FRANKLIN ELECTRONICS In October 2013 Franklin Electronics won an 18-month labor-intensive product development contract awarded by Spokane Industries. The award was a cost reimbursable contract with a cost target of

Franklin Electronicsin October 2013 Franklin Electronics Won An 18 M

FRANKLIN ELECTRONICS In October 2013 Franklin Electronics won an 18-month labor-intensive product development contract awarded by Spokane Industries. The award was a cost reimbursable contract with a cost target of $2.66 million and a fixed fee of 6.75 percent of the target. This contract would be Franklin’s first attempt at using formal project management, including a newly developed project management methodology. Franklin had won several previous contracts from Spokane Industries, but they were all fixed-price contracts with no requirement to use formal project management with earned value reporting. The terms and conditions of this contract included the following key points: Project management (formalized) was to be used.

Earned value cost schedule reporting was a requirement. The first earned value report was due at the end of the second month’s effort and monthly thereafter. There would be two technical interchange meetings, one at the end of the sixth month and another at the end of the twelfth month. Earned value reporting was new to Franklin Electronics. In order to respond to the original request for proposal (RFP), a consultant was hired to conduct a four-hour seminar on earned value management.

In attendance were the project manager who was assigned to the Spokane RFP and would manage the contract after contract award, the entire cost accounting department, and two line managers. The cost accounting group was not happy about having to learn earned value management techniques, but they reluctantly agreed in order to bid on the Spokane RFP. On previous projects with Spokane Industries, monthly interchange meetings were held. On this contract, it seemed that Spokane Industries believed that fewer interchange meeting would be necessary because the information necessary could just as easily be obtained through the earned value status reports. Spokane appeared to have tremendous faith in the ability of the earned value measurement system to provide meaningful information.

In the past, Spokane had never mentioned that it was considering the possible implementation of an earned value measurement system as a requirement on all future contracts. Franklin Electronics won the contact by being the lowest bidder. During the planning phase, a work breakdown structure was developed containing forty-five work packages of which only four work packages would be occurring during the first four months of the project. Franklin Electronics designed a very simple status report for the project. The table below contains the financial data provided to Spokane at the end of the third month.

Totals at End of Month 2 Totals at End of Month 3 Work Packages PV EV AC CV SV PV EV AC CV SV A 38K 30K 36K <6K> <8K> 86K 74K 81K <7K> <12K> B 17K 16K 18K <2K> <1K> 55K 52K 55K <3K> <3K> C 26K 24K 27K <3K> <2K> 72K 68K 73K <5K> <4K> D 40K 20K 23K <3K> <20K> 86K 60K 70K <10K> <26K> Note: BCWS = PV, BCWP = EV, and ACWP = AC. A week after sending the status report to Spokane Industries, Franklin’s project manager was asked to attend an emergency meeting requested by Spokane’s vice president for engineering, who was functioning as the project sponsor. The vice president was threatening to cancel the project because of poor performance. At the meeting, the vice president commented, “Over the past month the cost variance overrun has increased by 78 percent from $14,000 to $25,000, and the schedule variance slippage has increased by 45 percent from $31,000 to $45,000.

At these rates, we are easily looking at a 500 percent cost overrun and a schedule slippage of at least one year. We cannot afford to let this project continue at this lackluster performance rate. If we cannot develop a plan to control time and cost any better than we have in the past three months, then I will just cancel the contract now, and we will find another contractor who can perform.â€

.66 million and a fixed fee of 6.75 percent of the target. This contract would be Franklin’s first attempt at using formal project management, including a newly developed project management methodology. Franklin had won several previous contracts from Spokane Industries, but they were all fixed-price contracts with no requirement to use formal project management with earned value reporting. The terms and conditions of this contract included the following key points: Project management (formalized) was to be used.

