THE AMERICAN UNIVERSITY IN CAIRO

PROJECT MANAGEMENT
OPMG 528

Dr. Ali H. Awni

SPRING 2011

Teradyne Corporation The Jaguar Model

Prepared by:

Alaa El Din El Kordy Amr El Gamal Mohamed Abdel Samie Nancy Girgis Sara Khafagy

Table of Contents
Executive Summary ...............................................................................................................1 The Jaguar Project ................................................................................................................ 2 Project management tools &processes ................................................................................ 2 CPM in a product development setting ............................................................................... 5 Project execution strategy matrix ......................................................................................... 6 Phase gate process analysis .................................................................................................. 7 Risidual risk analysis ............................................................................................................ 9

Executive Summary
The Jaguar Model, which was a project undertaken by Teradyne Corporation, the Worlds largest supplier of equipment for testing semiconductors. The aim of the project was to develop a highly flexible tester platform that could be easily adjusted to the needs of different device segments. It was a critical project that will determine the ability and success of Teradyne to compete in the market, especially that the market need was drastically shifting towards flexible tester platforms rather than different specific test systems for each type of semiconductor device. With the Jaguar Model, Teradyne had used several Project Management PM tools to force discipline in the development process. Including the work breakdown structure WBS which is a detailed description of all the tasks required to complete the project and their interrelationships. The 3-point estimation which is a technique to incorporate uncertainty into projected schedule by estimating a best case, worst case and expected times for each task. The critical path analysis CPA which is a methodology that uses the WBS and 3-point estimates to identify bottleneck tasks in the development process, thus determining the overall lead time of the project. Finally the earned value analysis, which measures the project progress using three metrics: budgeted cost of work scheduled, actual cost of work performed and budgeted cost of work performed. Unfortunately, the project planning; tracking, metrics and reporting distracted many team members from real problems. Additionally, due to the nature of the project; being a development one. Each of the tools had its limitations: with the critical path method, there were many more unknowns and unclear estimates to be calculated which puts the accuracy of CPM at risk. The same applied to WBS, which mandates that each single task is recorded in proper sequence. Even the 3-point estimation tool highly relies on precise time estimates in order to be effective and with EV, it was difficult to apply because EV only works great if you know exactly what you need to do, which is not the case in development projects. After the development process was understood, Teradyne decided on their development team. They developed a project execution strategy matrix which listed the project dimensions, each with its corresponding principles, processes and structure with responsibilities. They also adopted a heavyweight team structure. This arrangement did not prove very successful as the project, although successful in the end, suffered a lot of delays. Basically this was attributed to the size and nature of the project which involved a hardware (sequential and straight forward) and a software (flexible) subprojects and it would have been better if Teradyne had looked at those two separately and adopted different approaches in managing each sub-project as a reflection to the dissimilarity in their natures. An overall leader needed to integrate the two subprojects successfully. Phase gate process analysis was also introduced, however lacked a discovery phase at the beginning of the project to generate more ideas even from the customer which would enhance the project overall success and make the voice of the customer more heard. The residual risk facing the Teradynes process was found to be the complexity of the semiconductor technology, the rapid rate of technological innovation in semiconductors, the speed in developing system and rapid technical support and finally the difficulty in acquiring new accounts. Therefore Teradyne should continue to attract and retain the best caliber, invest highly in its R&D, endeavor to maintain customer satisfaction and pursue the best methods of product development and PM techniques.

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The Jaguar Project

Historically, all test equipment suppliers including Teradyne designed completely different test systems for each type of semiconductors device. This allowed the design of the tester to be optimized to the test requirements of the particular device. By mid 1990s, changes in the market began to erode the logic of this strategy. Particularly as semiconductor manufacturers diversified into a broader range of device types, they were increasingly asking for a tester platform that could test multiple types of devices. This trend accelerated in the late 90s with the growth of contract manufacturers whose business model was to offer a wide range of device-testing services. For these customers, utilization rates of device-specific testers were simply too low to be economically feasible. As Teradynes vice president described it The platforms were getting more complicated and costly to develop and it was becoming increasingly infeasible to develop multiple platforms. In the late 1990s several of Teradynes competitors had started developing a single tester platform. Several competitors were already moving towards the direction of developing a more flexible, consolidated platform strategy. In other words, the Jaguar project, which was an initiative taken by Teradyne to create a highly flexible tester platform that could be easily adapted to the needs of different device segments, was the only way for Teradyne to compete in its market whose needs have dramatically changed from a tailored testing device to a more complex and flexible platform. It was highly critical to successfully launch the Jaguar project at this time. Especially that Teradynes competitors had already taken steps towards fulfilling this markets new demand.

