Project Management and Risk - Case Study Example

Project management/case-study Just as we plan for unforeseen events in our life, Project Managers also need to prepare for uncertainties, affecting their project. All project management skills of a Project Manager can fall flat in the face of uncertainties and unplanned problems. Any project can encounter uncertainties in the form of increased costs, schedule delays and diminished service qualities. Unless tackled, these uncertainties can lead to a major project disaster. The uncertainties encountered during project execution are the potential project risks. Risk can be defined as the possibility of loss. Risk arises due to the inability to achieve objectives within defined cost, schedule and technical constraints. Risk has two components, one the possibility of not achieving a particular outcome, and the second is the result of failure to achieve the outcome. The former is the probability of risk and the later is the loss. So Risk management is a set of action that help the project managers plan to deal with uncertain occurrences. It is through risk management, project managers assess risk and manage to reduce it to an acceptable level. The key idea in risk management is not to wait passively for a risk to materialize and become a problem. The objective of risk management is to ensure that for each perceived risk we know well in advance how to tackle it. In the case study, Jetblue had faced the virtual shutdown of the airlines operations following a Valentine's Day storm in Feb.2007. Due to adverse weather conditions and poor management, airline faced a critical situation, which ultimately had not even put an additional financial burden on its system but also blown away it's hard-earned reputation. Jetblue's immediate problem was to manage the passengers, those back in terminal from the stranded plane, those passengers who are still coming with the hope that they can still get another flight, their baggage management, due to massive cancellations airline could not be able to accommodate those passengers in already occupied subsequent flights and finally broke down in communication due to heavy load on communication lines resulted in chaos. These all-immediate problems combined together created havoc and tarnished the image of the airlines. Now if we analyze the whole case study we will find that these immediate problems are the result of improper/absence of risk management policies in the planning process. Risk management is a dynamic process because it deals with the activities that are yet to happen. Risk management has two folds agenda, first deciding actions for preventing risk from happening and second deciding actions for tackling risk that materialize. Now as a Project Manager, when we are planning any action, apart from other factors, we must gather as much information as we can about potential risks in the project. The project management plans the strategies for avoiding risks or controlling them. Jetblue have the information that as winter embrace the weather, the storm was anticipated by other airlines, which led them to cancel their flights but Jetblue opted to wait out without any proper future planning to deal with the potential risks of bad weather. Due to unprepared ness for potential risks, an airline was not able to deal with the sudden problems. Airline's main problem was its short-term plans without any other alternative options, which cause so many failures in different systems and the problems had occurred continuously one by one, results in mismanagement and tarnished the overall image of Jetblue. Due to unprepared ness of the risks involved in the airline's operations and absence of any contingency planning to mitigate the risks/uncertainties Jetblue faced number of problems. Airlines information system such as reservation system was not able to deal with the extended volume of customer calls. Due to massive cancellations and non-availability of facilities through website the problems aggravated. Navitaries system has been configured for Jetblue to only accommodate 650 agents at one time but in the emergency situation it has been increased up to 950 at the most but at the time of crises airline employs 1500 agents and other off duty crew and airport personnel to attend phone calls from customers. During the crisis period even this management had not proved sufficient. Non-training of staff in different functions aggravated the problems. Non-existence of lost baggage recording and tracking system in Jetblue increased the problems during this crisis situation. Non-availability of any such system exposed and enhanced the problems of baggage management of passengers. Though Jetblue has managed it in the other way but it takes 3 more days to shift the luggage from terminal to other location and then shorting it manually through handheld devices. Due to mismanaged problems and glitch in its Sabre flight control suite, which manages airlines schedules, track its planes and crew, interfaces with the Navitaire reservation system to provide real time information on flight status, fuel information, passenger lists and the revised, estimated and the actual arrival times, and Sabre Crew Track application, also part of flight control suit which tracks crew assignments, fulfills legal requirements, provides pilot and flight attendants which access to their schedule, the whole situation gets worst and by the time it has been