Question

Read the case study below and answer the accompanying questions.

TELESTAR INTERNATIONAL

On November 15, 1978, the Department of Energy Resources awarded Telestar a $475,000 contract for the developing and testing of two waste treatment plants. Telestar had spent the better part of the last two years developing waste treatment technology under its own R&D activities. This new contract would give Telestar the opportunity to “break into a new field”—that of waste treatment. The contract was negotiated at a firm-fixed price. Any cost overruns would have to be incurred by Telestar. The original bid was priced out at $847,000. Telestar’s management, however, wanted to win this one. The decision was made that Telestar would “buy in” at $475,000 so that they could at least get their foot into the new marketplace. The original estimate of $847,000 was very “rough” because Telestar did not have any good man-hour standards, in the area of waste treatment, on which to base their man-hour projections. Corporate management was willing to spend up to $400,000 of their own funds in order to compensate the bid of $475,000. By February 15, 1979, costs were increasing to such a point where overrun would be occurring well ahead of schedule. Anticipated costs to completion were now $943,000. The project manager decided to stop all activities in certain functional departments, one of which was structural analysis. The manager of the structural analysis department strongly opposed the closing out of the work order prior to the testing of the first plant’s high-pressure pneumatic and electrical systems. Questions (Conversations) Structures manager: “You’re running a risk if you close out this work order. How will you know if the hardware can withstand the stresses that will be imposed during the test? After all, the test is scheduled for next month and I can probably finish the analysis by then.” Project manager: “I understand your concern, but I cannot risk a cost overrun. My boss expects me to do the work within cost. The plant design is similar to one that we have tested before, without any structural problems being detected. On this basis I consider your analysis unnecessary.” Structures manager: “Just because two plants are similar does not mean that they will be identical in performance. There can be major structural deficiencies.” Project manager: “I guess the risk is mine.” Structures manager: “Yes, but I get concerned when a failure can reflect on the integrity of my department. You know, we’re performing on schedule and within the time and money budgeted. You’re setting a bad example by cutting off our budget without any real justification.” Project manager: “I understand your concern, but we must pull out all the stops when overrun costs are inevitable.” Structures manager: “There’s no question in my mind that this analysis should be completed. However, I’m not going to complete it on my overhead budget. I’ll reassign my people tomorrow. Incidentally, you had better be careful; my people are not very happy to work for a project that can be canceled immediately. I may have trouble getting volunteers next time.” Project manager: “Well, I’m sure you’ll be able to adequately handle any future work. I’ll report to my boss that I have issued a work stoppage order to your department.” During the next month’s test, the plant exploded. Postanalysis indicated that the failure was due to a structural deficiency

QUESTIONS

1. Who is at fault?

2. Should the structures manager have been dedicated enough to continue the work on his own?

3. Can a functional manager, who considers his organization as strictly support, still be dedicated to total project success

Answer 1

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Answer1:

I believe that the Project Manager is guilty during this scenario. The structures manager powerfully suggested the project manager to not stop the activities during this department before testing the plant’s hard-hitting gas and electrical systems. The structures manager warned the project manager and even mentioned that the take a look at was regular for succeeding month. I feel it might are a lot of necessary to contemplate this risk and forestall this from happening, alone from a security perspective. The project manager additionally mentioned that his boss expects him to complete this project while not cost. However, perhaps it might are of importance to run this specific issue by his boss so as to either increase the budget or modify the scope so as to with success and safely end the project.

Answer2:

This was running through my head for a bit whereas once I scan the text. It’s troublesome to mention. However, the structures manager did attempt to convert the project manager that it had been an enormous risk to require, and also the project manager went ahead and took the chance. even if the structures manager knew that this might probably happen, the project manager failed to hear his recommendation. If he would have continued to figure on his own, he would have disobeyed, he might have prevented the plant from exploding, however, he's reasonably certain and can’t do rather more than informing the project manager. He might have presumably tried to tell higher management of what's occurring, then again again, it ought to be a conflict that's resolved between him and also the PM. Also, I feel that the PM ought to have tried to arrange for conflicts higher since schedule constraints ar a number of the foremost common ones. I perceive that the firm had a fixed-price and there's not a lot of buffers once it involves the monetary facet.

Answer3:

I think they may still be dedicated to project success as a result of even if they solely contemplate their organization as strictly support, they'll be somewhat stricken by the project's success. purposeful managers apprehend that they need to support the organization’s goals, so it's imperative for them to perpetually have the most effective interest for a project in mind.