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PAYTON CORPORATION <https://www.essaydomain.com/payton-corporation/>

August 1, 2016/in Essay Writing Help

<https://www.essaydomain.com/category/essay-writing-help/> /by Stanley
Stanley <https://www.essaydomain.com/author/stanley/>

PAYTON CORPORATION

Payton Corporation case study What is the basis for the problem?

Who is at fault?

How can the present situation be corrected?

Is there any way this situation can be prevented from recurring?

How would you handle this situation on a longer duration project?

Should a customer be willing to accept monetary responsibility for this

type of situation?

*PAYTON CORPORATION*
Payton Corporation had decided to respond to a government RFP (Request
for Proposal) for the R&D phase of a new project. The statement of work
specified that the project must be completed within 90 days after
go-ahead, and that the contract would be at a fixed cost and fee.

The majority of the work would be accomplished by the development lab.

According to government regulations, the estimated cost must be based on
the /average/ cost of the entire department, which was $19.00 per hour
(unburdened).

Payton won the contract for a total package (cost plus fee) of $305,000.
After the first weekly labor report was analyzed, it became evident that
the development lab was spending $28.50 per hour. The project manager
decided to discuss the problem with the manager of the development lab.

/Project manager/: “Obviously you know why I’m here. At the rate that
you’re spending money, we’ll overrun our budget by 50 percent.”

/Lab Manager/: “That’s your problem, not mine. When I estimate the cost
to do a job, I only submit the hours necessary based on historical
standards. The pricing department converts the hours to dollars based on
department averages.”

/Project manager/: “Well, why are we using the most expensive people?
Obviously, there must be lower-salaried people capable of performing the
work.”

/Lab Manager/: “Yes, I do have lower-salaried people, but none who can
complete the job within the two months required by the contract. I have
to use people high on the learning curve, and they’re not cheap. You
should have told the pricing department to increase the average costs
for the department.”

/Project manager/: “I wish I could, but government regulations forbid

this. If we were ever audited, or if this proposal were compared to the
other salary structures in other proposals, we would be in deep trouble.
The only way legal to accomplish this would be to set up a new
department for those higher-paid employees working on this project. Then
the average department salary would be correct.”

“Unfortunately, the administrative costs of setting up a temporary unit

for only two months are prohibitive. For long-duration projects, this
technique is often employed. Why couldn’t you have increased the hours
to compensate for the increased dollars required?”

/Lab Manager/: “I have to submit labor justifications for all hours I

estimate. If I were to get audited, my job would be on the line.
Remember, we have to submit labor justification for all work as part of
the proposal.”

Perhaps next time, management might think twice before bidding on a

short-duration project. You might try talking to the customer to get his
opinion.”

/Project manager/: “His response would be probably be the same

regardless of whether I explained the situation to him before we
submitted the proposal or now, after we have negotiated it. There’s a
good chance that I’ve just lost my Christmas bonus.”

QUESTIONS:

1. What is the basis of the problem?

2. Who is at fault?
3. How can the present situation be corrected?
4. Is there any way this situation can be prevented from recurring?
5. How would you handle this situation on a longer duration project,
say one year, assuming that the multiple departments are involved
and that no new departments were established other than possibly the
project office?
6. Should a customer be willing to accept monetary responsibility for
this type of situation, possibly by permitting established standards
to be deviated from? If so, then how many months should be
considered as a short-duration project?

lease check the sample of the previously written essay on the topic. We
are sure we can handle writing a new unique essay on this topic within
the tight deadlines. No plagiarism and custom research is guaranteed.

Since the duration of the project is fixing at 90 days , this poses

problem of budget shortage The bases of the problem therefore are the
lack of communication and consultation between the management and the
departments that would be involved in the project before submitting a
bidding proposal

Case Study Payton Corporation (A Case Study It is quite logical to

assume that Payton Corporation is an established company and is capable
of handling the job , a government project , which Payton Corporation
just acquired via the bidding process

The problem is the limited budget for the project However , this problem
may be corrected if the following questions below can be answered
appropriately What is the basis for the problem At the onset , there are
some potential problems that were seemed not considered and settled
prior to the bidding

In the case at hand , it was the Lab department who was task to
accomplish most of the work Payton Corporation is facing a big problem
of budget shortage if the current financial management is not
immediately settled

The problem of Payton Corporation , which is now in trouble due to

potential shortage of budget , can be traced in the lack of proper
communication

The problem could have been avoided if interdepartmental consultation

and communication between the management and the various departments
were initiated

22 Who is at Fault It was quite obvious that the development lab and the
pricing department as well as the project manager and of course the
management were all at fault in the problem

First , it appears that there is no clear interdepartmental

communication among the departments involve in the project

50 dollars After discussing the issue with the manager of the

development lab manager , the project manager realized that the problem
was not about on spending of the budget by the lab department but
something else

But the management team who handles the bidding proposals had the
greater responsibility for the reason that they have supposedly studied
carefully the project and the duration whether the contract price would
be justifiable

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