Mike Bitka, one of the three owners of BC Company, and George Slicker, the compa
ID: 369794 • Letter: M
Question
Mike Bitka, one of the three owners of BC Company, and George Slicker, the company CEO, met on a regular basis to discuss the company business. Usually very calm, Mike was nervous at this recent meeting. Mike: I had a chance to talk to the other owners of the company last week about the Court House project, the one that was recently closed. They wanted me to discuss it with you so that we could improve our Best Known Methods (BKM) to prevent any similar disaster in the future. For the beginning, let me say that two months before the ending of the Court House project, we estimated to lose approximately $500,000 on a $1.5 million project. So from your point of view, what do you see as being the mistakes we should never repeat again? George:Iwill be very brief. First, the majormistake was to hire Pete Tramp as the manager. He didn't have much experience in managing projects. Because the job market was very tight we hired him to estimate the Court House project. He did the bid and got the job. Apparently, the bid estimate was below the cost of that project, and I have to admit that Steve Johnson of E-contractors, another bidder, warned me that our bid was very low. But, I did not react Mike: Did anybody in the company check Pete's estimate? George: No. According to our BKM, our estimating department should have verified Pete's estimate. But, they were too busy working on another two projects and did not have time to verify his estimate. Mike: Couldn't our estimators rearrange their work schedule to make time to verify this important estimate? George: I can't say for sure, I only can assume. But if our estimators wanted to have this project's estimate verified, they could've applied a method we learned in a project for Intel. It is called "shadow estimating." When you wantExplanation / Answer
Ans 1: The estimating department should include more team members to reduce the workload and enable them to verify the estimates. This will include the process to hire new heads and train them for the task as per BKM. Inclusion of shadow estimating technique will need little work from estimating department, which can also be done by efficient work allocation between team members without increasing the team size.
Ans 2: The shadow estimate approach will enable the management to doube check the estimate and reduce the chances of error significantly. On the downside it will involve the cost of consultant's payment.
Ans 3: Earned value is the method of measuring the part of the work that has been accomplished in a plan and comparing it with the budget. It is quantifiable measure of work. Had it been in place in the Court House project, the problem of under estimating the budget would have been detected earlier and suitable adjustments could have been done in the budget to avoid the disaster.
Ans 4: Periodic project audits help to track the progress of the project with keeping a tab on the budget. An under estimate may be detected during the audits because a higher part of budget would be spent over a period with a lower proportion of work being accomplished.
Ans 5: Yes. It will make the work easier for the estimating department which is already busy with other projects, and significantly reduce the risk of disasters like Court House, though at a relatively smaller cost.