Amazing Food Berhad awarded Hardware Express Sdn. Bhd. an RM350,000 contract for developing and testing of two boilers in one of its plants. Hardware Express Sdn. Bhd. had spent the better part of the last two years developing proprietary boiler technology under its own R&D activities. This new contract would give Hardware Express Sdn. Bhd. the opportunity to showcase into the boiler technology leagues. The contract was negotiated at a fixed price. The original bid was priced out at RM380,000 by the Hardware Express Sdn. Bhd. biding division. With a consideration to get the company chipped into the new marketplace, Hardware Express Sdn. Bhd. management decided that they would buy in at RM350,000 so that they could win this one. The original estimate of RM380,000 was very "rough" because of Hardware Express Sdn. Bhd. did not have any good man-hour standards in boiler technology, in which to base their man-hour projections. Corporate management was willing to spend up to RM30,000 of their own funds to compensate the bid of RM350,000. While the project was in progress, costs were increasing to such a point where overrun had occurred well ahead of budget. Anticipated costs to completion were now RM455,000. The project manager decided to stop all activities in certain functional departments, one of which was the Health, Safety & Environment (HSE) department. The manager of the HSE department strongly opposed the closing out of the risk assessment work order prior to the testing of the second boiler's high-pressure systems, and the following dialogue happened: HSE manager: "You are running a risk if you close out this risk assessment work order. How will you ensure that the boiler can withstand the pressure 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. I'm tasked to do the work within cost. The boiler design is similar to that of we have tested before, without any problems being detected. On this basis, I consider your analysis unnecessary." HSE manager: "Just because the design is similar does not mean that they will be identical in performance. There can be major deficiencies." Project manager: "I guess the risk is mine." HSE manager: "Yes, but I get concerned when a failure can reflect on the integrity of my department. You know, we are performing on schedule and within the time and money budgeted. You are 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." HSE manager: "There's no question in my mind that this risk assessment should be completed. However, I am not going to complete it on my overhead budget. I will reassign my team tomorrow. Incidentally, you had better be aware; my team are not happy to work on a project that can be suddenly cancelled. I may have trouble forming a team next time." Project manager: "Well, I am sure you'll be able to adequately handle any future work. I'll report to the boss that I have issued a work stoppage order to your department." During the test, there was a leaking on one of the high-pressure pipes connected to the boiler. As an attempt to stop the leaking, one of the workers impulsively grabbed a wrench and tried to tighten the connector. Unfortunately, the component exploded when the worker was tightening the connector without releasing the pressure. Post investigation indicated that the incident can be prevented if the risk assessment was done. As the CEO of Hardware Express Sdn. Bhd. you have the above-detailed scenario and are required to write a case to be submitted to the Board of Directors. Also, you are required to propose the way forward for the project to reach the total project success and the lesson learnt for future projects.
Amazing Food Berhad awarded Hardware Express Sdn. Bhd. an RM350,000 contract for developing and testing of two boilers in one of its plants. Hardware Express Sdn. Bhd. had spent the better part of the last two years developing proprietary boiler technology under its own R&D activities. This new contract would give Hardware Express Sdn. Bhd. the opportunity to showcase into the boiler technology leagues. The contract was negotiated at a fixed price. The original bid was priced out at RM380,000 by the Hardware Express Sdn. Bhd. biding division. With a consideration to get the company chipped into the new marketplace, Hardware Express Sdn. Bhd. management decided that they would buy in at RM350,000 so that they could win this one. The original estimate of RM380,000 was very "rough" because of Hardware Express Sdn. Bhd. did not have any good man-hour standards in boiler technology, in which to base their man-hour projections. Corporate management was willing to spend up to RM30,000 of their own funds to compensate the bid of RM350,000. While the project was in progress, costs were increasing to such a point where overrun had occurred well ahead of budget. Anticipated costs to completion were now RM455,000. The project manager decided to stop all activities in certain functional departments, one of which was the Health, Safety & Environment (HSE) department. The manager of the HSE department strongly opposed the closing out of the risk assessment work order prior to the testing of the second boiler's high-pressure systems, and the following dialogue happened:
HSE manager: "You are running a risk if you close out this risk assessment work order. How will you ensure that the boiler can withstand the pressure 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. I'm tasked to do the work within cost. The boiler design is similar to that of we have tested before, without any problems being detected. On this basis, I consider your analysis unnecessary."
HSE manager: "Just because the design is similar does not mean that they will be identical in performance. There can be major deficiencies."
Project manager: "I guess the risk is mine."
HSE manager: "Yes, but I get concerned when a failure can reflect on the integrity of my department. You know, we are performing on
Project manager: "I understand your concern, but we must pull out all the stops when overrun costs are inevitable."
HSE manager: "There's no question in my mind that this risk assessment should be completed. However, I am not going to complete it on my overhead budget. I will reassign my team tomorrow. Incidentally, you had better be aware; my team are not happy to work on a project that can be suddenly cancelled. I may have trouble forming a team next time."
Project manager: "Well, I am sure you'll be able to adequately handle any future work. I'll report to the boss that I have issued a work stoppage order to your department."
During the test, there was a leaking on one of the high-pressure pipes connected to the boiler. As an attempt to stop the leaking, one of the workers impulsively grabbed a wrench and tried to tighten the connector. Unfortunately, the component exploded when the worker was tightening the connector without releasing the pressure. Post investigation indicated that the incident can be prevented if the risk assessment was done. As the CEO of Hardware Express Sdn. Bhd. you have the above-detailed scenario and are required to write a case to be submitted to the Board of Directors. Also, you are required to propose the way forward for the project to reach the total project success and the lesson learnt for future projects.
A Small Introduction about Project Management
- Project management gives design and control of the projected climate so the concurred exercises will deliver the right items or administrations to measure up to the client's assumptions.
- Projects are transitory designs that should be appropriately overseen and controlled to meet their expressed targets.
- Project management is the use of cycles, strategies, abilities, information, and experience to accomplish explicit project targets as indicated by the project acknowledgment standards inside concurred boundaries.
- Project management has last assumptions that are obliged to a restricted timescale and spending plan.
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