ISEN

663 Organization 3- 1

---------Case Study III --------- Pallav Anand

UIN:225002541
THE WARDEN COMPANY

Paul Warner, general manager of the Military Products Division of the Warden Company, paced back and forth
in front of the window in deep thought. He was awaiting the arrival of Jim Foley, manager of the company's
Program Management Office and Roy Blair, the engineering manager. Foley arrived first and seated himself at
the small conference table.

WARNER: Well, that session with the Army representatives yesterday was certainly a fiasco. I thought we were
going to have a program review meeting-not a knockdown, drag-out fight between our own people. I'd hate to
read the reports those guys are going to write when they get home.
FOLEY: How was I to know that the engineering group was going to pick that time and place to set off a bomb?
Blair knows better than to air our dirty linen in front of the customer that way.
WARNER: Well, it certainly makes us look stupid when you two guys sit there and argue about how far behind
schedule we are and how big an overrun we're going to have on that target tracking system for the M-29 tank. I
was appalled to learn we are already a month behind and overspent by $100,000, and the contract is only 6 months
old.
FOLEY: I told you we could cut that schedule by 2 weeks and reduce the overrun to $50,000 by the end of the
contract.
WARNER: But then Engineering pipes up and says they disagree. They predict a month late and $130,000
overrun.
FOLEY: You know the engineering group always exaggerates. They always want a big cushion so they can act
like big heroes when they came in under the estimated schedule and budget. You remember what happened on
that Navy gun job.
WARNER: I know, I know. But why can't you guys get together on these figures. Why do I always have to get
everyone together and bang heads? I thought when we set your operation up 2 years ago that this would solve all
these coordination problems. I'm really having second thoughts about whether this program management scheme
is working. I still always seem to end up arbitrating. We can't go on this way, something has got to change.
FOLEY: I agree something has got to be done, but we can't go back to the old way. You remember the chaos we
had before, with no one in charge and no central point for the customer to go to.
WARNER: Yes, I remember, but this set up doesn't seem to be working either.

At this point, Roy Blair entered and sat down at the opposite end of the table from Foley.

WARNER: Roy, I think you know why I asked you to come over. After that confrontation yesterday, I'm bound
to get a call from the General tomorrow as soon as the army people get back home. We've got to have some firm
answers that we can live with. Besides, I'm very concerned with how we got ourselves into such a situation in the
first place.
BLAIR: I know. I've reviewed all of the estimates by my department heads and it just wouldn't be realistic to
change them. It still looks like a month late and a $130,000 overrun.
FOLEY: That just doesn't make sense. How can you be a month late when weve, only been at it for 6 months?
BLAIR: I've looked into that, and I can tell you why. Your office didn't give us permission to proceed until 3
weeks after we should have started and then
FOLEY: Now wait a minute. Those 3 weeks were spent waiting for you to make up your mind whether or not to
accept the schedule and budget we prepared. We got them to you on time; you held them up.
BLAIR: I didn't accept them right away because I knew from the start we couldn't meet your budget. You took
our estimates and then cut them 20 percent. That's why we have the overrun.
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FOLEY: But you did accept them. I have your signature right here.
BLAIR: Sure I finally accepted them. My back was up against the wall, and you knew it. I have a very limited
overhead budget to support people not currently on contracts. It was either give in or lay the people off. I figured
they might as well be working on the project while we argued about budgets. When you give me a budget that is
20 percent too low and say "take it or leave it, " I have to take it and then face up to the overrun later.
WARNER: Let's come back to that later. You've explained 3 weeks of the slippage. Where did the other week
come from?
BLAIR: That's easy to explain. We had barely started when Foley's coordinator started coming in with all kinds
of dumb questions. What if we did this instead of that? Can you reduce the weight by 15 pounds? Would the
system be compatible with the M-25 tank system? We spend 2 or 3 days every week answering questions.
FOLEY: Those questions aren't dumb, and they're coming from the customer. We've got to keep the Army happy
if we want to keep doing business with them.
BLAIR: But it takes time and effort to answer them. We've easily spent more than a week digging up the answers.
No place in my budget is there time or money for all this. I thought one of the purposes of the project management
scheme was to keep those people off our backs. If all you guys are going to do is be messenger boys relaying their
questions to us and our answers to them, why do we need you?
FOLEY: We'd gladly answer the questions ourselves if we could, but we don't have the technical expertise in my
shop. You'd be surprised at how many questions we do answer and how many requests we tum away because
they are outside the scope of the contract.
BLAIR: Well, I don't have those problems on the projects I run myself.
FOLEY: Maybe that's because all the tough projects are assigned to my office. That brings up another problem.
Not every project is run through my office. It seems to me that the top priority for manpower always goes to the
programs that are entirely under your responsibility. Last week, for example, all the drafters were pulled off this
job to work on the hydraulic control unit for the Navy.
WARNER: Let's consider that a minute. Jim, do you think it would help if all the projects were handled by your
office? That way you could set the priorities, etc.
BLAIR: Wait a minute. I don't object to Jim coordinating the projects that cross departmental lines. But I've got
to be in a position to run the Engineering group. I have to decide where best to use my people and resources, not
Jim. I'm the one who has to decide what areas need strengthening and which should be cut back. I also have to
worry about how to support my people, so I have to be free to seek contracts on my own. I'm willing to accept
responsibility to meet my budgets and schedules as far as possible, but only one person can run Engineering.
FOLEY: That's really the heart of the problem. I've got the responsibility, but every department head has the
authority to run things any damned way they want.
WARNER: Maybe we should go to a project-type organization. In other words, when we get a major contract,
we assemble the technical people we need, borrowing them from the different departments, and assign them
directly to you, Jim.
BLAIR: What happens after the contract is finished? What do you do with the people, send them back to me?
What if my budget won't stand it at that point?
FOLEY: I'm afraid I have to agree with Roy. That would put him in an impossible position. I've been in a line
position before, and it's a continuous juggling act trying to balance budgets, overhead, manpower forecasts, and
all the other problems. I'd hate to be put in a position where people could be taken and sent back without my say-
so.
WARNER: Well, thats a long-range problem we have to be thinking about. Our immediate problem is the Army
tank project. You two get together this afternoon and hammer out a budget and schedule you can both live with.
I've got to have some firm answers the first thing in the morning when the General calls. If you guys have to
work all night, I want one set of figures.

