expansion project was headed by individuals with limited knowledge of project management concepts, the project was not run sensibly as PRINCE2 required. This is evidenced by the fact that the project management method was not fully implemented while the project environment was filled with confusion and unprofessionalism (Hedeman et al, 2010, p.9). In PRINCE2, project management functions are not shared and tailored to the need of specific project (OGC, 2009, p.34). In contrast, there were actually two project managers in the Custom Wood Working Company namely the VP for Finance and Administration and the newly hired mechanical designed turned project manager at the design phase (Wideman, 2002, p.4). Moreover, since it is very likely that the project life cycle was not considered due to inadequacy of knowledge about it, risk management as required by PMBOK from project initiation to end (Stackpole, 2010, p.96) was not handled correctly as evidenced by the emerging and unresolved problems in the later stages of the project (Wideman, 2002, p.1-10). Although there were significant efforts devoted in the planning stage of the project, the project management approach used in the case study seems missing some important planning technique such as critical path as specified in the PRINCE2 process model (Harrington, 2006, p.18). For instance, there was no indication that modifications in the production equipment design were questioned despite its clear and direct impact on the design and length of the new plant. Moreover, there were already some problems in the early stages of the project but there was no evidence to suggest that work schedule was adjusted or modified. Moreover, according to Wideman (2002), even during the project’s near completion, the two project managers never attempt to prepare any meaningful planning for completion or order any inspection, testing, dry-running, and owner acceptance procedures (p.5). 3. Stages of the Project In the early stage, the Custom Woodworking Company plant expansion projects seem to be in the right track following traditional concept of project management. For instance, early in the proposed expansion, the company with its board of directors and key personnel conducted a feasibility study, discuss the project concept, and agreed on the scope and cost of work. In fact, they even name the project as “Woody 2000” and assigned the VP Finance and Administration officer to take the lead (Wideman, 2002, p.3). In the planning stage, the appointed lead manager discussed the project with the prominent contractor in the industrial estate and developed a monthly cash flow. Here, the 18 months project schedule was agreed including the cost of design, engineering, procurement, construction, and commissioning (Wideman, 2002, p.3). During the design phase, design of semi-automatic manufacturing machine commenced with good progress while necessary production line control was developed. However, management took the mechanical designer out of his design responsibility and assign project management responsibilities regardless of the fact that he has no experience and knowledge of project management concepts. Moreover, other key personnel took the opportunity to insert their own scheme into the design of the plant resulting to significant changes in the original work and errors that must be corrected using considerable man-hours (Wideman, 2002, p.4). Although the shop drawing contractor was aware of the standard review and approval procedures for specifications and drawings, none of those taking the lead including the project manager was conscious of their responsibility. Consequently, the delivery and construction schedule was delayed by two weeks and created several conflicts particularly in the delivery of other services (Wideman, 2002, p.4). The construction phase started with site clearing operation with no difficulty but after eight months some major problems began to emerge as changes in the production equipment resulted to the need to expand the length of the building by at least 5 feet. The problem was discovered late and after the perimeter foundations were already done. The problem was further compounded by the project manager when relationship between key personnel managing the construction was strained by the Custom Wood Working Company’s project manager directly dealing with the mechanical sub-contractor instead of the main contractor’s project manager. Another is the demand from the local inspection authority to upgrade the surplus paint disposal arrangement as it the existing one does not meet the latest environmental standards. Consequently, production was delayed by several weeks while customer delivery dates were missed. Some general contractors cancelled their contracts, inventories were depleted, and significant sales opportunities were lost (Wideman, 2002, p.5). 