Project Management Tools and Processes

Teradyne had used PM tools to force discipline in the development process. This was one of the critical elements of the Jaguar project execution strategy. With the data and information provided by the new tools people were able to know whether a team was having work done at the right pace or not. Others were more skeptical and thought the tools could be distracting by trying to figure out whether the tool reflected reality, rather than discussing what to do. Work breakdown Structure: A detailed description of all the tasks required to complete a project, and their relationship to one another. Work Breakdown Structure (or WBS) breaks a project down into its individual tasks and identifies the relationships between them. WBS has two major goals. First, to ensure that the project has all the work needed to complete the project successfully. Second, to ensure that the project includes no unnecessary work. By defining the project in this way, the WBS enables the project manager to clearly describe the hierarchical nature of the work to be performed and establishes a foundation for other elements of the formal project plan including the projects resource plan, budget, organizational plan and master schedule. WBS is indeed developed before dependencies are

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identified and activity durations are estimated. WBS is often used to identify the tasks for the Critical Path Analysis. 3-Point Estimation: A technique for estimating the minimum (best case), maximum (worst case), and expected times required to complete each task. This is a technique to incorporate uncertainty into schedule estimates. For each task, a best case, worst case, and expected lead time are estimated. This technique can be used in conjunction with CPA to identify those activities in the project most likely to cause a time delay. Critical Path Analysis: A technique uses the work breakdown structure and the 3-point estimates to identify bottleneck tasks in the development process which determine the overall lead time of the project. Critical Path Analysis (CPA) is a methodology to identify the set of rating limiting activities that determine the overall length of the project. CPA identifies those tasks that, if delayed, will cause the final completion date to slip. The main benefit of Critical Path Analysis is that it helps a company to identify the minimum length of time needed to complete a project. Where the company need to run an accelerated project, it helps it to identify which project steps it should accelerate to complete the project within the available time. Earned Value Analysis: A method for measuring project progress by comparing actual and expected resources (or time) expended. Earned value (EV) is a methodology for measuring a projects progress. EV compares the actual and planned amount of work completed (at various milestones) in terms of time or costs. An EV uses three metrics: 1) Budgeted Cost of Work Scheduled (BCWS)planned cost of the total amount of work scheduled to be performed by the milestone date; 2) Actual Cost of Work Performed (ACWP) cost incurred to complete work performed to date; 3) Budgeted Cost of Work Performed (BCWP)the planned cost to complete the work that has been performed to date. By comparing differences in these three metrics, it is possible to identify two sources of variance: cost variance (cv) and schedule variance (sv).

