Introduction
In the course of assessing the project execution and the issues which led to its failure, W.
Easley Associates encountered many issues on the search for information. However, we
managed to extract sufficient information about the course of events by conducting
interviews with various staff members to write a report on it.
At the cu
ent state, Pointp has cancelled the contract with Indubest Inc. according to which
Indubest was to design and produce a valve which should be superior in quality, function and
cost competitiveness. The work has been finished to 90 percent and Pointp will attempt to
finish the project on its own. This cancellation of contract was induced by a series of issues
which could have been foreseen and, partly, prevented. How it came to these is subject of the
following chapter. Additionally, we will present the underlying scientific theories that have to
e taken into account to fully understand them, and a proposal of how the project could have
een approached as to maximize the probability of a successful outcome.
Project and issue analysis
We will present the issue analysis in a structured way, that is categorized according to the
area in which the problems arose. The three areas we define therefore are the following: the
project concept and planning process, which stand at the very beginning of the project, issues
in communication and people management, which also addresses issues in leadership, and
lastly the use of control and performance measures.
The project concept and planning process
The first potential for problems was set very early in the process. After deciding to outsource
the development of a product, it is crucial that the proposal is chosen very diligently. In its
fixation to keep costs low, Pointp choose to give the valve project to the company with the
lowest bid. Indubest, however, had no prior experience with industrial water valves. This is
not an exclusion criteria on its own, but it does make a diligent and cautious proposal
selection all the more important. In the preparation of the proposal, however, there were two
problems.
Firstly, the proposal was written by the marketing and sales department with no input from
the research & design department or engineers whatsoever. Only later was the project
assigned to engineers, namely Joe Blog as the project leader. At this point, the team started
esearching the water valve market and dividing the project into phases and work packages,
which were then used to prepare a Gantt chart. Unsurprisingly, the more detailed project
evaluation led to the conclusion that project costs had been substantially underestimated.
Also, a good baseline plan would have helped to show that the project would not meet its
schedule. These steps should already have been undertaken before the first project proposal,
as they are crucial for a realistic project estimation.
Secondly, the time and cost estimates were based on standard tasks and work packages from
older projects. Since every project is different, and specially this project was different from
other projects Indubest had conducted earlier, this was an indicator that the estimates were
not founded on a solid basis custom to the particular project. Pointp would have been strongly
advised to ask for another proposal to which relevant engineers had contributed, to estimate
costs and time requirements more accurately. Pointp should also have asked for a detailed
schedule and cost
eakdown to understand the estimates better themselves and ask fo
improvements accordingly.
Communication and people management
For a functioning collaboration between two partners, a good communication is crucial. It
allows for feedback, asking questions in case of uncertainty, and aligning common goals.
However, in the present case there were some issues in the communication which led to
misunderstandings, dissatisfaction on both sides, and ultimately a waste of money and time.
One example of how communication failed to support a successful collaboration was the
development of a prototype. The proposal description was very vague, which led to the
misunderstanding in the prototype’s scope. While Pointp expected the prototype to be
virtually finished, Indubest was of the opinion that a simple working model to show the
functionality would be sufficient. As is the nature of a misunderstanding, this was not one
particular party’s fault, but still it could have been prevented. On the one hand it was
i
esponsible of Pointp to draft the proposal so vaguely, leaving room for misunderstandings,
on the other hand Indubest could have and should have further inquired details if they thought
that the proposal was vague. This misunderstanding led to a waste of time and money in two
ways: First, the prototype had to been
ought up to Pointp’s expectations. Afterwards,
Indubest proceeded making production-ready models without consulting Pointp first. If a
collaboration is to be successful, such an important step cannot be undertaken without
consulting the partner first and waiting for their response. Due to this overhasty behaviou
even more time and money were spent, as it was later decided that the prototype was not
production-ready yet.
The misunderstanding in the prototype’s design was not the only issue in communication.
Various Indubest engineers reported they felt stressed due to Pointp constantly emphasising
the importance of both low cost and functional superiority in the valve design, while at the
same time demanding speedy, low-cost development process. This led to a pressured and
stressed working environment counterproductive to these goals. Pointp should have been
more open at this point to feedback from Indubest engineers, who told him that it was
possible to obtain the desired degree of functionality and cost competitiveness, just not at the
desired development speed and cost. If both parties could have communicated openly with
each other, their goals might have been better aligned and they could have been saved from
disappointment.