rectified in several hours the problems aggravated for Jetblue. Though Jetblue have Skysolver system to solve all these issues but when the emergency occurred, Skysolver was unable to transfer information to Sabre system and the airline had no alternative way but to rectify it and so it takes time and by that time and the damage had already been done. Jetblue do not have any centralized database management system, which could keep track off duty crews and other relevant information so that they could be used in case of emergency such as this. Finally we come to the conclusion after analyzing the whole problem in broader terms that Jetblue do not have any risk management plans in place. All the systems, which have been adopted by Jetblue were of temporary in nature or in progress just to fulfill the immediate needs of the airline. Though the risk has already been identified but the risk analysis had not been done properly. Risk analysis consists of three steps i.e., Risk probability, Risk Impact and Risk factor, Actually in Jetblue, risk probability, factors and its impact on operations have not been analyzed properly and risk has been underestimated. Once the risk impact has been underestimated, one cannot mitigate the problems properly that occurred due to risk or uncertainties and bound to affect the services of the airline. As a project manager, one has to ensure sufficient awareness of the policy and strategy and to include risk management principals to all the planning processes (Johnson and Scholes, 1984). Contingency planning involves maintaining an alternative plan if the original plan fails. The next important failure, the whole system of Jetblue had faced was the non-existence of contingency planning. In the time of crisis when the existing system failed if contingency plans were placed, the crisis could be averted. But Jetblue had rectified or modified the existing system at the time of crisis, which took much time, and in the meantime, problem became out of control. So now based upon the whole problem we have to identify the alternative course of action, which are feasible. The first and foremost course of action should be to motivate the passengers through advertising and sending them messages about Jetblue success in managing the subsequent risky situation due to weather disruptions on Feb. 26 & March 16. This could improve their image considerably and make the customers think that earlier incidence was one time affair. Retaining and generating customer loyalty will be the primary objective of the airline. So in the meantime Jetblue must rectify its immediate shortcomings and put its whole system to work properly. The other alternative may be that management of Jetblue goes through all the present systems in work, to enhance its capacity. Navitaire reservation capacities must be doubled, all the contact information's must be stored and all the channels of communication with staff /crew (on duty or off duty), passengers has to be established and enhanced. Again Jetblue has to develop more and more automatic systems, which could rectify the problems automatically or generate different alternatives to passengers and staffs alike. The next alternative with Jetblue has to develop a long-term mission and vision based on its capacity of finance or capabilities of manpower. Airline has to train its employees/staff in multitasking so that in case of emergency everyone can do anyone's job as and when required. Jetblue has to improve its information system completely. Basically information management and its timely use put airline to an advantage position against to its competitors. Though this alternative needs huge investments and Jetblue being a low-cost airlines, could make it or not has to be evaluated. Another alternative should be to streamline the existing system for the short time period as well as in the meantime airline must start long term planning which must take into consideration of risk management, mitigation and contingency plans. Jetblue was already implementing SAP and ERP and it has to include and plan to provide passengers all the information, which they required through various mediums of communication. Jetblue has to start and equip its website to interact with passengers and crew (on or off) alike. They have to include overall passengers' management services from entry to exit and all the data of regular fliers. Overall management of passengers required reservation, cancellation or extension, baggage management, training of staff on multiple skills etc. Jetblue has to acquire latest technology such as Sabre new system, must have centralized passengers data warehouse system and proactive policy to reach out to the passengers. As we had discussed the above four alternatives now we will try to find out the most feasible option for Jetblue. In my view adopting any short term alternative and planning may lead to a crisis situation at any time in future. First alternative is about enhancing the capacity of existing system, which may solve the problem temporarily. This process may not cost more to Jetblue but for the long-term prospect and service improvement conditions, this alternative is not viable at all. It may not improve the overall image of the Jetblue and customers may not come back again because the act of the Jetblue may not match with what it claims and therefore customer loyalty can not be win back. The next alternative is also about technological improvements