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The project is behind schedule if the schedule variance (sv)computed as the difference between BCWP and BCWSis a negative number. The project is over cost if the cost variance (cv) Computed as the difference between BCWP and ACWPis a negative number. The mixture of these tools as declared by OBrien helped to see different things that were going on in such a complex project like Jaguar. The tools provided visibility into the project. This allowed Teradyne to respond to AlphaTech and be confident that could hit all the milestones. At Teradyne, the output of a development project was judged by two criteria: first, did the project achieve its target objectives and, second, did it build new organizational capabilities for future projects? As it pertained to project management tools and practices, some managers felt that, by and large, the project management tools worked and contributed to the success of the project. Their concerns revolved around the implementation. Others were much less convinced of the value of the tools, and were concerned that they could actually be a distraction. Its always worth mentioning that project planning; tracking, metrics, and reporting could distract team members from real problems. In the Jaguar project Primavera was an awkward tool. The interface is terrible. Many of the first-level engineering managers hated it. Primavera requires a very static work breakdown structure; once you enter it, it is very difficult to modify. The problem is that as you execute a project like this, you actually discover things you have to do differently. But, the schedule is produced and updated using the original work breakdown structure. So the reported scheduled becomes less meaningful over time. Some groups had a weekly struggle with Primavera. They worked it to get the schedule completion date to come out OK by constantly rearranging the critical path, but missed the fact that deliverables in general were slipping and work was not getting done at the planned rate. In recalling the struggles of the software team, the tools allowed the software team to lie to themselves. Some very strong people allowed themselves to be fooled by the data. The software disaster was evident from the EV. There are things that do not show up in the EV tool. Progress on EV can be done without making progress on the project. With more experience and training, team members would know how to get value from the tools they were using more efficiently and thought they would figure out what went wrong. OBrien was also a strong believer in the value of the project tools. He saw the tools as working but was critical of himself and other members of the organization for not always reacting to the data.

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The mixture of the PM tools used in the Jaguar project helped to see different things that were going on in such a complex project. The tools provided visibility into the project. This allowed Teradyne to respond to AlphaTech and be confident that could hit all the milestones. The PM tools helped as well to force discipline in the development process. This was one of the critical elements of the Jaguar project execution strategy. With the data and information provided by the new tools people were able to know whether a team was having work done at the right pace or not. Others were more skeptical and thought the tools could be distracting by trying to figure out whether the tool reflected reality, rather than discussing what to do.

CPM in a Product Development Setting

The critical path method (CPM) is one of many tools used by project managers to help them manage and control the many tasks they oversee in each project they lead. It is used in concert with several other tools to plan, coordinate, and execute these tasks so that the vital time variable is well harnessed and so that project completion is not delayed. There are several components of CPM that need to be identified in the outset in order for CPM to be utilized well. One of these is work breakdown structure (WBS), which is "a detailed description of all the tasks required to complete a project, and their relationship to one another" as the case explained. Another is the 3-point estimation, which the case explained as being "a technique for estimating the minimum (best case), maximum (worst case), and expected times required to complete each task". Earned value analysis is a tool used during the course of the project to compare budgeted figures with actual ones and can be applied to various parameters such as time and financials. Under regular circumstances, there is much tedious planning and meticulous work required in order to reach dependable results that make these tools useful to CPM. However, all this planning and its related work is heightened when the project involves product development. There are many more unknowns to be dealt with and many unclear estimates to be calculated, which puts accuracy of CPM at stake. One such example is the WBS, which mandates that each single task be contemplated and recorded in proper sequence and in correct relation to the other listed tasks. By ensuring that no important task is left out and that no unneeded task is added, WBS serves as a foundation for CPM. When this is applied to a product development project, the challenge is great. When a new product is developed, there is a disadvantage of doing things for the first time without the guidance of past successful or even unsuccessful similar projects. Even with a great deal of tenacity to get things right, there is great risk of either not including significant tasks or incorporating irrelevant ones. Another example is the 3-point estimation tool which relies on precise time estimates to be effective. This tool is significant because it is needed to identify activities that would cause time delays in the project and which need to be accurately ascertained so that bottlenecks are well-managed. In a product development project, these activities are hard to distinguish with accuracy due to the lack of similar projects to compare them to. The same challenges are true for the earned value analysis tool which involves budgets of cost of work scheduled and cost of work performed. As one of the engineers explained, "EV, for instance, works great if you know exactly what you need to do. But development is not like that. There's a lot of uncertainty." Problematic tools were not the only difficulty CPM was affected by in this product development setting. Other factors influencing CPM in this setting include resistance to change by the engineers who did not want to use the required tools, lack of "after-action" review meetings from similar projects that would provide much needed insight on how to manage the Jaguar project, and external factors such as enforcing an accelerated timetable by the client.

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All these limitations of CPM could be reduced through constant and frequent meetings by the core team whose members would compile recent results, analyze their effects on the project, and adjust the CPM and all its tools accordingly. This way, any deviations from the plan would be detected early and managed accordingly.

