Project Success or Future Criteria Northern Engineering Industry

Question: Discuss about theProject Success or Future Criteriafor Northern Engineering Industry. Answer: Introduction This report is prepared to understand how a project can be evaluated from the perspective of project management. The paper discusses various theoretical constructions that determined the project resolution, its success factors and failure factors. To understand how each of these factors plays a role in project management, a case of Rolls Royce ERP implementation was taken and the project was analyzed using various factors identified by researchers. Company Background Rolls Royce is a private sector organization that had acquired Northern Engineering industry in 1989 after which the company was able to consolidate its industrial power capabilities. By 1995, the company acquired another organization called Allison Engine Company from USA and thus, added aero propulsion and gas engine turbine to its product portfolio. Over the years, Rolls Royce has become a global organization with 14 services. For running its operations internally, Rolls Royce had developed 1500 IT programs that were difficult to maintain and costly to operate(Yusuf, et al., 2004). Moreover, different systems did not provide a consistent data making it difficult for the organization to make decisions fast. For instance, the company implemented MERLIN for managing its logistics and inventory but the system lacked communication with other systems in the organization such as IBIS which was a manufacturing system. Corporate Cost Accounting (CCA) was yet another system that was to be coordinated with. On top of these systems, there were other individual systems or suppliers, partners and customers adding to complexities. Thus, the company decided to implement an ERP system which could consolidate the entire IT system of the organization. Project Case Rolls-Royce had planned implementation of an ERP solution provided by SAP. This involved implementation of SAP R/3 software package. The solution involved integration of all functional processes of Rolls Royce including manufacturing, order management, human resource management, financial systems and supply chain. Rolls Royce hired EDS for the management of project while SAP was the ERP consultant and solution provider. A project team was formed with their segregation into separate smaller teams. Every operational business unit of Rolls Royce was provided a freedom to make a plan for required activities. A release strategy was defined which involved identification, validation, cleaning, loading and archiving of legacy data and procurement of new hardware that included 1000 personal computers, 6000 software licenses and servers. The project was divided into three phases that were to be completed from 1998 to 2000 when the Go live was planned. The project began with an intense study done on the requirement and a core team was constructed for managing the implementation project. A steering committee was also formed to provide financial guidance. Standard Criteria for Project Success or Failure There are 13 success factors that are defined by Jiang that include: Clear Goals: Goals include project mission and philosophy that further determines the objectives of project team. Competent PM: It is very important the project manager who is leading the project is competent in all essential areas of project including interpersonal relationships, technical requirements and administrative functions. A project manager must also have leadership qualities to be able to motivate team and keep them aligned with the project goals. Management Support: The project must get a buy in from the top management of the project organization. Communication Channels: For the information generated on the project during each of the phases, an appropriate channel must be used for communicating the same within and outside the project teams. This information can include project progress status, risks, issues, suggestions, feedback and so on. Responsiveness: The project manager must be responsive to the client and must keep the client always updated with the progress of the project. Competent Team: The team members of a project must be competent and thus appropriate and careful selection process must be used for human resource. Good Resource allocation: resources include time, money, logistics and human resources that must be appropriately allotted to each project task to ensure that the project runs smoothly. Control Mechanism: The project plan includes schedule and budget that act as control mechanisms for projects. Client Acceptance: Client of a software project must understand the importance of it and accept the deliverables positively. Feedback Capabilities: Formal channels for taking feedbacks in response to project reviews and status reports must be established such that team members and all other parties to project are able to present their views and suggestions for improvement. Technical Tasks: The technologies used for development must be efficient and must be reviews by expert consultants and project manager before they are put to use for the project. Trouble-Shooting management: Project team members must have a way to record the problems of a project and must be encouraged by the project manager to seek resolution to these problems independently (Attarzadeh Ow, 2008). As per the Chaos report, based on the outcome of a project, a project can be categorized into three resolution types that include project success, project challenges and project impaired. Resolution THE CHAOS Report Time Budget Functions Features Success Going as per the schedule Completed within the budget All deliverables achieved Challenged (OBrochta, 2002) Behind schedule Cost overruns Some not achieved Impaired/Failed Cancelled Losses incurred All features not delivered (King, 2003) Project Success: When a project is completed on time, within budget and has fulfilled all the desired features and functionalities of the project. Project Challenged: When a project is completed and is operational with most of the functions and features met but it exceeds budget or is over time then it can be considered as challenged. Project Impaired: When the project is cancelled sometime during the project development cycle, it is called project impaired(Sauter Frese, 2003). The