and up gradation so that the whole system works properly but the proper man management and customer relationship management is missing. Up gradation and improvement in technological system may cost less but the ultimate benefits to customers may not be so that they could develop loyalties of customers towards the airline. Another alternative laid emphasis on overall manpower planning and information management techniques. Staff has to be developed for multitasking and all the communication channels have to be improved. This requires more investments. As we know that Jetblue is a low cost airlines and generating $2.4 billion in revenue but $1 million loss, so on the basis of their financial position, it is not advisable to make larger investments. Finally I am agreeing to implement the last alternative. We will start with short-term plan with least investment. It may not cost much and solve the immediate problems. Our priorities must be to improve the information system immediately. As we know that SAP and ERP systems are in the process to be implemented. This will enhance the functioning of Jetblue. Our first priority will be to develop company's website and all the information's about rescheduling, cancellation and reservation has to be included. Company's website will have to provide all the information and facilities to its customers. It will cost less and prove more beneficial than any other communication channels. Interactive websites could provide answer to all queries of the customer. The next emphasis of the company will be on enhancing the number of agents from 650 to 1300. Doubling the agents may not cost more to company but it can provide more benefits to the company as well as to its customer through smooth reservation, cancellation or rescheduling system. Next step will be to create a centralize database management system which may not cost more but have tremendous benefits. Airline had entered into agreement with Lufthansa to purchase luggage management system named Bag scan way back in 2003 but never implemented. Now the airline has to seriously negotiate the system with the Lufthansa and also the other companies for the required baggage tracking system available in the market. Depending on the cost and the requirements, Jetblue has to implement the system, which can effectively track down lost baggage. Training to its employees became necessary after the incidence. Company must train its employees to other tasks so that at the time of emergency they could provide their services to other required jobs. Now this alternative provides us the holistic view and solution to the problem and may prevent future problems. Jetblue's CIO with his team of 193 persons has the responsibility implement all information and system development. CEO of the company must take the matters related to training and skill development of staff and crew (on or off) with the person related to Training & development. If the company does not have any training wing, it will outsource it to a reputed consultant who has similar kind of experience. Again the main reason of the problem of risk management and mitigation of risk remains. So CEO and all other Sr. management personnel's, who are entitled to take decisions must analyze the potential risk involved in operations and find out the way to manage it. Long term strategic planning using different management tools such as SWOT (strength, weaknesses, opportunities and threats) and PESTEL (political, economical, social, technological, environmental and legal) analysis put them at the advantageous position and help them to see the uncertain risk before it could happen. Once the risks have been identified, the risk mitigation plan and the second best alternative plan has to be devised so that in the time of emergency contingency plans could be adopted. CEO has to devise a well-planned campaign to improve the image of airlines through highlighting its achievements, risk management, and special features, which have been added for safe and comfortable journey. Initially within one to three months period all the staff and executive must work to complete the continued projects like improving websites, implementing completely ERP and SAP systems, enhancing the number of agents space to double, implement baggage lost tracking system and cross training of staff. All this improves the performance of the airlines immediately. Again we have to put an evaluation mechanism that time-to-time evaluate the progress made by the airline in improving and implementing the different systems. The first evaluation process has to be done at the end of first month and if the rectification will be required CEO will again issue the new directions and timetable to implement. The whole evaluation process must be monitored directly by the CEO of the airline so that he could monitor the progress time to time. If possible a separate wing could be formed specifically to look into the whole process of revamping or restructuring and to evaluate time to time. If the airline could bear the cost, later on an outside agency could be contracted to implement and evaluation of the whole process because as we had seen that most of the processes in the airline were outsourced. ***************************************************************************************** References: Johnson, Gerry and Kevan Scholes, Exploring Corporate Strategies, Prentice- Hall International Inc.: London. 1984. Read More