Gary Anderson had accepted a position

CASE STUDY: THE BLUE SPIDER PROJECT“This is impossible! Just totally impossible! Ten months ago I was sitting on top ofthe world. Upper-level management considered me one of the best, if not the bestengineer in the plant. Now look at me! I have bags under my eyes, I haven’t sleptsoundly in the last six months, and here I am, cleaning out my desk. I’m sure gladthey gave me back my old job in engineering. I guess I could have saved myself a lotof grief and aggravation had I not accepted the promotion to project manager.”HistoryGary Anderson had accepted a position with Parks Corporation right out of college.With a PhD in mechanical engineering, Gary was ready to solve the world’s mosttraumatic problems. At first, Parks Corporation offered Gary little opportunity to dopure research, which he eagerly wanted to undertake. However, things soonchanged. Parks grew into a major electronics and structural design corporationduring the big boom of the late fifties and early sixties when the Department ofDefence (DoD) contracts were plentiful.Parks Corporation grew from a handful of engineers to a major DoD contractor,employing some 6,500 people. During the recession of the late sixties, moneybecame scarce and major layoffs resulted in lowering the employment level to 2,200employees. At that time, Parks decided to get out of the RD business and competeas a low-cost production facility while maintaining ane engineering organisationsolely to support production requirements.After attempts at virtually every project management organisational structure, ParksCorporation selected the matrix form. Each project had a program manager whoreported to the director of program management. Each project also maintained anassistant project manager, normally a project engineer, who reported directly to theproject manager and indirectly to the director of engineering. Program managersspent most of their time worrying about cost and time, whereas the assistant programmanagers worried more about technical performance.With the poor job market for engineers, Gary and his colleagues began takingcoursework towards an MBA degree, should the job market deteriorate further.In 1975, with the upturn in DoD spending, Parks had to change its corporate strategy.Parks had spent the last seven years bidding on the production phase of largeprograms. But now, with the new evaluation criteria set forth for contract award,those companies winning the R&D and qualification phases had a definite edge onbeing awarded the production contract. The production contract was where the bigprofits could be found. In keeping with this new strategy, Parks began to beef up itsR&D engineering staff. By 1978, Parks had increased in size to 2,700 employees.The increase was mostly in engineering. Experienced R&D personnel were difficultto find for the salaries that Parks was offering. Parks was, however, able to luresome employees away from the competitors, but relied mostly upon the younger,inexperienced engineers fresh out of college.CASE STUDY: THE BLUE SPIDER PROJECT1With the adoption of this corporate strategy, Parks Corporation administered a newwage and salary program that included job upgrading. Gary was promoted to seniorscientist, responsible for all R&D activities performed in the mechanical engineeringdepartment. Gary had distinguished himself as an outstanding production engineerduring the past several years, and management felt that his contribution could beextended to R&D as well.In January 1978, Parks Corporation decided to compete for Phase I of the BlueSpider Project, an R&D effort that, if successful, could lead into a $500 millionprogram spread out over twenty years. The Blue Spider Project was an attempt toimprove the structural capabilities of the Spartan Missile, a short-range tacticalmissile used by the Army. The Spartan Missile was exhibiting fatigue failure after sixyears in the field. This was three years less than what the original designspecifications called for. The Army wanted new materials that could result in a longerlife for the Spartan Missile.Lord Industries was the prime contractor for the Army’s Spartan Program. ParksCorporation would be a subcontractor to Lord if they could successfully bid and winthe project. The criteria for subcontractor selection were based not only on low bid,but also on technical expertise as well as management performance on otherprojects. Parks’ management felt that they had a distinct advantage over most of theother competitors because they had successfully worked on other projects for LordIndustries.The Blue Spider Project Kick-offOn November 3, 1977, Henry Gable, the director of engineering, called GaryAnderson into his office.Henry Gable: “Gary, I’ve just been notified through the grapevine that Lord will beissuing the RFP for the Blue Spider Project by the end of this month, with a thirty-dayresponse