Another question which must be asked in the context of communication and leadership is
whether the responsibilities in the project were well defined. Joe Blog was the project leade
on Indubest’s side and clearly known to be in charge. On behalf of Pointp, is was not quite
clear to us who was in charge, but it seems to have been the president himself, Ulrich Fitch.
Due to a lack of contrary evidence, we are to assume that he functioned also as the project
esponsible. However, it is not apparent whether the two people responsible on both sides
communicated as often and as thoroughly as they should have. Pointp’s reaction to the
ewritten project proposal by Joe Blog, which indicated that the costs had been considerably
underestimated, is unclear. However, an open communication about such a point is
imperative to decide on further procedure. We must assume that all the communication
etween the responsible people on both sides happened as it should have.
Nonetheless, Pointp’s employees blame Ulrich Fitch for introducing the “new unnecessary
valve”, which indicates that he is personally held responsible for the project’s failure and
attests him a lack of leadership qualities.
Control and performance measures
The last aspect we assessed regarding the project execution were control and performance
measures. Controlling the progress of the project during its execution is as crucial to a
project’s success as is the preparation phase. From the interviews we conducted it can be
infe
ed that throughout the project, the design concept, work tasks, and schedule were
changed frequently. Indubest also had to ask Pointp for additional funds four times.
Normally, this should not be the case if a good baseline plan was made. However, not only
was the original project plan not reliable, but also Joe Blog’s plan, which was considerably
etter, needed to be updated frequently.
To better track and monitor the project’s processes, key success measures should have been
measured and observed over time, for example by applying the Earned Value Management
(EVM) method. From what we can infer from the staff interviews, it was omitted to perform
such measurements. Only after cancellation of the contract was established that 90 percent of
the work required was completed and that the production cost of the new innovative valve
would be 50 percent higher than had originally been anticipated. Apart from that, no
measures were recorded whatsoever. If they had, this could have had an effect on the
continuation of the project. If, for example, it would have been obvious that there was a big
discrepancy between the earned value and the planned value early in the project, this could
have been an indicator that the project would exceed the original costs by far and Pointp
might have decided to abort the project sooner to save time and money. Or they might have
decided to give Indubest more time for developing the valve, trading the fast completion of
the project for lower costs.
Managerial theories to conside
We have discussed issues that arose during the project execution as well as their causes. To
etter understand the underlying scientific background, we will now take a closer look at the
explanations that some management theories can give us regarding the issues encountered.
Leader-participation model (Vroom & Yetton, 1973)
In the project concept and planning process we saw the problem that the proposal was written
y the marketing department without involving engineers in its creation. This is a
shortcoming of the decision makers in the marketing department and sheds a bad light on
their leadership qualities. According to the leader-participation theory, a leader must adjust
his behavior to the task structure at hand. Since Indubest did not have prior experience in the
field, the project proposal was a non-routine task. A group-based decision procedure should
have chosen in which the relevant engineers for the project could give their opinion. Thei
participation would have increased the decision acceptance, which in turn increases
commitment and effectiveness of action.
Goal-setting theory (Locke & Latham, 1990)
The development of the valve prototype was a very challenging yet achievable goal.
According to the goal-setting theory, this combination will usually result in highe
performance, but not so in the present case. Other important prerequisites, which were not
fulfilled here, are that the goal has to be specific and accepted. You could say it was neither:
the proposal description was very vague and the engineers felt rather pressured, being fa
from em
acing the goal. A participation in the goal setting on the other hand would have led
to a higher commitment, which would have been very favourable - but was neglected.
Fiedler’s contingency model (Fiedler, 1981)
The negative consequences of the stressed atmosphere in which the engineers were
developing the prototype can also be explained on the basis of another theory: Fiedler’s
contingency theory. It states that a group’s performance depends on how well the leader’s
interaction style is matched to the favourableness of a situation. A situation is most
favourable if the leader-member relationship is good, the task is highly structured, and the
leader has a strong position power. However, in the present case the task description was
ather vague and therefore unstructured, and due to