Project Execution Strategy Matrix and Heavyweight Team

Through its product development, Teradyne often experienced significant delays and quality problems caused by failures of coordination and communication. The reasons behind this were that projects were handled by individual engineering functions and the lack of one individual responsible for the entire project. To address this problem, Teradyne launched several improvement initiatives. One of which is the Project Execution Strategy Matrix (PESM), where the project dimensions (including Project Definition, Governance and Staffing, Structure of Project Tasks and Activities, its Design, Prototype and Test, Senior Management Review and Control and finally the Real-Time MidCourse Corrections) are listed, each with its corresponding principles, processes and structure with responsibilities. Although the PESM seemed well organized, it was neither practically applicable nor ensured adequate control, and on the other hand responsibilities were not precisely defined. In general once the development process is understood, the formation and operation of the development team are critical to the projects outcome. The optimal team composition is influenced by many factors including company size, reporting structure, geographical proximity of employees, product nature, available resources and so forth. In applying this to Teradynes Jaguar Project, we find that Teradyne is a large company which has major engineering operations located in Boston, North Reading, Minneapolis, Tualatin, San Jose and Agoura Hills (in 4 different states across the US). In addition the Teradynes engineering organizations in Boston and Agoura Hills had their own flexible tester projects underway. The launching of the Jaguar project meant merging the efforts of these two teams although both teams had their preferred approaches. Consequently tensions arouse over whose approach will overrule. It was not a group that came together willingly. Teradynes choice of a heavyweight project team for project/task governance was not the most suitable choice for such a huge, monumental and strategic project. Heavyweight teams are typically composed of full-time members from various functions, who often are physically co-located (which is not the case in our Project). Members of a heavyweight team play an active role in shaping project-level decisions. Although some major decisions may still be vested in the functions, within certain limits the project team has authority to make substantive decisions affecting the project. Likewise, the leader of a heavyweight project team is not simply a coordinator, but an active and authoritative manager of both the team and the process. They are generally dedicated to just one project and are fully responsible for its overall success. This type of teams works best in development projects that require a high degree of cross-functional integration. In our case, the Jaguar project was organized into a set of project teams, each of which was focused on a particular subsystem or task including software, system architecture (hardware), analog instrumentation porting, interface and mechanical. To ensure adequate levels of integration across the different sites and sub teams, a core team was formed from the leaders of each of the subsystem teams. When discussing project leadership, the project manager was faced with a big challenge to control a group which did not come together willingly as previously mentioned. Although the choice of heavyweight team gave OBrien enough job authority to manage and shepherd such a complex project, the team seemed to struggle with its implementation. This could be attributed to the fact that such a sheer project entailed many functions which although integral, however have different natures

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and should be managed in different ways for example in hardware the physical attributes of a part often determine the appropriate sequence and structure of tasks, whilst in software you dont have these physical constraints, which gives you a lot more flexibility. Thus different approaches should have been applied as appropriate. In other words, it would have been better to run two parallel subprojects (software and hardware) completely separate and have different ways in managing them with an overall Project Leader who will be responsible for the overseeing of their successful integration. Another major reason for the struggle that Teradyne was experiencing was the lack of sufficient staff training, unlike the TQM initiative where everybody received enough training. Although the Jaguar project represented a drastic change; not only in the methodology but also in the whole organizational culture which used to encourage individual initiative (warning new employees that they will have to dive in without expecting to be told what to do). Instead in the implementation of the Jaguar Project collaboration of different teams from different ways of doing things was expected. However inadequate effort was exerted to coach teams and to align the whole organizational culture. To mitigate this complexity, we suggest that Terdayne divides the Jaguar Project into 2 subprojects (software and hardware) with different teams and methods of management as appropriate. Hardware is usually sequential and straight forward whilst software projects are flexible and could easily fall behind schedules or go beyond their scope. The overall Project Leader will be responsible for ensuring that both subprojects run well, stick to their timeframes, scopes and budgets. In addition, he will be accountable for the successful integration of both sub-projects.

