The Corwin Corporation Corwin Management Essay

The Corwin Corporation Corwin is an internationally reputed manufacture of low-cost and high-quality rubber products. They are a non-project driven company that employ a market development, product-market strategy, in which, they sought out new markets for their existing product line (Ansoff, 1957). This strategy has enabled them to grow and generate an annual revenue of $150 million. Their reputation and the aid of their research and development (R&D) unit – that is responsible for examining technological advances and its possible application in the existing product line – has enabled them to increase the longevity of their product lifecycle. Furthermore, their reputation results in many requests to manufacture speciality products. However, Corwin practices a conservative, risk adverse management style, and implements a stringent management policy to evaluate speciality product requests. This policy includes an evaluation of whether the speciality product will provide a 20% profit margin, if there is a potential for follow-on contracts, whether the product can be integrated into the existing product line and, if the product development will interfere with the existing product line. Consequently, Corwin no-bids on over 90% of speciality product requests.

The Peters Company (Peters) is known for being a problematic customer. Despite this fact, Corwin developed a good working relationship with them and accepted speciality product projects from Peters in 1980, 1981 and 1982, based on potential follow-on contracts. However, their fourth collaboration resulted in the disintegration of the working relationship and a major financial loss.

The purpose of this report is to analyse and determine which factors lead to the fallout between Corwin and Peters and, to prevent the reoccurrence. The first part of the report consists of an in-depth analysis and discussion of the major issues faced in the project. The second part of the report consists of the conclusions drawn from the analysis and discussion section. The recommendation sections focuses on means of ensuring project management success and Corwin’s future direction.

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Discussion and analysis

Project Selection

Pertaining to the project selection process, four main dysfunctional issues were identified. These are 1) deviation from standard policy, 2) incomplete specifications and short bid preparation time, 3) absence of key decision makers and 4) fixed-price contract. Each issue is addressed in detail below.

Research suggests that “if the organization has well-documented pre-project planning procedures and standards in place, many of the elements may be partially defined when project planning begins” (Gibson Jr & Gebken II, 2003, p. 352). Corwin has a ridged informal project management standard in place to assess speciality product inquiries. As stated previously, Corwin had accepted speciality project inquiries from Peters in the past, based solely on follow-on contracts. However, in this instance, from the initial discussion, Corwin was able to assess that the Peters project was beyond their capabilities and had the potential to disrupt the existing product line. According to their policy, the fact that the project had the potential to disrupt Corwin’s existing product line should have been a deciding factor in rejecting the bid. From the case analysis, it is evident that the project did interfere with the existing product line. Constant changes to the test matrix made it hard for the staff to schedule their time appropriately.

The decision to bid was based on a rough set of specifications and Corwin was given only 48 hours to deliberate. Uncertainty or incompleteness of project information results in a higher level of risk (Khan, 2006; Wang, Xu, & Li, 2009). This is because of the complexities involved in decision making that makes it harder to effectively determine and manage the scope of the project (Khan, 2006; Wang et al., 2009). The inability to adequately manage the scope of a project has been cited as being a major cause of project failure (Dumont, Gibson Jr, & Fish, 1997; Taylor, 2000). In addition, research states that “short bid preparation time leads to a number of errors/omissions” (Iyer & Jha, 2005, p. 292). The case analysis does prove that Corwin had poor risk and scope management, such as, the inability of the project manager to manage scope change, which resulted in a cost overrun. Furthermore, the short bid preparation time did lead to errors, such as that of the inadequate contract management, as will be discussed later.

The decision to accept or reject a bid was deliberated upon by “a four-man committee composed of the president and the vice president (V.P.) of manufacturing, marketing and engineering”. Since, most of the staff was on vacation at the time, only the V.P. of marketing and the V.P. of engineering were present in the deliberation of the project. Research suggests that the project selection process is a very complex task, especially for R&D undertakings and often involves multiple decision makers who assess the project from various perspectives (Tian, Ma, Liang, Kwok, & Liu, 2005). Additionally, “a lack of communication between the marketing, R&D, and manufacturing functions of a company can be extremely detrimental to the new product development process” (Schilling & Hill, 1998, p. 74). The absence of key decision makers indicated that the decision to bid was based on the knowledge repositories of two decision makers and thus, not all the facets of the project were sufficiently assessed.