Earned value cost schedule reporting was a requirement. The first earned value report was due at the end of the second month’s effort and monthly thereafter. There would be two technical interchange meetings, one at the end of the sixth month and another at the end of the twelfth month. Earned value reporting was new to Franklin Electronics. In order to respond to the original request for proposal (RFP), a consultant was hired to conduct a four-hour seminar on earned value management.

In attendance were the project manager who was assigned to the Spokane RFP and would manage the contract after contract award, the entire cost accounting department, and two line managers. The cost accounting group was not happy about having to learn earned value management techniques, but they reluctantly agreed in order to bid on the Spokane RFP. On previous projects with Spokane Industries, monthly interchange meetings were held. On this contract, it seemed that Spokane Industries believed that fewer interchange meeting would be necessary because the information necessary could just as easily be obtained through the earned value status reports. Spokane appeared to have tremendous faith in the ability of the earned value measurement system to provide meaningful information.

In the past, Spokane had never mentioned that it was considering the possible implementation of an earned value measurement system as a requirement on all future contracts. Franklin Electronics won the contact by being the lowest bidder. During the planning phase, a work breakdown structure was developed containing forty-five work packages of which only four work packages would be occurring during the first four months of the project. Franklin Electronics designed a very simple status report for the project. The table below contains the financial data provided to Spokane at the end of the third month.

Totals at End of Month 2 Totals at End of Month 3 Work Packages PV EV AC CV SV PV EV AC CV SV A 38K 30K 36K <6K> <8K> 86K 74K 81K <7K> <12K> B 17K 16K 18K <2K> <1K> 55K 52K 55K <3K> <3K> C 26K 24K 27K <3K> <2K> 72K 68K 73K <5K> <4K> D 40K 20K 23K <3K> <20K> 86K 60K 70K <10K> <26K> Note: BCWS = PV, BCWP = EV, and ACWP = AC. A week after sending the status report to Spokane Industries, Franklin’s project manager was asked to attend an emergency meeting requested by Spokane’s vice president for engineering, who was functioning as the project sponsor. The vice president was threatening to cancel the project because of poor performance. At the meeting, the vice president commented, “Over the past month the cost variance overrun has increased by 78 percent from ,000 to ,000, and the schedule variance slippage has increased by 45 percent from ,000 to ,000.

At these rates, we are easily looking at a 500 percent cost overrun and a schedule slippage of at least one year. We cannot afford to let this project continue at this lackluster performance rate. If we cannot develop a plan to control time and cost any better than we have in the past three months, then I will just cancel the contract now, and we will find another contractor who can perform.â€

Paper for above instructions

Assignment Solution: Addressing Project Management Issues at Franklin Electronics
Introduction
In October 2013, Franklin Electronics embarked on a significant journey by securing an 18-month labor-intensive contract with Spokane Industries, valued at

Franklin Electronicsin October 2013 Franklin Electronics Won An 18 M

FRANKLIN ELECTRONICS In October 2013 Franklin Electronics won an 18-month labor-intensive product development contract awarded by Spokane Industries. The award was a cost reimbursable contract with a cost target of $2.66 million and a fixed fee of 6.75 percent of the target. This contract would be Franklin’s first attempt at using formal project management, including a newly developed project management methodology. Franklin had won several previous contracts from Spokane Industries, but they were all fixed-price contracts with no requirement to use formal project management with earned value reporting. The terms and conditions of this contract included the following key points: Project management (formalized) was to be used.

Earned value cost schedule reporting was a requirement. The first earned value report was due at the end of the second month’s effort and monthly thereafter. There would be two technical interchange meetings, one at the end of the sixth month and another at the end of the twelfth month. Earned value reporting was new to Franklin Electronics. In order to respond to the original request for proposal (RFP), a consultant was hired to conduct a four-hour seminar on earned value management.

