Mohamed El-Mehalawi, PhD, PMP

Here is real story.

A company that specializes in large project manufacturing has many planners and schedulers on staff. They plan and schedule engineering and procurement activities based on the information they get internally from engineering and procurement departments. They schedule manufacturing on the other hand, based on the information delivered from their vendors: since vendor information is as reliable as internal information. Both of these project types are estimated using gut feel rather than any estimating tool or empirical method, and for a long time this practice had worked fine. All of this, by the way, is based on project manufacturing which means that every product is unique.

 

One particularly happy customer that had received their product went on to ask for 100 more units exactly the same as the first one; and for those next 100 units to be delivered within one year. The situation then became quite different.  Does that look like they were moving into a mass production organization or what! Nevertheless, the planners and schedulers continued to follow the same estimating procedure and asked the vendor who manufactured the first unit if they were in fact able to manufacture the 100 units within one year; despite the fact that they had spent 7 months to produce the first one. The vendor of course without reluctance answered that they were capable of producing the 100 units within the required timeframe.

 

The project manager was smart enough to say, “That’s hard to believe. I need some facts and numbers to assure the organization that we will deliver on time.” He brought a scheduler with vendor relations and manufacturing engineering background to investigate the situation. Amazingly, the new scheduler got more information from the vendor and generated a very complex schedule and proved that the vendor in fact would be able to deliver on time.

 

The project manager still had his doubts, however; and returned again to the vendor – this time he brought a project management consultant on board with one specific mission; to listen.

Over the next few meetings, the consultant listened carefully to discussions and debates. From these meetings – while he was not saying anything – he found that two important facts were missing:

  1. The complex schedules that were generated, were based on times and durations given by the vendor with the assumption of unlimited resources.
  2. The schedule of that project was generated in isolation from the rest of the work underway in the shop. Other projects in the shop were subcontracted by this same organization, and if the vendor moved the resources from those projects to serve the new project, those other projects would be late.

 

The consultant then started to discuss these two issues. The first reply he heard in response to his comments was, “Mr. Doe plans everything in his head and does not need these sophisticated tools.” Mr. Doe was the plant manager. He did not have a planner for the shop despite the fact that they employed more than 400 workers. Indeed, Mr. Doe was a very smart person and he did form a good plan, in his head, for the first unit. Evidently, his planning method was not scaling to work for the 100-unit project.

 

The consultant suggested incorporating resources into the schedule and considering other projects which share those resources. After simple analysis of resource constraints, the conclusion was that the vendor would be able to finish the 100-unit project in three years rather than one year. Everybody except the project manager jumped on the consultant saying that he was missing many facts although he has not started the analysis yet. They told him that the vendor will move more resources to finish this project on time giving it a very high priority. They forgot that if that happens, it will delay other projects that they themselves contracted with the vendor.

 

After numerous calls they reached the conclusion that the vendor would take it upon themselves to hire more workers to finish the project on time. Doing the resourcing math, they also calculated that one unit required 30 workers for 7 months to complete. That meant that the vender needed to hire an additional 1750 workers to complete all the projects that were being proposed. This introduced new constraints: such as the available space of the plant. Will it fit 1750 people? Not a chance. Even if they were to divide out the work effort into 3 shifts, there were still space constraints for the 580 people in each of the shifts. The other constraint they faced was the fact that the plant was located in a very small town – how would the vendor locate the 1750 workers required? And then lay them off after a year?

 

Had the vendor employed a reasonable amount of enterprise scheduling and resource planning, they would’ve answered the consultant’s two questions even before he came on board with the project team. Additionally, if the vendor had made a very simple project portfolio analysis, they wouldn’t have claimed that they could hire 1750 employees for a year.

 

Still, the project looked appealing and the end result, if it was done well, would be very good income for the vendor, so they continued forward with their plan. They didn’t consider the fact that if the project duration was stretched from one year to three years, both the selling organization and the vendor will be in big trouble. The project manager was sensitive to note these potential challenges and took it upon himself to assemble a team to study the situation carefully. After a thorough examination, his entire team was convinced that the project could not be done through this vendor in just one year, so the project manager started to put together other options and scenarios.

 

This was a very unique situation for the selling organization as well as for the vendor. Project manufacturing was built up to produce one unique product at a time. Mass production, however, meant producing similar units of the same product thousands of times.  In this particular case, the customer asked for 100 units of the same product; which  made this scenario something between project manufacturing and make-to-order production. This was actually the primary reason that made the team members confused on how to schedule this kind of unique project: a project that somehow violates the definition of a project.

 

If both the performing organization and its vendors were to employ project scheduling and controls, the situation would have been clarified and much easier. An enterprise project controls system makes it easy to manage shared resources, and provides more communication and visibility. With these additions facilitated, managing projects is made easier and needs less effort.