Chaos report defines both success and failure factors that include: Success: User Involvement: For a project to be successful, the involvement of user during different phases such as requirements gathering and acceptance testing is important. If the project is unable to meet the needs of these users then despite its completion on time and within budget, the project would only be a failure (Salmon, 2009) Management Support: Support from management is necessary to keep the project going smooth and on track failing which the project can be at a great disadvantage and can even fail(Attarzadeh, 2008). Clarity of requirements: Base level of requirements does not work in large projects and they are required to be very detailed such that they are all clear enough to judge their impacts, prioritize them and plan for activities required to meet those requirements. In case of failure to gather all their requirements of the project in the starting phase, problems can occur at later stages(Nelson, 2007). Efficient Planning: Proper planning is the key to the success of the project and to be successful the planning has to be detailed considering all aspects of the project right from its scope, time, cost to quality and resource requirements (Nelson, 2005) Failure Planning and Estimation: Planning stage involves estimation of the schedule as well as the cost that would be incurred on the project. If these estimates are not correct then they would fail to guide the project sufficiently and later cause the failure. Implementation: In software projects, implementation is a major step which has to follow a proper methodology as well as take care of fulfilment of requirements. Testing can be used to ensure that all requirements are met. If the testing or investigations are not done properly, despite the full featured development, the project can still fail to meet the stakeholder requirements(Hoffman, 2003) Human Factor: Project managers must have all the required skills to be able to manage the project efficiently. If the project manager is incapable of applying project management principles in practice sufficiently then it can also cause a failure. Moreover, lack of proper communication between different members on a project can also lead to the failure of a project despite all other factors doing well (Elenbass, 2000) Besides the two popular model used for determination of project success and failure, there are many critical success factors identified in the literature by various researchers in project discipline. (Belassi Tukel, 1996) Case Analysis The project may be analyzed with respect the project resolution, success and failure factors defined in various theories as described in the last section. The first step would be the determine, if the project was successful, challenged or impaired. The assessment can be done on the basis of how schedule, cost and features were managed on the ERP project of Rolls Royce. Schedule: The implementation was divided into three phases including first phase of strategy development and direction which was completed in the Quarter 1 of 1998, second phase which involved project planning and early development of ERP software which lasted for 2nd and 3rd Quarter of the same year and the third phase which lasted from 1998 to 2000 and was completed in three waves including operational focus, pilot development, and assembly and spares. The go live was planned in the 2nd Quarter of the year 2000. However, in the phase two of the project, there were significant changes were to be made as the first phase itself took 6 months unexpectedly instead of 4 months. Major changes in schedule were made due to following reasons: To get more time for preparing and cleaning data To provide additional time for pilot development To allow more time to complete prerequisites To get more time for resolving difficulties The Go live phase took two weeks to complete because of certain problems like user authorization difficulties, temporarily work halts on shop floors, incorrect value transfers between systems and transaction problems. Actual go live happened after one year of pilot implementation. Thus, the project was actually not completed as per the initially planned schedule(Yusufa, et al., 2004). Cost: The final cost of development of the ERP system was $2.8 million which was more than the initially planned budget. Major causes of the cost overrun were delays, underestimation of communication requirements, scope creep, lack of ownership and initial fall in productivity(Olson, et al., 2005). Features and Functions: The project faced scope creep and thus, many modifications were made in the initially decided scope. There were data variances and user authorization problems found that delayed the go live stage. The new system required changes to be made in data. Thus, from the perspective of project resolution, Rolls Royce ERP implementation project was challenged and not successful. However, this interpretation would not be sufficient enough to learn from the case and thus, the case may be analyzed with respect to individual success and failure criterias defined in theories discussed in the previous section. Thus, a list of project evaluation criteria including both success and failure factors determined in the Chaps report and in the Jiangs success measures may be applied to the ERP implementation project of Rolls Royce: Clear Goals: Goals of the project were clear from the beginning and those included development of a new ERP system and integration of all departmental processes into a single centralized system to replace old legacy systems Competent PM: Responsibility of managing project was given to EDS which was an external outsourcing company. The company already had an experience of working with SAP projects and had some SAP consultants internally. EDS was made responsible for taking over existing systems, providing required resources, developing IT system of Rolls Royce and employing SAP consultants. EDS had a good experience of working in aerospace industry and had people with specialized skills of producing architectural frameworks for ERP projects and working with SAP projects. Communication Channels: Company used meetings and seminars extensively for communicating changes to employees or training the staff on the importance as well as the use of new system Competent Team: The project team