A study conducted on project bidding determined that vague or incomplete specification resulted in higher bids because bidders usually “tend to overcompensate for high uncertainty”(Jorgensen & Carelius, 2004, p. 968). However, in this case, the contract was predetermined to be fixed-price. Research suggests that fixed-price contracts are favourable in circumstances where the risks are low and the scope of the entire project is clearly specified (Turner & Simister, 2001). Because of the short bids preparation time, Corwin only included the test specifications for the first five tests. Thirty tests were to be conducted in total. Incomplete specification and the incomplete test matrix indicated that the project would be subjected to high risk and scope change and thus not a favourable condition for a fixed-price contract. In addition, product pricing and estimation was a “joint undertaking between manufacturing and marketing”. The parties involved in preparing the proposal – the engineering V.P., a R&D scientist and a contracts man – were incompetent because of their inexperience in creating a proposal. Their inexperience is noticeable in the fact that for the pricing effort, they worked backwards from the offered price. Corwin’s failure to adequately manage costs is further noticeable by the fact that the project ran over budget because of a change in scope.

Leadership and management

Numerous problems arise from incompetent leadership and management of the projects that can negatively influence the outcome of a project (Belassi & Tukel, 1996; Nixon, Harrington, & Parker, 2012; Verma, 1995). The most noticeable problems that arose resulting from incompetent leadership and management were because of the project manager and the lack of top management support.

Research has identified that the appointment of an incompetent project manager does result in project management failure. (Iyer & Jha, 2005; Mishra, Dangayach, & Mittal, 2011; Munns & Bjeirmi, 1996). Additionally, some studies suggest that when the dimensions of the project is uncertain or ambiguous, as in this case, an incompetent project manager only exacerbates the project outcome (Yeo, 1993). For speciality projects, the norm was to appoint a project manager from the marketing department. However, in this case, Corwin selected a R&D scientist as the project manager. Although objections were raised due to the inexperience of the newly appoint project manager, they were overlooked. As a result, numerous issues arose because of the project managers’ lack of experience. Firstly, fixed lines of communication were not established between the project manager and line staff and, the project manager and his superiors, which resulted in additional issues. For example, he failed to communicate changes made to the test matrix to the line staff because he was “embarrassed”. Additionally, he did not report the in-house representatives’ actions to his superiors. Secondly, the project manager procured all the raw materials for the project before the contract was signed and before all the tests were finalized. The failure to manage the procurement process resulted in the project exceeding its budget due to changes made to the test matrix. Finally, the project manager failed to manage scope change in a proficient manner. His failure to do so resulted in additional issues such as the dissatisfaction of most employees working on the project and cost overruns.

Top management supported is cited as being one of the foremost critical success factors of every project (Fortune & White, 2006; Pinto & Prescott, 1988). However, most of Corwin’s executives failed to participate and support the project. Most of the executives had reservations about the success of the project and distanced themselves from the project. The most salient illustration of the lack of top management support is the failure on the part of the R&D manager. The R&D manager failed to offer support and advice when approached by the project manager for help even though it was his designated role to do so. His reasons for lack of support was due to time management, which has been cited as one of the difficulties faced by non-project driven organizations (Kerzner, 2009). However, when the progress of the project was reported to the other managers, the R&D manager blamed the project manager for failing to report to him.

Another issue pertaining to top management support is the lack of a project sponsor. According to Kerzner (2009, p. 384), “the project sponsor usually comes from the executive levels and has the primary responsibility of maintaining executive-client contact”. Even though, there is a gap in literature pertaining to the precise role of a project sponsor, Kerzner (1998) states that the role of the project sponsor can evolve according to the situation. Issues that could have been rectified by the presence of a project sponsor were the clarification of the in-house representatives’ boundary of authority and the fact that there was no direct communication between Corwin and Peters after the signing of the contract. The only progress report received by Peters was from the in-house representative who had a different view of the progress of the tests. For example, he reported that the first five tests were total failures when in fact they were “marginally acceptable”.

Organizational Strategy

Corwin’s risk-adverse culture only allows them to bid on less than 10% of specialty project requests. This indicates that more than 90% of projects are potentially lost to competing companies. Even though their current strategy has proven to be highly profitable for the company, research suggests that, “product life cycles have been shortening as the innovations of others make existing products obsolete” (Schilling & Hill, 1998, p. 68). Moreover, the fragmentation of the market into smaller niches and lean manufacturing has enabled “manufacturing enterprises to customize their product offerings to the demands of fairly narrowly defined customer groups, thereby out-focusing their competitors” (Ibid, p. 68). Furthermore, Corwin’s R&D departments’ capability is restricted by the fact that they are mainly focused on examining technological advances and its possible application in their existing product line. This indicates that other manufacturing enterprises may have a competitive advantage over Corwin. Thus, Corwin’s long-term sustainability may be in jeopardy.