Phase gate process analysis

Teradyne aimed at changing the way product development is being done via tackling one the problems the company faces, which is poor planning for individual projects. Thats because the goals and scope were often not clearly defined up front and thus, projects tended to expand as new thoughts or additional features were thought of. This lead to missed milestones, lack of ownership, significant delays and quality issues. So, Teradyne launched the phase gate model for developing new projects. The phase gate model consisted of five stages, concept development, project and product planning, detailed design and development, product test and validation and finally product release and ramp. There was a gate that a project had to pass through to move from a phase to another. The gate was mainly related to reviewing the phase deliverables that were determined for each phase. The phase gate model was applied to the Jaguar project. This project required heavily spending more time on the early stages of the development process (phases 1 &2). Thats because it was a strategic project for Teradyne and the source of technology advancement and revenue increase. Thus, the project had to be incorporated in the phase gate model to be monitored and controlled. In fact the misusage of the phase gate model affected the project outcome. The team was asked to understand the customer requirements and product specifications for the management to approve the transition of the project to phase two. In fact, the management gave the green light for the project to move to the next phase in May 2002. However, the team knew that there was a huge potential customer called AlphaTech was about to test a competitors product. So, the team thought of adapting the product developed to AlphaTech requirements to compete with others and get to gain AlphaTech as a new and strategic customer. Thus, the result was trying to incorporate new

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functionality to the product that was not included in the original plan and committing to the shipment of the product to AlphaTech three months earlier than the original timeframe set and agreed upon. The consequences of all these disruptions included the extra costs, adding more resources, consuming the team efforts, introducing the software of the product with bugs and without all the functionality that AlphaTech asked for and more importantly stopping the development of the product for other customers which lead to delays in other launches. It was clear that the gates were not very strict between the stages. The deliverables must have been reviewed properly with solid data to track the projects progress. In addition, potential customers and their requirements must have been identified earlier to avoid ad hoc changes that disrupt the project flow and other projects as a consequence. Adding a discovery stage at the front end of the phase gate process would generate project ideas (see below Fig.). Some of these ideas might come from the customers. So, building voice of customer work into the discovery stage to help identify customers problems, unmet needs and even unarticulated ones. The research might involve working closely with the customers to know their problems and understand their business and its workflow. This helps in incorporating the customers requirements in the project plan from the beginning and engaging the customers in the development process.

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Residual Risk Analysis

The residual risk is the risk or danger of an action or an event, a method or a (technical) process that, although being abreast with science, still conceives these dangers, even if all theoretically possible safety measures would be applied (scientifically conceivable measures). In other words it is the exposure to loss remaining after other known risks have been countered, factored in, or eliminated. The risk facing Teradyne process is simply any factor that jeopardizes its time schedule, budget, project scope or accuracy and quality, most of which could be mitigated. However the residual risks are discussed below: The complexity of the semiconductor technology. The job of a semiconductor tester was to determine whether or not a chip met its target specifications by interrogating the device electronically i.e. sending it signals and then measuring the response. This task in reality is one of the most challenging problems in the entire electronics industry. Additionally, as devices became ever more complex and precise, this challenge increased exponentially. The rapid rate of technological innovation in semiconductors puts a constant pressure on Teradynes R&D investment and time wise. The difficulty in acquiring new accounts. Customers are the manufacturers of semiconductors such as Intel, Texas Instruments, IBM, Hitachi and Samsung who usually place their orders when they were transitioning to a new generation of technology (cyclic market). They tend to stick with existing systems to leverage past experience. Semiconductor Vendors looked for technical performance and features. They focused heavily on test economics which were largely driven by test speed, as testing was often a bottleneck in the total semiconductor production process. Therefore speed in developing systems and rapid technical support was considered essential to competing in this market. In an attempt to preempt the effects of the residual risks facing we suggest that Teradyne: Continue to attract the best caliber in engineering, system architects and developers Invest highly in its R&D to keep up breast with the rapid technological development in the semiconductor industry Endeavor to maintain customer satisfaction Pursue best methods of product development and project management techniques

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