use for the ERP implementation project was divided into small segments for managing parts of the project. Every operational business unit of Rolls Royce was given its own project planning team Good Resource allocation: Resource allocation was left to the project management organization that was efficient in providing resources, scheduling and optimizing them for project. Control Mechanism: A core team for ERP system was made to oversee the project performance and control it. Client Acceptance: A high level of customization was done on the development project by SAP which is why the client organization that is Rolls Royce was particularly satisfied with deliverables. The client was involved during different phases of development to make changes in scope and ensure necessary modifications in the systems. Technical Tasks: Rolls Royce faced a major technical problem during implementation due to inaccurate data obtained from legacy systems. The data obtained was to be normalized and modified as per the desired formats for feeding into the new system. Duplication of data was one major issue faced by the organization and it took time for the new system to take over. Till all the data was normalized, cleaned and transferred to new systems, old legacy systems could not be discontinued and thus, interfaces had to be developed between the new ERP solution and the legacy systems of the organization which increased both scope and cost of the project. Trouble-Shooting management: For managing situations of trouble shooting, a risk management process was used and the company maintained a risk register with record of huge number of project risks that were identified, recorded when appearing unexpectedly and resolutions were made. Some of the risks recorded in the risk register of ERP project were: Inability to align the human resource with the project goals Inability to provide adequate support for implementation Unavailability of the required hardware during implementation Employees resistance to change of systems Lack of serious commitment from top management for implementation project Lack of knowledge in users for using new systems Inappropriate testing of the ERP system Inability to give priority to ERP implementation project due to other important ongoing projects Challenges of maintenance due to connection between legacy and new systems Serious impacts on the accounts of the organization Extension of the go live phase User Involvement: Users were involved in requirement gathering, change feedbacks during progress reporting and were provided extensive training by SAP consultants. Expert users were trained firs on the system usage which was technical and involved expert features. Later, end users were provided training by these trained expert users. Training was carried out through seminars and in the sessions, demonstration of the developed system was also done. Management Support: The senior management of Rolls Royce was not technically oriented and thus, they could not provide sufficient guidance to the project team. Thus, an initiative was taken to train them on the ERP technology to seek buy-in. Clarity of requirements: Initially, an extensive investigation was done on the requirements and they were made very clear. Efficient Planning: The plan developed at the start of the project was very detailed and determined all deliverables, their estimated duration, specifications and responsibility identification. Planning and Estimation: A range of review was conducted on the project in order to come up with proper guidance that was used for making estimates on project cost and timelines. These reviews included design review, operation review, and high level review. The plan included a detailed three step process that was conducted in three phases including planning, scheduling, and operating. Implementation: The project implementation faced three types of problems including cultural, technical and business. Human Factor: The project team expected to get immediate acceptance from employees because of improvements provided in the new ERP system but that did not happen as new system did not get much appreciation as compared to legacy systems on some parameters. Thus, a training plan was added to make employees realize the potential of new system through proper training. These training were conducted by consultant who demonstrated the system and there were 10,000 employees who were provided training. Conclusions This report was prepared to understand how projects can consider as success or failure as per the principles and practices of project management. For this, a case of ERP implementation in Rolls Royce was considered. Various project management success and failure related theories were covered and some success factors were determined. It was found that a project is not considered as success from project management point of view if it fails to deliver on time and on budget even if all the features and functions are provided. Thus, the ERP project of Rolls Royce was not a success but a challenged project. In order to understand specific factors that contributed to this status of the project were then explored for the case of Rolls Royce and based on the analysis some recommendations can be made for improvement in project management practices that are included in the next section. Recommendations The recommendations for a sound project management practice considering the learning from the case of ERP implementation project include: While planning a project, risk management is a very crucial activity to do as many risks can be avoided or easily handled in case of their occurrence in future. As this project was planned with appropriate risk management strategies, the management team was able to manage the risks on time and take appropriate decisions for their mitigation. Initial estimates for duration and costs must be prepared very carefully as any changes later can severely affect these constraints. A contingency budget may thus be allotted at the starting of the project to accommodate such conditions. The buy-in from employees and end users should be taken before the project is started as it can later on affect the development and performance of the project. Data migration can be a major issue if not considered while planning especially in IT projects. 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