Conclusion

Based on the discussion and analysis of the case, it is evident the termination of the project by Peters was a result of internal inefficiency, which is a component of project management success (de Wit, 1988; Han, Yusof, Ismail, & Aun, 2012; Ika, 2009). Most of the key issues pertaining to the project arose from the deviation from standard protocol. The fact that Corwin choose to consider the bid solely on the potential of follow-up contracts was not a major issue, as they have done so in the past without adverse outcomes. However, the further divergence from normal protocol resulted in project management failure and consequently, the termination of the project. These inconsistencies include, the decision makers involved in the bid/no-bid decision, the appointment of a project manager from the R&D department rather than the marketing department and, the parties involved in the formulation of the contract proposal. If Corwin had followed normal protocol, they would have been more adept in making an informed decision, which may have resulted in an alternative course of actions such as a no-bid decision or a higher bid price.

Some vital predicaments that were discussed were unrelated to standard procedure, such as the communication issues, top management support, and the lack of a project sponsor. The lack of communication between internal and external stakeholders has been cited as one of the main reasons for project management failure (Balachandra & Friar, 1997; Mishra et al., 2011; Schilling & Hill, 1998). Additionally, the analysis indicates that a project sponsor along with top management support is imperative for the success of a project. Furthermore, a vital aspect that needs to be addressed is Corwin’s long-term sustainability. Corwin is at a major disadvantage because of the narrow focus of their current strategy which additional impediments their R&D focuses. In order to stay competitive in the industry, Corwin needs to address the issue of their long-term sustainability.

As stated in the introduction, the purpose of this report is to prevent the recurrence of the key issues depicted in the case. Considering that Corwin is a non-project driven company, they do have informal project management procedures in place to aid them. However, to ensure that they are safeguarded, Corwin needs to develop and implement a more formal project management framework. Thus, the recommendation will focus on establishing Corwin’s long-term presence in the market place and the development and implementation of a formal framework.

Recommendations

Corwin’s current management policy prevents them from bidding on more than 90% of specialty product inquiries. Based on the analysis it is evident that if Corwin were to follow the same policy or only focus on the manufacturing of their existing product line, it will not only result in a financial loss resulting from lost opportunities, but it will impede their ability to obtain a sustained competitive advantage. Thus, it is recommended that Corwin relinquish the policy. In order to ensure that Corwin is safeguarded in their future project undertakings, it is recommended that they employ a structured project management framework. The purpose of this framework is to provide a toolkit for managing all the components of a project thought out the project lifecycle (Ghosh, Forrest, DiNetta, Wolfe, & Lambert, 2012; Greenley, 2008; Hartley, 2008). This will ensure that Corwin has a formal protocol to plan and implement future projects and thus increase their chances of obtaining successful project outcomes.

Universally recognized frameworks employed by organizations are Project Management Body of Knowledge (PMBOK), Australian Institute of Project Management (AIPM), Projects in a Controlled Environment (PRINCE2), HERMES Swiss Project Management method, among others (Ghosh et al., 2012). In line with Corwin’s risk adverse culture, it is recommended that they adopt the PRINCE2 framework because it is more focused on risk assessment and management as compare to other frameworks such as PMBOK (Greenley, 2008). Additionally, this framework will provide Corwin with a set of processes specifically targeted at helping them resolve the issues face with scope management, contract management, human resource management, communication management and so forth. Furthermore, if the implementation of this framework does prove to be successful and increases the number of specialty project undertakings by Corwin, then they should consider increasing the capacity of the R&D department to match the requirements. By doing so, Corwin will be more equipped at sustaining a competitive advantage and establishing a long-term presence in the market place. The specifications of this framework is discussed below.

