A

Project Report

On

Case Study : Corwin Corporation

Submitted To:
Prof. A. B. Raju

Submitted By:
Chirag Shah

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 Table of Contents

EXECUTIVE SUMMARY ............................................................................................................................... 3

INTRODUCTION........................................................................................................................................... 4

DISCUSSION AND ANALYSIS ...................................................................................................................... 5

PROJECT SELECTION AND STAFF COMPETENCIES ................................................................................. 6

MANAGEMENT SUPPORT AND ORGANIZATION CULTURE .................................................................... 7

COMMUNICATION ISSUES FOR INTERNAL AND EXTERNAL STAKEHOLDERS .................................... 8

CONCLUSIONS ............................................................................................................................................. 9

QUESTIONS:-.............................................................................................................................................. 10

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EXECUTIVE SUMMARY

This report has been prepared to examine the reasons why the Peters/Corwin project,
instigated in late December 2011, was terminated during the testing phase by the client.
This led to financial loss for Corwin and cessation of relations with Peters, an important
customer. Corwin has long-standing internal protocols with regard to project selection
around product-based initiatives from outside clients. However, in this instance, these
measures were entirely overlooked.

Thus, the project failed to meet the brief due to lack of proper management at the initiation
and execution stages. This analysis points up three major areas of concern, namely: project
selection (includes staff competencies); managerial support (includes organizational
culture); and communication issues (for internal and external stakeholders). Out of the
discussion, conclusions were drawn which then helped formulate practical
recommendations to address issues raised now, and to ward off future repetition.

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INTRODUCTION

This report seeks to isolate the reasons why a recent collaboration with Peters Company
(PC), a company with which Corwin Corporation (CC) had an established and healthy
working relationship, floundered. Not only did CC lose out financially but its future
potential revenues from Peters have been jeopardized. CC’s strong reputation has received
negative publicity at a time of global recession. The investigation was tasked with
examining the actions of relevant employees in the context of standardized procedures and
technical operations. It was also possible to compare this project with historical projects of
a similar nature.

Due to the breakdown in the relationship with PC, our consultants were unable to glean
data from that quarter which may have led to a fuller understanding of the events. Our
consultants based their conclusions on the fact that all Corwin staff normally involved in
external projects had appropriate knowledge and skills. Despite some strictures, the
overarching conclusion reached by the report is that, in reality, the project never had any
chance of succeeding. This was due directly to company procedures that were not complied
with from the outset. On a more positive note, the timely examination of all the events,
together with the honest and open input from CC staff has been worthwhile in terms of
lessons learned for future application.

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DISCUSSION AND ANALYSIS

CC had built up an international reputation with their production of well-known, good

quality rubber products. A contributing factor to CC’s success was its preference for
extending their markets rather than engaging in specialty manufacturing for outside
companies; it had a competent policy in place to evaluate such approaches. CC had a small
Research and Development (R&D) section which monitored technology to enhance the
existing catalogue.

This case demonstrates what occurred when CC took on a project from a known client that
was an unwise selection. It will be shown that it had already failed at the pre-project stage
which should encompass “scope planning, scope definition, scope verification, and scope
change control”. Without this preparation, the project had no chance of being executed
successfully.

“A project plan based on faulty or erroneous assumptions can destroy morale and impact
execution”. Due to this unstable foundation, a chain of events was set-off culminating in the
project being halted in the testing stage by the client. The project company incurred
financial loss and the breakdown of a valuable relationship and a number of staff had
unnecessary bad experiences.

The following discussion analyses three chief dysfunctional issues which then inform the
conclusions and recommendations. The aim is not to apportion blame but rather to
confront the missteps and take something from the experience. The focus of the analysis
pertains to establishing tenets of “project management success” over “project
success/failure”.

Whilst all the aspects overlap, three central themes have been isolated, namely: project
selection (which also includes staff selection by competency); managerial involvement
(which also includes organizational culture); and communication issues (for internal and
external stakeholders). These areas were nominated 20 years ago by Hamburger as early
indicators of project failure: “an oversimplified, unrealistic project plan; a non-supportive
management and, an uncooperative functional organization; (is like) working with … no
plan at all”.

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PROJECT SELECTION AND STAFF COMPETENCIES

CC first rejected the work from PC (for every good reason) but changed its mind after
learning of the financial incentives. Most CC executives were away due to the Christmas
holiday season which meant that the deal’s worth was not evaluated via the usual criteria
and in-house managerial consultation.

