Case Study

PROJECT MANAGEMENT SITUATION ESTABLISHING A PROJECT CONTROL SYSTEM

An organization has been managing projects for several years through a group of project managers, specifically hired for their successes with this type of work. They have consistently performed well in other organizations, demonstrating an exceptional understanding of the technology and the project management discipline. They are excellent communicators and keep all parties informed of the progress of projects.

Recently, the company finance director stated that many of the projects were losing money. This was determined when the new accounting system was implemented and costs for projects were collected, collated, and analyzed. Nearly one-third of the projects were not performing well in the cost area. Only 18 percent of the projects were producing revenues that met the company's fee structure.

A review of project documents and plans as well as discussions with some project participants revealed the following:

• There was no consistency in the project plans. Some were missing vital information and others were inconsistent with the company's policies for project operations.
• Each project manager followed a different life-cycle model and methodology for similar projects. There was no single methodology being used for projects.
• Project managers relied on their experience, methodologies, and styles from their prior organizations.
• Project managers considered all projects to be successful if they met the cost, schedule, and technical performance objectives. Because cost data were not provided by the accounting department, it was assumed that projects were making money.
• No project audit had been conducted in at least 3 years and there were no procedures for conducting an audit. No trained people were available to conduct audits. The project managers were hired because they were "experts" in managing projects.

Senior management was in a quandaryâexperienced project managers were not providing the desired cost performance results and there may be other areas that were in need of fixing. Further, the company relied heavily on projects to generate most of its revenue. There was a need for some immediate action to move the company into a better cost performance position.

Case Questions

1. From the information given in the project management situation, what is the most likely problem and how would one fix it?

2. Why do highly qualified project managers use different methodologies in the same company? Is this a problem?

3. What are some of the reasons for lack of meeting cost performance (profit) goals? What can be done to improve the situation?

4. Does the company's project control system work? What, if any, changes should be made?

5. What type of audit would you perform on the projects to determine critical success factors? What would be your initial focus?

PROJECT MANAGEMENT: Strategic Design and Implementation