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It is quite logical to assume that Payton Corporation is an established company and is capable of handling the job, a government project, which Payton Corporation just acquired via the bidding process. Looking at its structure, it appears that the corporation is highly organized as they have various departments working independent with each other due to their different functions. In the case at hand, it was the Lab department who was task to accomplish most of the work.
Payton Corporation is facing a big problem of budget shortage if the current financial management is not immediately settled. The development lab spends much higher than what was actually stated budget per hour, which is according to government limitations, stands at 19 dollars per hour while the actual spending per hour is 25.50 dollars. After discussing the issue with the manager of the development lab manager, the project manager realized that the problem was not about on spending of the budget by the lab department but something else. The problem is the limited budget for the project.
However, this problem may be corrected if the following questions below can be answered appropriately.
What is the basis for the problem?
At the onset, there are some potential problems that were seemed not considered and settled prior to the bidding. First, it appears that there is no clear interdepartmental communication among the departments involve in the project. Second, the management may have overlooked the nature of the project, which requires highly knowledgeable people, which would mean higher wage. Since the duration of the project is fixing at 90 days, this poses problem of budget shortage.
The bases of the problem therefore are the lack of communication and consultation between the management and the departments that would be involved in the project before submitting a bidding proposal. The problem could have been avoided if interdepartmental consultation and communication between the management and the various departments were initiated. According to Owen Hargie and Dennis Tourish an “organization that communicates badly can be likened to a theatrical production in which no one knows which part they are playing and constantly speak the wrong lines, often interrupting others to do so” (p. 22). The problem of Payton Corporation, which is now in trouble due to potential shortage of budget, can be traced in the lack of proper communication. Hargie and Tourish pointed out that “a focused communication strategy helps avert such chaos. It provides the opportunity for organizations to enjoy a long running performance in the market place” (. 22).
Who is at Fault?
It was quite obvious that the development lab and the pricing department as well as the project manager and of course the management were all at fault in the problem. But the management team who handles the bidding proposals had the greater responsibility for the reason that they have supposedly studied carefully the project and the duration whether the contract price would be justifiable. Peri Pakroo and Barbara Kate Repa Noted that “often, the hardest part of the bidding is breaking down the project into smaller parts so that you can make good estimates of how much work, time and materials it will require” (p. 6/7). But it appears that they had failed to breakdown the proposal and to analyze the project duration and whether the contract price can be justified. Pakroo and Repa point out that “you won’t be able to make an effective bid on a project until you thoroughly understand all the details involved” (p. 6/7). In the case of Payton it appears that the management bidding team failed to scrutinize the project thus the problem of wages was not anticipated. The management team also failed to consult other departments particularly the development lab manager who had to do the majority of the work, and the project manager about their opinion on the bidding price and the nature of the work to be done.
How Can the Present Situation be corrected?
Based on weekly progress report, after the manager found out the budget spending discrepancy, he tried to correct the budget situation by discussing with development lab manager the issue, hoping that some adjustments can be made regarding salary issue. John Nicholas noted that the “primary purpose of evaluation in project management is to asses performance, reveal areas where the project deviates from goals, and uncover extant or potential problems so they can be corrected” (p. 414) Indeed, the project manager was right to believe that something can be done to correct the situation. First, the project has gone ahead only for a week and the project manager must bring to the attention of the management the problem the soonest time and ask the management to call for a meeting of all department concern. Second the project manager must come up with some suggestion or solution to the problem and present it during the meeting. Third, the development lab manager must also give his opinion on how the potential budget shortage can be addressed. The solution that would be derived from this evaluation meeting must be strictly carried out by the project manager.
Is There Anyway this Situation can be prevented from Recurring?
The obvious answer to this question is yes. In fact even the problem on the case at hand could have been avoided had the management initiated a consultation and evaluation meeting of the bidding proposal with the heads of the different department of the company, as the saying goes, “two heads are better than one.” I believe that once a concrete solution to the problem would be in place, it needs a strict implementation until the project is finished. There is no way the problem will recur if there is proper and efficient management of the project. Michael Thomsett contends that preventing recurrence of the problem needs improving processes. He stated that preventing recurrence “may require continual monitoring, change, improvement, modification, and ultimately, revamping entire processes” (p. 134) added to these ,there must be also close coordination between the project manager and the development lab manager who is doing the majority of the work and effective monitoring and supervision must always be employed by these managers.
How would you handle this situation on a longer duration project, say one year assuming that multiple departments are involved and that no other departments were established other than the project office
On a longer duration this situation could be indeed difficult, perhaps not because of the nature of the work but because it involve multiple department which is not significantly contributing to the progress of the project. I would say that I will not handle this kind of situation on a longer duration because it will only give more headaches and a waste of energy particularly if those departments is involve only in the spending of the budget. These departments will be like thorns on the flesh that will continue to torment me day after day. In fact in the short duration project presented, the project manager admits that he stand to loose his bonus because of the impending budget shortage.
However, if the management is willing to back up measures that will oblige other department to align their function towards the project, it is a challenge to handle such condition. Of course conflict of opinions cannot be avoided some times but that is part of the challenge. But one thing that I will make sure is that the project will be adequately budgeted. Referring to this Alan Webb suggest that a contingency budget should be included in the contract. Webb said “…but it must be realized that contingencies reduces the risk and failure to include them increases overall risk” (p. 86). In the Payton Corporation Project, this is one thing that was neglected by the management. The contingencies according to Webb are contained “within the project and its budget typically include sums covering identified risk issues, incomplete scope definition, in accuracies in estimates and residual risk” (p. 86). It was obvious that that contract do not provide for the contingency budget, which could have been the solution to the problem.
Therefore if the project is not properly contracted in terms of financial safety measure against unexpected problems and there is no clear communications between the management and the other involved party, I will not work on it.
Should a customer be willing to accept monetary responsibility for this situation, possibly by permitting established standards to be deviated? If so, then how many months should be considered a short duration project?
In a strictest sense the customer may not accept monetary responsibility in a sense that the transaction was all under contract agreement. Indeed, in this case it was the bidder who bids the price and any problem that would arise out of this contract will be assumed by the bidder. But if there is really a gross mistakes in the budget estimate that could not be resolved no matter what adjustment is made, I would say yes to the question above if the customer is willing to do so. In fact, the lab manager suggested to the project manager to try to open the problem to the customer to get his opinion. Although the blame here remains in the management, but it is a fact that everyone commit mistakes, so the issue here is not deviating from the standard, but first, is humanitarian consideration on the workers whose wages would be affected, and for the proper completion of the project.
I believed that short duration project should be consist of up to five months maximum especially if the nature of the work is sensitive and requires careful action.
In the case in point, the problem was aggravated by the salary discrepancy of the high skilled workers and solution that was seen was to create a temporary unit for these high paying workers in order to get the average salary for all non-high paying workers. But this option is simply not available, as the law requires this temporary unit to be not less than two months. Besides, the project duration is fixing at ninety days. Therefore if the short duration projects will be up to five months, perhaps it could help solve problems mentioned in the case study
Hargie, O & Tourish, D (2000) Hand Book of Communication Audits For Organization. London: Routltge
Nicholas, J (2004) Project Management for Business and Engineering Principles s and Practice. USA: Elsevier Inc.
Pakroo, P & Repa, B.K. (2006) The Small Business Start-Up Kit. USA: Consolidated Printers
Thomsett, M (2005) Getting Started In Six Sigma. New Jersey: John Wiley & Sons Inc.
Webb, A (2003) The Project Managers Guide to Handling Risk. England: Gower Publishing