TEV is a manufacturing company based in a rapidly developing nation. It has traditionally manufactured its products using manual techniques with some automation but the chief operating officer (COO), Samuel, had sponsored a project to install a fully automated production line. The production line is now fully operational, albeit later than intended. A summary of the project timeline is shown below:
February 2015
The project was initiated by Samuel, amidst much hype. There was a factory demonstration to staff showing the space where the new production line would go and outlining the efficiency savings, and therefore the overall profitability of the company, which would arise as a result of the project. He stated that the completion date would be August 2016 and, as a result, the company would increase its market share by 20% over the following three years.
After the presentation, Samuel had called one of the factory shift managers, Da Lin, into his office and informed him that he would be taking on the role of project manager, along with his current role.
May 2015
Da Lin received the production line designs during a meeting with the contracted supplier. The contractor informed Da that the work would take approximately 12 months from the date of approval of the designs.
January 2016
Samuel resigned his role at TEV, and was replaced by Meesha as COO.
March 2016
A progress meeting was held, but Da Lin was unable to attend as he had been absent for six months due to a long‑term illness. Thus, the meeting involved the contractor, Meesha and Da Lin’s deputy, Byron. The contractor informed the meeting that it was still awaiting TEV approval of the new designs before it could begin the final construction and installation. The new designs would allow a greater number of different products to be manufactured using the automated production line. It stated that the project should now be completed in May 2017, as there had been delays in getting each stage approved, and the designs had changed. Meesha stated that she was unaware that the contractor was waiting for action from within TEV and said she would investigate and resolve the matter.
After the meeting, Meesha asked Byron to take over the role of project manager, and to get up to date with what had happened and what needed to happen for completion.
February 2018
The production line was opened by Meesha, and immediately put to manufacturing the product for which it was intended. The first production run took two hours to produce the same number of units which would typically be produced in a day. The first customers to receive the products commented on their superior quality. Byron, standing with his colleagues, muttered ‘I’m so thankful that’s over. I was so overloaded with that and my daily tasks that I didn’t know whether I would ever see the end of it’. Luckily, Meesha, who was standing nearby, did not hear him above the noise of the new machinery.
Meesha is now wondering how the whole project could have been managed better, as she is considering further automation. She is concerned that the costs, which were $60,000 over budget, may make the new project financially unviable.
Required:
Analyse how the production of a formal ‘terms of reference’ (project initiation document) and a business case would have helped address problems encountered in the project.
The project has been completed 18 months later than announced by Samuel and apparently over budget, although it does seem to be effective. However, there were problems encountered which may have been avoided/minimised if there have been more focus on the early stages of the project lifecycle. There does not appear to be any evidence of a project initiation document (PID) or formal business case.
One of the issues with the project appears to have been that of the project staff and their responsibilities. The project sponsor (Samuel) was defined from the beginning but he only allocated a project manager, Da Lin, after announcing the initiation of the project. The PID would have stated the key personnel of the project and their roles. Thus, consideration would have been given to the time needed to fulfil their project roles. It appears no thought was given to this, as the project manager was given the role in addition to his full-time responsibilities. Whether this has contributed to his health issues, is not known, but his successor (Byron) appears to have found it difficult, given his reaction at the end of the project.
In addition to the lack of consideration of project responsibilities, a clear problem occurring during this project was the turnover of the key staff who were involved in the project. Samuel moved onto another company and as a result, the importance of the project may have been lost on his replacement, Meesha. Until the meeting on the planned completion date, she does not appear to have involved herself with the project. Had a business case been in place, she would have been able to understand a clear justification for the project going ahead and may have focused more attention on it.
Simultaneously, the project manager had been absent for six months, so with the departure of the project sponsor and the absence of the project manager, there would be nobody focusing on the project, or possibly understanding what was needed to complete it. A clear business case and project initiation document would have informed them of the following:
Objectives
Samuel outlined efficiency savings, profitability and an increase in market share by 20% over three years in his initial introduction to the project. It is not clear that these objectives were formalised, and supported by relevant data. The supporting data could have provided an important insight into how the objectives could be achieved, as there seems to be no mention during the project of how sales will be increased. An increase in production capability does not necessarily mean an increase in sales revenue.
Additionally, these objectives all appear to be business objectives, but there seems to be no mention of project objectives other than a completion date of August 2016. The project manager, a factory shift manager, will not be in a position to deliver the business objectives. The new project sponsor may have recognised this, on reading the documentation, and allocated benefit owners accordingly.
Scope
The scope of the project was not well defined initially. It seems that the project was for a production line for one product line only. However, one of the delays was in waiting for approval for new designs which would allow it to be used to manufacture a number of different products. Had this been clearly stated originally, then there would be no requirement for designs to change, and therefore incur a lengthy delay. This change of scope could also have led to the project being over budget, as this may have incurred greater design costs, as well as costs in the development and installation of the production line.