This fundamental error was aggravated by CC accepting a fixed-price contract. CC also

made the components of their bid fit the total sum proffered by PC. This meant there was
no contingency in the event of over-runs which did occur early on in the testing stage. The
inexperienced Project Manager (PM) also spent the whole budget for raw materials up-
front which was far too premature a move.

The staff called upon by default to put the proposal together were not (and could not be
expected to be) competent due lack of skills and experience. Examples are the Contracts
Man (CM) who was not familiar with fixed-price contracts and the scientist who was made
PM despite not having dealt with external projects previously. Some players voiced
personal motivations which may have blinkered their performance. VP Engineering (VPE)
remarked that his “vote never appeared to carry any weight” and he was keen for the
sector that he ran to have more experience rather than remain a “support group” to
marketing and manufacturing. The PC representative (PCR) made it clear he did not want
his promotion chances jeopardised, which was part of why he got so involved in the testing
procedures, even though that was inappropriate behavior.

Britz and Buys have recorded that it is quite common for projects to fail due to lack of
participants with the necessary skills. It is not sufficient to just position any employee and
“hope for the best” especially for such an important project imbued with unknown
quantities. A bad project selection decision was made the moment the costing boundaries
were violated in favour of the client. noting it is “the difference between monitoring costs
and managing costs”.

It is worth noting that the fact that it was a new product for CC was not necessarily a deal-
breaker, for “what matters are not so much the idiosyncratic aspects of project type … but
the ability to size quickly complex and fluid situations and correctly judge which
opportunities are worth exploring, which are not”.

Gibson Jr, Wang, Cho and Pappas say that it is entirely possible to determine whether a
project should go ahead at the pre- project phase and in this case, all the warning signs
were there.

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MANAGEMENT SUPPORT AND ORGANIZATION CULTURE

Having accepted the contract, some managerial staff distanced themselves which
endangered the project from the off. The VP Marketing (VPM) who initiated the project
then became unavailable and handed the task over to the VPE. R&D admitted he had
reservations and also said he would not have chosen that PM. He then proceeded to
instruct the PM, on two separate occasions, to keep him informed on a very casual basis.
R&D later contradicted himself by reporting that the PM had “kept him in the dark.” R&D
later elected to exclude the PCR from the new testing schedule which amounted to
avoidance behavior.

Millar and Theunissen (2008) have stated that a major function of managers is to make and
stand by decisions. According to Kerzner, “project execution involves the working
relationships among the participants and whether or not they support project
management” (2006, p.299). This is confirmed by Kleim & Ludin, 1998; Blackstone Jr, Cox,
& Schleier Jr, 2009) who posit that weak or remote leadership defective skills or
competencies, affect project outcomes. In the current example, executives deserted their
team members and engaged in finger-pointing.

CC was a very conservative company which preferred to have no-one “rock the boat” so
operated by risk-avoidance to a high degree. This means it could be described as a
traditional or functional organisation which produces a narrow range of outputs and
maintains clear definitions between its divisions (Hartley,2009). The warning remarks
made by R&D were not heeded by his superior, VPE, who brushed them aside in such a
manner as to make R&D drop the matter.

How a company operates in the day-to-day breeds its corporate culture, “the underlying
belief and value structure of an organization collectively shared by the employees”
(Clampitt, 2010, p. 73). However, cultures can become dysfunctional, for
“interdepartmental conflict, clashing personalities and a lack of trust may impede the
collaborative work, which will in turn affect the successful attainment of objectives” (Millar
& Theunissen, 2008, p.3).

Once bad health within an organization has been identified , managers must acknowledge
their part in the dis-ease and then take corrective actions themselves, for, “rarely, if ever,
are changes required of an organisation, a business, a unit, or a team that require no change
from the one leading that organisation (Black & Gregersen, 2008, p.9).

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COMMUNICATION ISSUES FOR INTERNAL AND EXTERNAL
STAKEHOLDERS

Communication breakdown, whether in transmission, receipt, or lack of, is a cause of

problems in every human arena. In the current case, a “reluctant authorization to proceed”
from the President was passed along as “the Boss gave his blessing.” R&D actually voiced
the concern that failure of the project could adversely affect CC’s association with PC, but
no-one sought to make anything more of the remarks.

The PM was worried about the PCR’s comments and actions, but did not report these to any
superior, thinking he was able to deal with such issues. The inexperienced PM also did not
know to include functional staff soon enough, assuming they would just come on board
when he needed them. This lack of sensitivity, combined with the outbursts from the PCR
along with his interference with the testing process, led to a poor working environment
and disgruntled rank and file whose work was vital to the project. It could be said that PC
bullied CC into taking the job as it was widely acknowledged PC had been difficult to work
with in the past. However, nobody held a gun to anyone’s head but damaging words and
actions went unchecked.