period. I’ve been waiting a long time for a project like this to come along sothat I can experiment with some new ideas that I have. This project is going to be mybaby all the way! I want you to head up the proposal team. I think it must be anengineer. I’ll make sure that you get a good proposal manager to help you. If westart work now, we can get close to two months of research in before proposalsubmittal. That will give us a one-month’s edge on our competitors.”Gary was pleased to be involved in such an effort. He had absolutely no trouble ingetting functional support for the R&D effort necessary to put together a technicalproposal. All of the functional managers continually remarked to Gary that, “Thismust be a biggy. The director of engineering has thrown all of his support behindyou.”On December 2, the RFP was received. The only problem area that Gary could seewas that the technical specifications stated that all components must be able tooperate normally and successfully through a temperature range of –65° to 145°F.Current testing indicated the Parks Corporation’s design would not function above130°F. An intensive R&D effort was conducted over the next three weeks.Everywhere Gary looked, it appeared that the entire organisation was working on histechnical proposal.CASE STUDY: THE BLUE SPIDER PROJECT2A week before the final proposal was to be submitted, Gary and Henry Gable met todevelop a company position concerning the inability of the preliminary designmaterial to be operated above 130°F.Gary Anderson: “Henry, I don’t think it is going to be possible to meet specificationrequirements unless we change our design material or incorporate new materials.Everything I’ve tried indicates we’re in trouble.”Henry Gable: “We’re in trouble only if the customer knows about it. Let the proposalstate that we expect our design to be operative up to 155°F. That’ll please thecustomer.”Gary Anderson: “That seems unethical to me. Why don’t we just tell them the truth?”Henry Gable: “The truth doesn’t always win proposals. I picked you to head up thiseffort because I thought that you’d understand. I could have just as easily selectedone of our many moral project managers. I’m considering you for program managerafter we win the program. If you’re going to pull this conscientious crap on me likethe other project managers do, I’ll find someone else. Look at it this way; later wecan convince the customer to change the specifications. After all, we’ll be so fardownstream that they will have no choice.”After two solid months of sixteen-hour days, the proposal was submitted. OnFebruary 10, 1978 Lord Industries announced that Parks Corporation would beawarded the Blue Spider Project. The contract called for a ten-month effort,negotiated at $2.2 million at a firm-fixed price.Selecting the Project ManagerFollowing contract award, Henry Gable called Gary in for a conference.Henry Gable: “Congratulations Gary! You did a fine job. The Blue Spider Projecthas great potential for ongoing business over the next ten years, provided that weperform well during the R&D phase. Obviously you’re the most qualified person inthe plant to head up the project. How would you feel about a transfer to programmanagement?”Gary: “I think it would be a real challenge. I could make maximum use of the MBAdegree I earned last year. I’ve always wanted to be in program management.”Henry Gable: “Having several master’s degrees, or even doctorate’s for that matter,does not guarantee that you’ll be a successful project manager. There are threerequirements for effective program management: you must be able to communicateboth in writing and orally; you must know how to motivate people; and you must bewilling to give up your car pool. The last one is extremely important in that programmanagers must be totally committed and dedicated to the program, regardless ofhow much time is involved.“But this is not the reason why I asked you to come here. Going from projectengineering to program management is a big step. There are only two places youCASE STUDY: THE BLUE SPIDER PROJECT3can go from program management; up the organisation or out the door. I know ofvery, very few engineers that failed in program management and were permitted toreturn.”Gary: “Why is that? If I’m considered to be the best engineer in the plant, why can’t Ireturn to engineering?”Henry Gable: “Program management is a world of its own. It has its own formal andinformal organisational ties. Program managers are outsiders. You’ll find out. Youmight not be able to keep the strong personal ties you now have with your fellowemployees. You’ll have to force even your best friends to comply with yourstandards. Program managers can go from program to program, but functionaldepartments remain intact.”