In attendance were the project manager who was assigned to the Spokane RFP and would manage the contract after contract award, the entire cost accounting department, and two line managers. The cost accounting group was not happy about having to learn earned value management techniques, but they reluctantly agreed in order to bid on the Spokane RFP. On previous projects with Spokane Industries, monthly interchange meetings were held. On this contract, it seemed that Spokane Industries believed that fewer interchange meeting would be necessary because the information necessary could just as easily be obtained through the earned value status reports. Spokane appeared to have tremendous faith in the ability of the earned value measurement system to provide meaningful information.

In the past, Spokane had never mentioned that it was considering the possible implementation of an earned value measurement system as a requirement on all future contracts. Franklin Electronics won the contact by being the lowest bidder. During the planning phase, a work breakdown structure was developed containing forty-five work packages of which only four work packages would be occurring during the first four months of the project. Franklin Electronics designed a very simple status report for the project. The table below contains the financial data provided to Spokane at the end of the third month.

Totals at End of Month 2 Totals at End of Month 3 Work Packages PV EV AC CV SV PV EV AC CV SV A 38K 30K 36K <6K> <8K> 86K 74K 81K <7K> <12K> B 17K 16K 18K <2K> <1K> 55K 52K 55K <3K> <3K> C 26K 24K 27K <3K> <2K> 72K 68K 73K <5K> <4K> D 40K 20K 23K <3K> <20K> 86K 60K 70K <10K> <26K> Note: BCWS = PV, BCWP = EV, and ACWP = AC. A week after sending the status report to Spokane Industries, Franklin’s project manager was asked to attend an emergency meeting requested by Spokane’s vice president for engineering, who was functioning as the project sponsor. The vice president was threatening to cancel the project because of poor performance. At the meeting, the vice president commented, “Over the past month the cost variance overrun has increased by 78 percent from $14,000 to $25,000, and the schedule variance slippage has increased by 45 percent from $31,000 to $45,000.

At these rates, we are easily looking at a 500 percent cost overrun and a schedule slippage of at least one year. We cannot afford to let this project continue at this lackluster performance rate. If we cannot develop a plan to control time and cost any better than we have in the past three months, then I will just cancel the contract now, and we will find another contractor who can perform.â€