Communication breakdown escalated regarding the testing procedures because they had
not been laid down sufficiently at project initiation. All these problems arise because
everyone operates under their own personal filter, or perception (Limaye, 2005).
However, when it comes to stakeholders, the issue is further complicated because they
often have different objectives. Missing input from central stakeholders also meant the
scope was not clear for either side, an absolute must for project success (Ward, 1995). PMs
need to be aware that stakeholders include everyone from the client, suppliers, in-house
technical and marketing staff, all the way up to top executives.

As Roebuck says, stakeholders must be included in “communication that is two-way,

relevant to needs, understandable, useful, timely, and mature” (2006, p.187). Members of
CC also displayed “organizational silence” whereby staff do not act on information they
possess particularly with regard to crucial issues for fear of reprisal (Morrison & Milliken,
2000).

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CONCLUSIONS

 Projects have little chance of a positive outcome when no time is taken to research the
schedule, specifications and opportunities adequately before electing to proceed (or
not).
 Ignoring the normal protocols when putting proposals together by using unskilled
personnel leads to deficiencies in technical matters, faulty documentation and poor
consultation with stakeholders which adversely affects the budget, the profit and the
company’s reputation.
 If protocols are followed and the correct personnel involved from the outset, then the
alternative decision to not adopt the project remains an option; alternatively, the client
can turn down a bid that is much higher than their budget.
 Fitting a bid around a figure proffered by a potential client and then making the
contract “fixed-price” with no room for contingency, lays the responsibility of extra
costs with the provider rather than the client, which is untenable.
 Spending the entire budget on raw materials at the outset without reference to
suitability and requisite amount wastes the provider’s money (in this scenario).
 When managers are not party to contract acquisition they do not support the project
and even allow unskilled staff to be involved and further, do not support those staff to
later lay the blame at the door of team members they have a duty to manage.
 Formal and informal communication channels are faulty leading to inadequate
documentation, misinterpretation of data (deliberate and accidental), omissions in
contacting prime internal stakeholders at all, and lack of clarity as to who has authority
in the project.
 The company culture is such that staff does not like to bring crucial information to the
notice of their superiors, which sets off a ruinous chain reaction ending in project
failure.
 The desire to keep a client ‘on side’ is not a fitting reason to agree to a contract
especially if that work opportunity is not crucial to the company’s survival.
 Internal (and external) personnel see contracts as opportunities to further their career
ambitions ahead of the interests of the company.
 Complacency sets in when the company does not change its methods in the marketplace
but relies on the fact that because the company has succeeded, it will continue to
succeed, which is a danger in a fast-changing global environment.

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QUESTIONS:-

1. What were the major mistake made by Corwin?

Corwin made some major mistakes in its handling of the project. First mistake was in its
project selection process. New product development does not fit within Corwin’s
conservative, risk-adverse market expansion focus. Although Corwin had a product
selection policy in place, they did not formally evaluate the request from Peters against
the policy. Second Corwin agreed to a fixed price contract. In a fixed price contract, the
vendor takes on the majority of the financial risk. Fixed price contracts work well in
situations where the requirements are clear and the vendor is confident that they can
meet the requirements for the agreed price. However, the Peters project did not fit the
criteria for a fixed price contract.

2. Should Corwin have accepted the assignment?

Corwin should not have accepted the project only base of core competency of their
design and it did not have any internal resource available to take on the project
themselves. And also A strict management policy and a risk adverse culture results in a
90% no bid on specialty product inquiries. However, Corwin selected to respond to a
bid from one of its customers. The project was a complete failure and cost Corwin its
relationship with the customer. This case study examines the mistakes Corwin made
during the initiation and execution of the failed project.

3. Should companies risk biding on projects based upon rough draft specifications?
No, because rough drafts are exactly that – a draft. Despite a first-mover advantage for
early bidders, the project can completely change, which would impact the ability for a
firm to meet the required budget, timeline, project goals and customer satisfaction.

4. Should be shortness of the proposal preparation time have required more active
top management involvement before the proposal went out of house?
Yes, There should be shortness of the proposal preparation time have required more
active top management involvement before the proposal went out of house but in this
project Senior management failed to engage in and support the project. Three of the
four decisions makers were out of town during the proposal process. Due to the short
turnaround requirements for the proposal presentation, senior management was
unable to participate in the proposal process. In addition, senior management stayed at
arm’s length during execution and only engaged once they became aware of major
problems with the project. If senior management had been involved at the onset they
might never have accepted the project.