“I’m telling you all this for a reason. We’ve worked well together the past severalyears. But if I sign the release so that you can work for Grey in ProgramManagement, you’ll be on your own, like hiring into a new company. I’ve alreadysigned the release. You still have some time to think about it.”Gary: “One thing I don’t understand. With all of the good program managers wehave here, why am I given this opportunity?”Henry Gable: “Almost all of our program managers are over forty-five years old. Thisresulted from our massive layoffs several years ago when we were forced to lay offthe younger, inexperienced program managers. You were selected because of yourage and because all of our other program managers have worked on onlyproduction-type programs. We need someone at the reigns who knows R&D. Yourcounterpart at Lord Industries will be an R&D type. You have to fight fire with fire.”“I have an ulterior reason for wanting you to accept this position. Because of thedivision of authority between program management, who can I communicate withconcerning R&D work? The program managers we have now are interested only intime and cost. We need a manager who will bend over backwards to getperformance also. I think you’re that man. You know the commitment we made toLord when we submitted that proposal. You have to try to achieve that. Remember,this program is my baby. You’ll get all the support you need. I’m tied up on anotherproject now. But when it’s over, I’ll be following your work like a hawk. We’ll have toget together occasionally and discuss new techniques.“Take a day or two to think it over. If you want the position, make an appointment tosee Elliot Grey, the director of program management. He’ll give you the samespeech I did. I’ll assign Paul Evans to you as chief project engineer. He’s aseasoned veteran and you should have no trouble working with him. He’ll give yougood advice. He’s a good man.”The Work BeginsGary accepted the new challenge. His first major hurdle occurred in staffing theproject. The top priority given to him to bid the program did not follow through forstaffing. The survival of Parks Corporation depended upon the profits received fromthe production programs.In keeping with this philosophy Gary found thatCASE STUDY: THE BLUE SPIDER PROJECT4engineering managers (even his former boss) were reluctant to give up their keypeople to the Blue Spider Program. However, with a little support from Henry Gable,Gary formed an adequate staff for the program.Right from the start Gary was worried that the test matrix called out in the technicalvolume of the proposal would not produce results that could satisfy specifications.Gary had a milestone, ninety days after go-ahead, to identify the raw materials thatcould satisfy specification requirements. Gary and Paul Evans held a meeting tomap out their strategy for the first few months.Gary Anderson: “Well Paul, we’re starting out with our backs against the wall on thisone. Any recommendations?”Paul Evans: “I also have my doubts in the validity of this test matrix. Fortunately, I’vebeen through this before. Gable thinks this is his project and he’ll sure as hell try tomanipulate us. I have to report to him every morning at 7:30 a.m. with the raw dataresults of the previous day’s testing. He wants to see it before you do. He alsostated that he wants to meet with me alone.“Lord will be the big program. If the test matrix proves to be a failure, we’re going tohave to change the scope of effort. Remember, this is an FFP contract. If wechange the scope of work and do additional work in the earlier phases of theprogram, then we should prepare a trade-off analysis to see what we can deletedownstream so as to not overrun the budget.”Gary Anderson: “I’m going to let the other project office personnel handle theadministration work. You and I are going to live in the research labs until we getsome results. We’ll let the other project office personnel run the weekly teammeetings.”For the next three weeks Gary and Paul spent virtually twelve hours per day, sevendays a week, in the research and development lab. None of the results showed anypromise. Gary kept trying to set up a meeting with Henry Gable but always foundhim unavailable.During the fourth week, Gary, Paul and the key functional department managers metto develop an alternate test matrix. The new test matrix looked good. Gary and histeam worked frantically to develop a new workable schedule that would not have animpact on the second milestone, which was to occur at the end of 180 days. Thesecond milestone was the final acceptance of the raw materials and preparation ofproduction runs of the raw materials to verify that there would be no scale-updifferences between lab development and full-scale production.Gary personally prepared all of the technical handouts for the interchange meeting.After all, he would be the one presenting all of the data. The technical interchangemeeting was scheduled for two days. On the first day, Gary presented all of the data,including test results, and the next