.66 million. This project marked Franklin's inaugural venture into formal project management practices, explicitly requiring earned value management (EVM) for performance measurement. However, within three months, the project faced alarming cost and schedule variances that jeopardized its continuation. This analysis aims to dissect the factors influencing project performance at Franklin Electronics, critique the application of EVM, and develop recommendations for improvement.
Understanding Earned Value Management
Earned Value Management (EVM) is a project management technique that integrates the project's scope, schedule, and cost, allowing managers to assess project performance and progress effectively (Fleming & Koppelman, 2010). By quantifying project work using three primary metrics—Planned Value (PV), Earned Value (EV), and Actual Cost (AC)—EVM facilitates the identification of variances that can signal potential issues (PMI, 2017).
In the context of Franklin Electronics, the financial data at the end of the third month depicts a troubling scenario. Although the Earned Value (EV) was computed to be less than the Planned Value (PV), the Actual Cost (AC) was higher than both EV and PV, leading to unfavorable Cost Variance (CV) and Schedule Variance (SV):
- Cost Variance (CV) = EV - AC
- Schedule Variance (SV) = EV - PV
As outlined in the financial report, the negative CV and SV indicate that the project is not only over budget but also behind schedule. Specifically, by month three, the total CV amounted to ,000, and the total SV was ,000. This discrepancy resulted in a critical situation prompting a potential project cancellation as per Spokane’s vice president’s warnings.
Factors Contributing to Poor Performance
Several factors contributed to the poor performance at Franklin Electronics:
1. High Complexity and Lack of Experience with EVM: This was Franklin’s first involvement with formal project management and EVM. The lack of familiarity might have contributed to misunderstandings in terms of how to effectively implement the methodologies (Keller, 2020).
2. Ineffective Communication: The project suffered due to insufficient communication regarding earned value methodologies within the organization. The cost accounting department displayed reluctance towards EVM, which could have resulted in inadequate reporting practices and understanding of the system (Morris & Pinto, 2010).
3. Underestimation of Project Scope: When developing the work breakdown structure (WBS), estimating the duration and cost of work packages might have been inadequately done, leading to a misalignment between expected and actual performance.
4. Lack of Technical Interchange Meetings: The reduced frequency of technical interchange meetings, as perceived by Spokane Industries, undermined the opportunity for timely intervention and collaboration between teams (Cleland & Ireland, 2016). Regular technical meetings are necessary for discussing challenges and implementing corrective actions.
5. Resistance to Change: The project team's resistance to learning and applying new project management techniques likely played a significant role in performance setbacks. Change management is critical in such transitions, as it encourages personnel buy-in and a shared understanding of objectives (Kotter, 2012).
Recommendations for Improvement
To address the alarming project performance issues and enhance project management practices, Franklin Electronics should consider the following recommendations:
1. Training and Continuous Development: Conduct further training sessions focused on the practical applications of EVM, emphasizing both theoretical knowledge and practical implications. Embracing EVM through ongoing education can provide all team members with better tools to track project performance (Fleming & Koppelman, 2010).
2. Frequent Interchange Meetings: Elevate the frequency of technical interchange meetings and foster open communication between all stakeholders. These meetings should serve as checkpoints and collaborative discussions, allowing for real-time feedback and adjustments (Cleland & Ireland, 2016).
3. Enhanced Reporting Tools: Design more comprehensive status reports that clearly articulate project status using color-coded indicators for quick reference (green for on-track, yellow for caution, and red for critical review). Such visual aids can enhance understanding and facilitate early intervention (PMI, 2017).
4. Root Cause Analysis of Variances: Implement regular reviews of cost and schedule variances to identify root causes and suitable corrective actions. Conducting these analyses could help in preventing future oversights and preparing better estimates (Kerzner, 2017).
5. Integrated Project Management Team Structure: Form an integrated project management team that brings together stakeholders from various departments to align objectives, timelines, and budgets regularly, promoting a more holistic view of the project landscape (Morris & Pinto, 2010).
6. Feasibility of Fixed Pricing: Explore the possibility of adjusting the contract terms in the next bidding phase, such as transitioning to a fixed-priced contract. This structure can assign more responsibility to Franklin Electronics in terms of project planning and execution.
Conclusion
In conclusion, Franklin Electronics faces significant challenges in executing its contract with Spokane Industries due to performance variances linked to a lack of experience with EVM, ineffective communication, and inadequate stakeholder engagement. By embracing training, frequent communication, improved reporting practices, and rigorous analysis of variances, Franklin Electronics can enhance its project management capabilities and foster a collaborative environment conducive to meeting project objectives.
References
1. Cleland, D. I., & Ireland, L. R. (2016). Project Management: Strategic Design and Implementation. McGraw-Hill Professional.
2. Fleming, Q. W., & Koppelman, J. F. (2010). Control Your Project Management: Cost and Schedule Control Using Earned Value. PMI.
3. Kerzner, H. (2017). Project Management: A Systems Approach to Planning, Scheduling, and Controlling. John Wiley & Sons.
4. Kotter, J. P. (2012). Leading Change. Harvard Business Review Press.
5. Morris, P. W. G., & Pinto, J. K. (2010). The Wiley Guide to Project Technology, Supply Chain, and Procurement Management. John Wiley & Sons.
6. PMI (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide). Project Management Institute.
7. Prabhakar, G. P. (2008). What Is Project Success: A Conceptual Framework. International Journal of Project Management, 26(7), 733-742.
8. Shenhar, A. J., & Dvir, D. (2007). How Projects Differ and Why It Matters. Project Management Journal, 38(3), 5-16.
9. Shtub, A., & Rosenwein, M. (2013). Project Management: Processes, Methodologies, and Economics. Springer.
10. Williams, T. (1999). The Role of Project Management in Achieving Business Objectives. Project Management Journal, 30(1), 49-58.