As the two men started to leave, Warner asked Foley to remain for a minute.
ISEN 663 Organization 3- 3

WARNER: Jim, we can't go on like this. It's obvious to me, just as it was obvious to the Army yesterday, that we
don't have control of our own act. How many people do you have?
FOLEY: I've got six people plus my secretary. Four are coordinators, one is a cost estimator and budget specialist;
the other one is an expert on PERT and is used for scheduling and status review.
WARNER: How many projects does each coordinator have?
FOLEY: It varies. This tank project is taking one man full time; the other 12 contracts are divided more or less
equally among the other three.
WARNER: What do you think is the real problem?
FOLEY: Part of it is lack of manpower. Sometimes the projects are in trouble before we know it. But part of it is
that my coordinators have no line authority. We can negotiate budgets, schedules, and work statements with the
line departments and try to follow up to see they live up to their agreements. But if they fall down on the job,
there isn't anything we can do except holler. I've threatened several times to take a job away from them and go
outside on contract, but they know it's an idle threat. I'm not sure you would let me if I wanted to.
WARNER: Well, I don't know what the answer is, but something has got to be done. I don't know what I'm going
to tell the General in the morning. But I'm sick and tired of being put in this embarrassing position. Besides, this
playing referee constantly is giving me ulcers. I want you to give this matter serious thought and give me some
kind of recommendation next Friday.
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Case Study Discussion Questions

1. What would you recommend if you were Foley?

I would recommend that Blair be disciplined for washing dirty linen in front of the customer. If he had issues
with budget and the timeline he could have discussed those earlier with Warner or Foley and they could have
come up with a timeline they both agree on. Blair is also wrong to accept a budget he cannot possibly meet.

Foley should change his attitude towards the engineering team and offer them more feasible budget and
timeline so that 3 weeks of time are not wasted just to decide whether the project is feasible or not. Also if
there is a possibility of questions from the customer they should be planned and accounted for in the timeline.

Warner should be involved in the balancing of power and resolution of conflicts between Foley and Blair.

2. What type of organization structure does the Military Products Division presently have?

Military Products Division has a matrix structure.

3. Can the present setup be made workable?

1. Better planning is needed which accounts for activities like answering questions.
2. Balance of Power is critical to execute projects in such a framework. Warner has to be aware about
the situation at all times.
3. Foley has to consider project financial feasibility and timeline before forcing the engineering manager
to accept a budget he cant live upto
4. Foley has no real authority to penalize the departments which fall behind on schedule.

4. Should Warner take any action against Blair for agreeing to a budget and schedule he knew he
could not live up to?

Yes. Blair should not have accepted a budget and timeline which he thinks cannot be completed.
He should have put his foot down and not accept the project. Also he should have discussed his problems
with Warner and Foley earlier instead of catching them off guard in front of the customer.

5. What appear to be the organizational issues surrounding this case?

There is a conflict between the Functional Manager and the Engineering Manager. They needs to be a
power balance in the organization which has to managed by Warner. Also Foley has no authority to
discipline the departments which are not completing their scheduled activities. Blair accepts a budget
which he is certain he cant live upto. Blair needs to be in a position where he can accept only those
projects which he thinks and he can complete and he needs to be accountable for delays and overruns.