PROGRAM INITIATING case studies in project program and organizational project management
270 CASE STUDIES
CHAPTER SUMMARY
Name of Case Area Supported by Case
Case Type Author of Case
Business That Operated Without Knowing Where
Its Profits Came From Program Financial
Framework Critical Incident
Dragan Z. Milosevic, Peerasit Patanakul, and
Sabin Srivannaboon Mega Security
®
Program Selection Critical Incident
Sabin Srivannaboon
271
Business That Operated Without Knowing Where Its Profi ts
Came From
Dragan Z. Milosevic, Peerasit Patanakul, and Sabin Srivannaboon
CALLING IT QUITS?
Mathew Nordica became a vice - president of new product development NPD of Coastline Software COS three years ago when he was recruited for this position
from a large electronics company. For all the three years, he has been trying to make what he calls “ time - capture ” be part of COS ’ s NPD practice. In the long
run, he wants all of his engineers to apply the same practice as a standard proce- dure used in the company. However, after the battling long and hard, he is ready
to call it quits. However, he has suddenly received the help from someone whom he never expected — Pete Pitt, the CEO of COS.
BACKGROUND
Coastline Software is a market leader in construction project management soft- ware with annual sales of 62 million. COS was a program - driven business, so
all of its income came from executing programs. Unlike in the early 1990, when COS ’ s programs redefi ned the industry putting out an array of the trail - blazing
software products, the beginning of 2000 brought only the software improvement programs. It looked like COS ’ s engineers ’ imagination dried out, fi nding them-
selves without big ideas. It didn ’ t go unnoticed in the industry. So, COS became a takeover target. At least, rumors had it so.
COS FOR SALE
Rumors were ceased when CEO Pete Pitt formally announced in the Board meeting that he was shopping COS around. To make COS more attractive for sale, Pete
developed a list of improvements that managers of COS had to make. Mathew, like
272 CASE STUDIES
others, got his share of improvements from the list. Among the rest, Pete wanted Mathew to make the “ time capture ” part of his NPD department.
Currently, for every new program, NPD would have to prepare a so - called program brief, in other words a business plan. The plan goes to the Product
Approval Committee PAC which selects the program proposed in the program brief or turns it down. They do that on the basis of the program brief elements
that show how to:
Integrate the operating functions within a company in the program Align the program with COS ’ s business strategy
Tame the fuzzy front end of the program Manage complexity
Accelerate time - to - money Predict the program ’ s software sales
THE TIME CAPTURE
While all this is fi ne, it is not enough. During and after the program implementa- tion, there is no time capture whose job is to collect person - hours of all program
participants. Multiplied by an hourly rate, the person -
hours would yield the actual labor cost of the program. Without the prediction of this information in
the program brief, PAC does not know the accurate, predicted profi tability of the proposed program in the brief when they select a program. So, often they
choose the wrong programs. What is worse, with the lack of the time capture, no one in the company could tell whether a program really made or lost money.
Mathew knew that he could tell his people outright that Pete ordered the time capture to be implemented. But he wanted to use that as a last resort, even though
his people resisted for a million reasons the concept of time capture for years. Mathew wanted them to understand that COS can no longer operate as a business
without knowing where its profits came from. He wanted them to truly appreciate the time - capture function. And more importantly, he wanted everyone ’ s buy - in,
rather than forcing them to do whatever they were told.
Although things seemed fine at the moment, the lack of time capture in fact could greatly jeopardize the company position in the long run. Mathew could
foresee the potential disasters if his people continued to resist the time - capture idea. So he ’ d been thinking about a way or two to introduce the time capture. And
he knew he did not have much time left.
Discussion items
1. What are the consequences for a business if it selects programs without
knowing their estimated profitability? 2. What are reasons for people to resist time capture? Are any of them justified?
3. What is a good way to introduce time capture?
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273
Mega Security
®
Sabin Srivannaboon
JAMES DUFF AND HIS NEW JOB
James Duff has just accepted a position of Program Manager at Mega Security
®
, one of the leading safety equipment manufacturers in the southeast region, and a
well - known importer and distributor in the country. After spending more than fi ve years working as an engineer at another company on the West Coast, James fi nally
decides to take this opportunity, and turns himself toward a managerial position. He is very excited about it.
Founded in 1980 as a family business, Mega Security
®
has grown in 25 years from a small vendor of seven employees to a well - recognized company of
nearly 2,000. The company products include industrial safety equipment such as protective clothing, eye protection, face protection, head protection, respiratory
protection, and the best - selling items of all: ear plugs and gloves. The company is currently expanding their businesses and is in the process of constructing a new
building, which covers around 20,000 square meters of usable area.