Constraints
The time for delivery of the project was clearly stated but although there does appear to have been a budget set (as Meesha commented that the project is over the amount budgeted), it may be that it is recorded only in the accounts rather than in any project documentation. As COO, it may be that Meesha was unaware of the budget, unless it was brought to her attention by the finance department. It is important that a full cost-benefit analysis is provided, as Meesha could then focus on the different financial costs and benefits involved and ensure they occur as planned. For example, she would be able to see whether the new designs lead to installation expenses being over budget, and could determine whether these would be justified or not.
Risk
Although risk measurement and control is an ongoing element of project management, there should have been an initial attempt to list and consider actions relating to the key risks. Contingencies could then have been put in place for the risks identified, such as loss of key personnel. This could have included a succession plan, whereby there was a deputy project manager involved throughout. This would have ensured that, as soon as Da Lin became absent from work, there was someone who would have knowledge of the project and what tasks needed completing. Similarly, there may have been contingencies for slippage which could have minimised the delays.
In conclusion, a business case and PID would have clearly justified the project and informed project team members of the project details and what was required by them. A PID is important in any project, but it is even more so if key personnel change, as it is important that the original details do not get lost in the handover.
Distinguish between a post-implementation review, a post-project review and a benefits realisation review and analyse the value of each of these in the context of the scenario.
Now that the execution stage of the project is complete, it is important to close the project correctly in order to formalise acceptance of the project, evaluate the project to learn from what occurred and to determine whether any further action is needed. Within the completion stage, there should be three reviews carried out, all of which have different purposes: post-implementation review, post-project review and benefits realisation review.
A post-project review takes place at the final stage of the project, with the review culminating in the sign-off of the project and the formal dissolution of the project team. In TEV’s case, this should be occurring immediately, as the production line has now been installed. The post-project review identifies the lessons learned, such that the conduct and outcome of future projects may be improved. Thus, the focus of this review is on how the project itself was managed, rather than whether it delivered the required business objectives. The review should highlight what went well and what went badly in the project.
This seems particularly important to TEV as Meesha is considering further automation projects. The project finished over time and over budget and it is important to recognise what led to this and how to avoid it in future. The points picked up in part (a) of this question would have been highlighted and would ensure that future projects were initiated correctly. Furthermore, the review would pick up on the apparent absence of other project management features such as clear plans, with defined gateways. Thus, deadlines for different stages of the project should be adhered to in the future and issues, such as a failure to sign off new designs, should not occur. In turn, this would remove or reduce the delays. The importance of a defined project team and responsibilities, with sufficient time to manage the project, should also be addressed in the post-project review and therefore corrected in further projects.
The production line is now operational. Once it has been in use for a short period of time, anywhere up to six months, a post-implementation review should be held.
A post-implementation review focuses more on what the project delivered. It aims to discover whether the project met its objectives and delivered the elements originally defined on initiation. It should also be used to consider the fitness for purpose of the deliverables created by the project, in this case the production line.
By carrying this out after the deliverables from the project are apparent, this allows TEV’s manufacturing staff to use the new production line and to give their feedback. It seems from the first production run that the customers are happy with the quality of the output, but there is no mention of the production staff views. The line has also not been in operation long enough to see if there are any problems, for example, maintenance or issues with setting up the line. The review will consider strategies for fixing or addressing any identified faults in this period and make recommendations on how to avoid them in the future.
Again, this could be key to future projects at TEV, as the company is considering further automation. Any issues caused by the design of the production line could be corrected in future designs and thus avoid repetition in future projects. Until the production line has been in place for a few weeks or months any issues may not be apparent, but it may be that the line is not as flexible as hoped for, or requires more staff, or is too noisy for the factory environment. The scenario makes reference to the noise of the new machinery. If this proves to be an issue which needs correcting, it should be mentioned in the post-implementation review, and solutions found. This would then be taken into consideration for future projects such that the solution would be found during the project rather than after implementation.
A benefits realisation review considers whether the benefits stated in the business case have been achieved as stated. It would usually be the final review to be carried out, as sufficient time is needed to determine whether the planned benefits have been realised. For example, Samuel mentioned increased market share by 20% over the following three years. This can only be reviewed after three years have passed, although progress towards it could be measured at an earlier stage.
The review will analyse the original business case to see whether the forecast costs were correct and the benefits realised. As there does not appear to have been a formal cost-benefit analysis, this aspect of the review may not be of a great deal of use to the company. However, it could still provide information on the actual costs which could be taken into consideration in future projects.
The efficiency and increased profitability would also be considered, although they too do not appear to have been quantified. Some of the benefits could be measured at post-implementation stage. For example, improved efficiency seems to be apparent almost immediately, with daily production now being produced in two hours, but this will need to be further assessed to determine profitability as the costs of running automated production lines will be very different to the current costs and cannot be measured simply on time. There will be electricity and maintenance costs to consider, as well as any reduction in staffing costs.
The benefits realisation review will give Meesha the best indication of whether it is worthwhile implementing further automated production lines in the future and how to ensure that the planned benefits are actually delivered.