PRINCE2 is based on seven principles which are, continued business justification, learning from experience, defined roles and responsibilities, manage by stages, manage by exception, focus on products and, tailor to suit the project environment (Turley, 2010). Additionally the framework is utilized to plan, delegate, monitor, and control six performance targets which are, timescales, costs, quality, benefits and risks (Ibid.). The PRINCE2 framework offers numerous benefits which address most of the issues faced by Corwin. Firstly, being product-focused, it defines all the attributes and the scope of the project and identifies the project stakeholders (Turley, 2010; Zhang, He, & Zhang, 2012). Second, the principal of roles and responsibilities indicates that every team member has a structured role and are accountable for performing their role with due diligence (Turley, 2010). Additionally, it specifies the need and the role of a project sponsor and divides the authority of the project over senior management and the project manager (Ghosh et al., 2012; Greenley, 2008). Even though numerous scholars have suggested that strong assistance from the marketing department is imperative in every stage of new product development, Corwin’s inclination of employing a project manager from the marketing department may indicate some deficiencies which can be remedied by senior management support (Balachandra & Friar, 1997; Cooper, 1980; Mahajan & Wind, 1992). Third, the principal of management by exception implies that senior management intervention is advocated in exceptional instances (Ghosh et al., 2012; Turley, 2010). For example, when the project manager was unable to handle the in-house representative, it was the role of senior management to intervene. Fourth, it is user friendly, easily customized and can be easily understood (Zhang et al., 2012). Fifth, it instigates the continuous monitoring and justification of the project during the course of the projects’ lifecycle (Turley, 2010). Hence, if at any period, the project seems unprofitable, it can be terminated. Finally, PRINCE2 can provide an insight into the mistakes made in past projects which are documented in a “lesson log” and thus improve on future projects (Greenley, 2008; Turley, 2010).

However, PRINCE2 does have two limitations which are vital to this case. First, for certain processes such as decision making, PRINCE2 offers a range of techniques which can be implemented but fails to provide details in order to make an informed decision about appropriateness (Turley, 2010). Second, it overlooks procurement management which is an imperative aspect of a project (Ghosh et al., 2012). Based on these two limitations, recommendations are provided below.

Since it has been recommended that Corwin relinquish their current decision-making policy, it is recommended that Corwin adopts a framework that is more adept in providing informed decisions. The framework designed by Bitman and Sharif (2008) providing a comprehensive ranking system based on previously published systems and practitioner evaluation and utilization, is recommended (p.276). This framework is ideal for projects with a high degree of complexity and for improving a company’s competitive advantage (Ibid.). The framework compromises of multiple toolsets such as “project evaluation form, pairwise comparison matrices, a weighted scoring model, a scorecard, and radar diagrams” (p. 277). Each of these tools can be customized to Corwin’s requirements. Even though this framework may seem to be excessive, the use of multiple set of tools to make a decision is advantageous because it “increase the objectivity, accountability, and transparency of its strategic decision-making process” (p.277). Furthermore, the added benefit of utilizing this framework is that it involves multiple decision makers and it creates an audit trail. This signifies that it allows for a multi-level assessment of the project and thus the bid/no-bid decision will be more informed and if mistakes do occur, it can be traced using the audit trail. It is further recommended that Corwin strictly implements this framework and do not bypass any of the requirement before proceeding to the next stage of the project lifecycle.

The issues that arose as a result of improper procurement management were a result of the project managers’ incompetence. Therefore, it is recommended depending on the project, that only experienced personnel are authorized to plan and procure the required materials. In conjunction with lack of competencies, it is recommended that in estimating project costs and drawing up a contract proposal, that only qualified personnel are involved. Furthermore, it is recommended that Corwin reject bids, which have incomplete specification and are fixed price.

Finally, it is recommended that Corwin implement a project management information system (PMIS). A PMIS is a single unifying and “comprehensive systems that support the entire life-cycle of projects, project programs, and project portfolios” (Frederik, 2009, p. 19). In other words, it incorporates all the aspects of a project, such as, planning, organizing, monitoring, and reporting, within a centralized online setting. Research indicates that 75% of organizations that have employed a PMIS have obtained favourable project outcomes with the help of the system (Raymond & Bergeron, 2008). Furthermore, Raymond and Bergeron (2008) state that the influence of PMIS on project success is a result of “higher-quality information, extensive use of the system, and individual impacts on the project manager” (p. 219). The major advantage of a PMIS is that it makes the managing of a project easier and it enables continuous and real-time monitoring of the project (Caniëls & Bakens, 2012; Jaafari & Manivong, 1998; Raymond & Bergeron, 2008). Corwin can choose a paid PMIS software such as Microsoft Project, which is utilized by numerous organizations (Raymond & Bergeron, 2008). Alternatively, a free web-based open source project management software can be utilized which are comparable to MS Project (Margea & Margea, 2011). Based on the research of Margea and Margea (2011), eGroupWare is the most suitable software as it allows for collaboration, project portfolio management, resource management planning, project scheduling, risk management, document management and provides help and support. Thus, by implementing an appropriate PMIS, Corwin will be able to manage projects with ease and thus ensure successful project management in future endeavours.