day the test matrix. The customer appeareddispleased with the progress to date and decided to have their own in-house caucusthat evening to go over the material that was presented.CASE STUDY: THE BLUE SPIDER PROJECT5The following morning the customer stated their position: “First of all, Gary, we’requite pleased to have a project manager who has such a command of technology.That’s good. But every time we’ve tried to contact you last month, you wereunavailable or had to be paged in the research laboratories. You did an acceptablejob presenting the technical data, but your project office personnel presented theadministrative data. We, at Lord, do not think that you’re maintaining the properbalance between your technical and administrative responsibilities. We prefer thatyou personally give the administrative data and your chief project engineer presentthe technical data.“We did not receive any agenda. Our people like to know what will be discussed, andwhen. We also want a copy of all handouts to be presented at least three days inadvance. We need time to scrutinize the data. You can’t expect us to walk in hereblind and make decisions after seeing the data for ten minutes.“To be frank, we feel that the data to date are totally unacceptable. If the data do notimprove, we will have no choice but to issue a stop work order and look for a newcontractor. The new test matrix looks good, especially since this is a firm-fixed-pricecontract. Your company will bear the burden for all costs for the additional work. Atrade-off with later work may be possible, but this will depend upon the resultspresented at the second design review meeting, ninety days from now.“We have decided to establish a customer office at Parks to follow your work moreclosely. Our people feel that monthly meetings are insufficient during R&D activities.We would like our customer representative to have daily verbal meetings with you oryour staff. He will then keep us posted. Obviously, we had expected to review muchmore experimental data than you have given us.“Many of our top quality engineers would like to talk directly to your engineeringcommunity, without having to continually waste time by having to go through theproject office. We must insist upon this last point. Remember, your effort may beonly $2.2 million, but our total package is $100 million. We have a lot more at stakethan you people do. Our engineers do not like to get information that has beenfiltered by the project office. They want to help you.“And last, don’t forget that you people have a contractual requirement to preparecomplete minutes for all interchange meetings. Send us the original for signaturebefore going to publication.Although Gary was unhappy with the first team meeting, especially with the requestsmade by Lord Industries, he felt that they had sufficient justification for theircomments. Following the team meeting, Gary personally prepared the completeminutes. “This is absurd,” thought Gary. “I’ve wasted almost one entire week doingnothing more than administrative paperwork. Why do we need such detailedminutes? Can’t a rough summary just as well suffice? Why is it that customers wanteverything documented? That’s like an indication of fear. We’ve been completelycooperative with them. There has been no hostility between us. If we’ve gotten thismuch paperwork to do now, I hate to imagine what it will be like if we get into trouble.”A New RoleCASE STUDY: THE BLUE SPIDER PROJECT6Gary completed and distributed the minutes to the customer as well as to all keyteam members.For the next five weeks testing went according to plan, or at least Gary thought that ithad. The results were still poor. Gary was so caught up in administrative paperworkthat he hadn’t found time to visit the research labs in over a month. On a Wednesdaymorning, Gary entered the lab to observe the morning testing. Upon arriving in thelab, Gary found Paul Evans, Henry Gable, and two technicians testing a newmaterial, JXB-3.Henry Gable: “Gary, your problems will soon be over. This new material, JXB-3, willpermit you to satisfy specification requirements. Paul and I have been testing it fortwo weeks. We wanted to let you know, but were afraid that if the word leaked out tothe customer that we were spending their money for testing materials that were notcalled out in the program plan, then they would probably go crazy and might cancelthe contract. Look at these results. They’re super!”Gary Anderson: “Am I supposed to be the one to tell the customer now? This couldcause a big wave.”Henry Gable: “There won’t be any wave. Just tell them that we did it with our ownR&D funds. That’ll please them because they’ll think we’re spending our own moneyto support their program.”Before presenting the information to Lord, Gary called a team meeting to present thenew data to the project personnel. At the team meeting, one functional managerspoke out: “This is