Soon after he started, James was assigned to evaluate the fire extinguishing systems that will be used in the new building. As a result of the company ’ s strategic
plan to fulfill an initiative within a portfolio, the company now focuses on law enforcement and employee safety issues , and considers this effort a program as it
is comprised of multiple related projects that must be managed in a coordinated fashion. James will have to make a recommendation and propose a system to his
senior manager based on the available information. It is important that the right system is chosen. That ’ s the clear message from the company ’ s CEO .
THE MORE, THE MERRIER?
To ensure that he selects the right system, James decided to assemble a program team of selected key personnel including the Finance, Plant, Production, and
Safety Managers, to help him with the decision - making process. James knows that these key personnel have different opinions and they prefer different systems
based on their set of objectives and backgrounds. The Finance Manager once mentioned to him in the hallway that he would prefer a system with the lowest
274 CASE STUDIES
cost possible, while the Plant Manager requested a system that was easy for maintenance. He wanted to get the system up and running as soon as possible.
Two weeks ago, the Production Manager expressed his interest in a system that was easy to use, while the Safety Manager was concerned about a variety of safety
issues. As the program manager, James knows that he has to make sure the system chosen must meet the functionality required and comply with industry safety
standards set by law.
THE PROBLEM
Last week James held a meeting with his team, but no progress was made because there were a lot of arguments about which system should be selected. All seemed
to have reasonable needs. But satisfying everyone ’ s needs at the same time? That would be a mission impossible. Besides, James knows he needs to avoid suboptimi-
zations, and do whatever is best for the company as a whole. The serious question now is “ how ” he would optimize those individuals ’ needs for the company ’ s
greater good. And the “ what - system - he - should - select ” question is secondary. The team started fi ghting and ended up without a conclusion. Unfortunately, James
has until the end of today to make a decision. Time is running out, and he still does not know which system should be chosen. The system has to be up and run-
ning within the next 60 days. Moreover, the system is expected to have around a fi ve - year lifespan.
At the moment, four suppliers have provided quotes and additional informa- tion regarding their fire extinguishing systems see Tables 14.1 through 14.4 .
These suppliers are Fire Extinguisher; Early Birds, Ltd.; Xtra Care, Ltd.; and Zebra Limited. They offer systems that have different functionalities, prices,
maintenance costs, etc. The technologies used in these systems are also different e.g., chemical - based, form - based, water - based, but they are all applicable to use
in the new building.
Table 14.1 Fire Extinguisher Model
ABC-1
TypeTechnology Chemical-based with the latest technology
FunctionalityLaw Meets standard complies with law
Installation No hassle. There is no cost for installation
Unit Price 85 per set
Spraying Area Up to 100 square meters
Delivery Lead Time 15 days upon placement of order
Maintenance 3 per set per year
Ease of Use Easy
Relationship w Vendor Never done business with before
Program Initiating Process 275
Table 14.3 Xtra Care, Ltd. Model
GHI-1
TypeTechnology Foam technology
FunctionalityLaw Meets standard complies with law
Installation Cost of installation is around 4 per set
Unit Price 115 per set
Spraying Area Up to 200 square meters
Delivery Lead Time 50 days upon placement of order
Maintenance 3 per unit per year
Ease of Use Somewhat difficult
Relationship w Vendor Never have business with before, but major stakeholder of Xtra Care,
Ltd. is a close relative of Mega Security
®
Table 14.4 Zebra Limited Model
JKL-1
TypeTechnology Water-based
FunctionalityLaw No information available, but most likely will not meet standard
Installation No hassle. There is no cost of installation.
Unit Price 2,430 per set
Spraying Area Up to 5,000 square meters
Delivery Lead Time 55 days upon placement of order
Maintenance No maintenance is required
Ease of Use Easy
Relationship w Vendor Never done business with before
Table 14.2 Early Birds, Ltd. Model
DEF-1
TypeTechnology Chemical-based
FunctionalityLaw Meets standard complies with law
Installation No hassle. There is no cost for installation.
Unit Price 170 per set
Spraying Area Up to 250 square meters
Delivery Lead Time 30 days upon placement of order
Maintenance 550 after the first year, plus 10 increment for the following years
Ease of Use Easy to some extent
Relationship w Vendor Have prior business relationship, negotiations may be possible
276 CASE STUDIES
When James looks at the quotes and provided information from the vendors, he has another problem. Some information is missing, and further information
cannot be obtained at this time as the end of the day is approaching. “ This is probably one of the worst days in my life, ” James said to himself.
Discussion items
1. How would you recommend James approach this problem? 2. What system would you recommend James choose? Support your recommen-
dation, and state your assumptions.
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