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5. Are there any risks in not having the vice president for manufacturing available
during the go or no-go bidding decision?
Accountability for deliverables cannot be guaranteed; also, they may have insight into
the impact of a project on the company's resources as a whole (capital, personnel
availability, scheduling, etc).

6. Explain the attitude of Dick Potts during the proposal activities.

On the following morning, the specification sheets arrived and Royce, West, and Dick
Potts, a contracts man, began preparing the proposal. West prepared the direct labor
man-hours, and Royce provided the costing data and pricing rates.
Potts, being completely unfamiliar with this type of effort, simply acted as an observer
and provided legal advice when necessary. Potts allowed Royce to make all decisions
even though the contracts man was considered the official representative of the
president.

7. None of the executives expressed concern when Dr. Reddy said, “I would never
have assigned him (West) as project leader.” How do you account for the
executives lack of concern?
Situation:-

Reddy: “I think we’re heading for trouble in accepting this project. I’ve worked with
Peters Company previously on R&D efforts, and they’re tough to get along with. West is
a good man, but I would never have assigned him as the project leader. His expertise is
in managing internal rather than external projects. But, no matter what happens, I’ll
support West the best I can.”

Royce: “You’re too pessimistic. You have good people in your group and I’m sure you’ll
be able to give him the support he needs. I’ll try to look in on the project every so often.
West will still be reporting to you for this project. Try not to burden him too much with
other work. This project is important to the company.”
West spent the first few days after vacation soliciting the support that he needed from
the other line groups. Many of the other groups were upset that they had not been
informed earlier and were unsure as to what support they could provide. West met with
Reddy to discuss the final schedules.

Reddy: “Your schedules look pretty good, Dan. I think you have a good grasp on the
problem. You won’t need very much help from me. I have a lot of work to do on other
activities, so I’m just going to be in the background on this project. Just drop me a note
every once in a while telling me what’s going on. I don’t need anything formal. Just a
paragraph or two will suffice.”

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 Finally, the conclusion was Reddy never assigned West as a project leader then as
concern of other activities he gave all authority to West for handled this project. I think
Royce enlightens about this problem but Reddy was not even concern about what she
said. And it will lead to the project defaulter.

8. How important is it to inform line managers of proposal activities even if the line
managers are not required to provide proposal support?
It is very important it to inform line managers of proposal activities even if the line
Managers are not required to provide proposal support. In this case line managers
could not do anything because the line managers were engaged too late in the process.
Once the proposal was accepted, the project manager attempted to engage the line
managers to obtain the resources needed to support the project. However, the line
managers became upset because they were not involved earlier in the project. The
project manager expected the line managers to provide resources to support the project
but did not give them any opportunity to provide input during the proposal process.
They were resistant to providing resources after the fact. If Corwin had involved its line
managers early in the process, they might have been able to provide information that
would have influenced the proposal.

9. Explain Dr. Reddy’s attitude after go ahead.

Situation:-

Both West and Reddy agreed that the project was now out of control, and severe
measures would be required to correct the situation, in addition to more than $250,000
in corporate funding.

Reddy: “Dan, I’ve called a meeting for 10:00 A.M. with several of our R&D people to
completely construct a new test matrix. This is what we should have done right from
the start.”

West: “Shouldn’t we invite Ray to attend this meeting? I’m sure he’d want to be involved
in designing the new test matrix.”

Reddy: “I’m running this show now, not Ray!! Tell Ray that I’m instituting new policies
and procedures for in-house representatives. He’s no longer authorized to visit the labs
at his own discretion. He must be accompanied by either you or me. If he doesn’t like
these rules, he can get out. I’m not going to allow that guy to disrupt our organization.
We’re spending our money now, not his.”

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 So, Dr Reddy accept that the project was out of control. After go-ahead he spends
money again and restarts the project.

10. Is immediate procurement of all materials a mistake?

The immediate procurement of all material a mistake because Ray already reported
that to boss that the first five tests were failures and that we’re changing the direction
of the project.

At that time West said that, “I’ve already purchased $30,000 worth of raw materials.
Your matrix uses other materials and will require additional expenditures of $12,000.”
So, immediate procurement of all material were lead to additional expenditures of the
project costing.

11. Should Pat Ray have been given the freedom to visit laboratory personnel at any
time?
Legally, Ray had the freedom to visit lab personnel because the contract between the
two companies “contained a clause specifying that Peters Company had the right to
send an in-house representative into Corwin Corporation for the duration of the
project.

12. Should an in‐house representative have the right to remove a functional

employee form the project?
However, unless the contract also specified the in-house representative had authority
to remove a functional employee from the project, Ray should only have been able to
make a suggestion to the project manager and his company.

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