a hell of a way to run a program. I like to be kept informed abouteverything that’s happening here at Parks. How can the project office expect to getsupport out of the functional departments if we’re kept in the dark until the very lastminute? My people have been working with the existing materials for the last twomonths and you’re telling us that it was all for nothing. Now you’re giving us amaterial that’s so new that we have no information on it whatsoever. We’re nowgoing to have to play catch-up, and that’s going to cost you plenty.”One week before the 180-day milestone meeting, Gary submitted the handoutpackage to Lord Industries for preliminary review. An hour later the phone rang.Customer: “We’ve just read your handout. Where did this new material come from?How come we were not informed that this work was going on? You know, of course,that our customer, the Army, will be at this meeting. How can we explain this tothem? We’re postponing the review meeting until all of our people have analysed thedata and are prepared to make a decision.“The purpose of a review or interchange meeting is to exchange information whenboth parties have familiarity with the topic. Normally we (Lord Industries) requirealmost weekly interchange meetings with our other customers because we don’t trustthem. We disregarded this policy with Parks Corporation based upon past workingrelationships. But with the new state of developments, you have forced us to revertto our previous position, since we now question Parks Corporation’s integrity incommunicating with us. At first we believed this was due to an inexperiencedprogram manager. Now, we’re not sure.”CASE STUDY: THE BLUE SPIDER PROJECT7Gary Anderson: “I wonder if the real reason we have these interchange meetingsisn’t to show our people that Lord Industries doesn’t trust us. You’re creating a hell ofa lot of work for us, you know.”Customer: “You people put yourself in this position. Now you have to live with it.”Two weeks later Lord reluctantly agreed that the new material offered the greatestpromise. Three weeks later the design review meeting was held. The Army wasdefinitely not pleased with the prime contractor’s recommendation to put a newuntested material into a multi-million-dollar effort.The Communications BreakdownDuring the week following the design review meeting Gary planned to make the firstverification mix in order to establish final specifications for selection of the rawmaterials. Unfortunately, the manufacturing plans were a week behind schedule,primarily because of Gary, since he had decided to reduce costs by accepting theresponsibility for developing the bill of materials himself.A meeting was called by Gary to consider rescheduling of the mix.Gary Anderson: “As you know we’re about a week to ten days behind schedule.We’ll have to reschedule the verification mix for late next week.”Production Manager: “Our resources are committed until a month from now. Youcan’t expect to simply call a meeting and have everything reshuffled for the BlueSpider Program. We should have been notified earlier. Engineering has theresponsibility for preparing the bill of materials. Why aren’t they ready?”Engineering Integration: “We were never asked to prepare the bill of materials. ButI’m sure that we could get it out if we work our people overtime for the next two days.”Gary: “When can we remake the mix?”Production Manager: “We have to redo at least 500 sheets of paper every time wereschedule mixes. Not only that, we have to reschedule people on all three shifts. Ifwe are to reschedule your mix, it will have to be performed on overtime. That’s goingto increase your costs. If that’s agreeable with you, we’ll try it. But this will be thefirst and last time that production will bail you out. There are procedures that have tobe followed.”Testing Engineer: “I’ve been coming to these meetings since we kicked off thisprogram. I think I speak for the entire engineering division when I say that the rolethat the director of engineering is playing in this program is suppressing individualityamong our highly competent personnel. In new projects, especially those involvingR&D, our people are not apt to stick their necks out. Now our people are becomingostriches. If they’re prevented from contributing, even in their own slight way, thenyou’ll probably lose them before the project gets completed. Right now I feel that I’mwasting my time here. All I need are minutes of the team meetings and I’ll be happy.Then I won’t have to come to these pretend meetings anymore.”CASE STUDY: THE BLUE SPIDER PROJECT8The purpose for the verification mix was to make a full-scale production run of thematerial to verify that there would be no material property changes in scale-up fromthe small mixes made in the R&D laboratories. After testing, it became obvious thatthe wrong lots of raw mate…

 

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