Gulshan Campus - II

Project Description with

Reasons of Failure

Project Evaluation
(Course Title)

Prepared & Submitted By:

Moin Ahmed
(Reg. # 13375 )
MBA (E)

Submitted To:

Respected Mr. Sohaib Jamal

(Lecturer / Class Teacher)

Dated: 12th October 2019

Volkswagen

Organization: Volkswagen Group (VW)

Project type : Vehicle emissions system
Project name : Defeat Device
Date : September 2015
Cost : Potential costs in the region of $18B

Synopsis:
Arguably one of the most expensive scandals in modern corporate history, the revelation that Volkswagen cheated
government emission testing has shaken people’s confidence in a once solid brand. A business story on the scale of
Enron or the BP spill in the Gulf of Mexico, the story is both an embarrassment for the company and a financial
disaster for the shareholders. In addition to fines of up to $18 billion at least $25 billion has been lost due to a dive
in stock price.
Reports in the media indicate that in real world driving conditions some Volkswagen diesel cars emit up to 40
times the national standard for nitrogen oxide (NO). NO emissions are a significant pollutant with links to both
asthma and lung illnesses. As owners of the Volkswagen, Audi, Seat, Skoda, Bentley, Bugatti, Lamborghini and
Porsche brands (plus Ducati bikes and truck makers Scania and Man) more than 11 million vehicles are affected.
In many projects the failure is because of mistakes or poor management. In this particular case the problem was
man-made and intentional. Volkswagen engineers intentionally designed and installed a so called “defeat device”
(a piece of software rather than a physical device) into the engine’s control computer. The defeat device was
programmed to detect when the car was undergoing emissions testing. When official testing conditions were
detected (steering wheel not be used, vehicle on a test rig, etc) the system would retune the engine to minimize
emissions (in doing so it sacrificed fuel economy, but did adhere to the testing limits for clean-air standards). In
real world driving conditions the system would revert to its normal mode in which fuel efficiency was optimized at
the expense of emissions (i.e. the defeat device turned off part of the emissions control system during normal
driving conditions).
Reports indicate that the technology needed to comply with the government regulations was available, but
someone in the project that designed the affected engine decided that the cost of the necessary components was
too high. To ensure profit margins were protected the defeat device was installed so that the more costly
emissions cleaning components did not need to be installed. Competitive pressures, cost control and profit margin
are always considerations in real life projects, but Volkswagen’s approach to those challenges was to cheat. Rather
than finding a creative (and legal) solution they took a short cut that will ultimately cost far more than the savings
they made.
After an independent lab tested the vehicles under real world driving conditions, Volkswagen management
was forced to admit the lie. Although they have taken responsibility, the effects on the brand in the wake of them
acknowledging to have had prior knowledge to the facts remain to be seen. Trust and confidence in loyal
customers has been shaken and the goodwill they enjoyed is now questioned and looked at through a magnifying
glass. The reasons as to why Volkswagen did or did not act earlier to avert a possible scandal may pretty much be
irrelevant as knowledge of the disaster is now in the public domain.
http://calleam.com/WTPF/?p=7666

Project Failures

1. Ill managed project

2. Risk assessment failure
3. Failed to contemplate the consequences of the project if exposed to the public / government authorities
4. Empirically, such unethical projects are ultimately prone to collapse
5. Lack of contingency planning
6. Preference given to revenue/earning at the cost of hard earned goodwill