4. Analysis of the Project The Custom Wood Working Company’s plant expansion project started in the right direction but the owner did not realize the implications of letting the VP for Finance and Administration taking over project management. Although some idea about project management were there, it is certainly not enough to succeed. For instance, there was indeed a project feasibility conducted including cost and target date of completion. There was planning and consultation with experts in the field of industrial development. Cash flow chart was produced and there was a plan to monitor expenses and preparation for contingencies. There was a work schedule prepared by the contractor who also offered some assistance in project planning. Analysis of the case study seems to point to one specific problem which is project management failure. It is important to note that there was an attempt to employ established project management methodology such as PMBOK but was implemented erroneously due to lack of project management experience and knowledge project life cycle and concepts. Moreover, the appointment of two project manager as discussed earlier directly violates the principles of PRINCE2 which was consequential to the numerous problems encountered later in the project. For instance, the first project manager made an error when he decided not to consult the production people during the planning stage. This error eventually leads to numerous delays due to discrepancies in design and construction. According to Schwalbe (2010), one of the most important skills of an effective project manager is the ability to recognise the importance of people and leadership. Effective managers often demonstrate exceptional leadership and management skills particularly when building teams and long-term goals (p.24). This is because project management is about working with people because it is them who actually get things done (Field & Keller, 1998, p.225). He also made another mistake appointing a mechanical designer as second project manager despite the fact that the latter knows nothing about project management. Eventually, poorly informed project managers led the project in the wrong direction causing not only delays in completion but project overrun with expenditures exceeding the budget when the project was just 85% complete (Wideman, 2002, p.5). The importance of project management methods came into view when people’s attitude and the way some people do things prevent successful completion of a supposed simple plant expansion project. The project starts out without full knowledge of project management and its associated processes and eventually suffered the severe consequences of project overrun and customer dissatisfaction. The owner never realised the importance of hiring an experienced project manager who knows the reality project management and its relationship with construction projects. Evidently, it was the VP for Finance and Administration and the mechanical designer turned project manager who actually under estimated established project management method like PRINCE2 and PMBOK by confidently assuming that these methods can be played around. For instance, it never occurred to them that plant construction should reflect the changes in the design and specification of the production train. They are also unaware of the review and approval procedures for specifications and shop drawings and the implications of schedule conflict to the timely completion of the project. Overall, if similar project will be manage by a competent project manager using established project management methodologies; the result will be completely different. Following the principles of structured project management approach as in PRINCE2, the focus of the plant expansion project will be on the process and the management aspects of the project (Hedeman et al, 2010, p.9) rather than considering the innovations proposed by the VP for Finance and Administration. The owner should have considered at least PMBOK’s project management processes particularly in the area of risk management, monitoring and control, planning, quality assurance, time management, and quality in the project environment (Harrington, 2006, p11). 5. Conclusion The case study is a real-life project with real consequences such as project overrun and expenditures beyond owner’s expectation. The $17 million budget reached more than $20 million excluding production delays, late deliveries, and dissatisfied customers mainly because of poor project management. Despite some idea of project management methodology, the appointed project managers failed because they lack the experience and knowledge of real project manager. They do not understand project management concept and project life-cycle, procedures and processes, and so confident that they will succeed without careful planning and management. The owner of the Custom Wood Working Company failed to realised the importance of focusing on the project management aspect of the plant expansion and eventually suffered not only financial losses but diminished reputation. The project could have been successful if it followed the correct project management procedures as stated by either PMBOK or PRINCE2 but this never happened because there was no consideration given the project management aspect of the project. In fact, the ability of the VP for Finance and Administration and the mechanical designer to handle a multi-million project was never questioned and allowed up to the very end of the project. 6. References Harrington H, (2006), Project Management Excellence: The Art of Excelling in Project Management, Paton Professional, UK Hedeman B, Heemst G, & Fredrikz H, (2010), Project Management Based on PRINCE2, Van Haren Publishing, UK P.M.I, (2008), A Guide to the Project Management Body of Knowledge- PMBOK Guide 4th ed. Project Management Institute, ANSI, US Saladis F. & Kerzner H, (2011), Bringing the PMBOK Guide to Life: A Companion for the Practicing Project Manager, John Wiley & Sons, US Schwalbe K, (2010), Information Technology Project Management, Cengage Learning, US Stackpole C, (2010), User’s Manual to the PMBOK Guide, John Wiley & Sons, US TSO, (2009), Managing Successful Projects with Prince2 The Stationery Office, UK Wideman R, (2002), Project Management Case Study: The Custom Wood Working Company- Woody 2000 Project, AEW Services, Canada Read More