Sharp Printing, AG wants to design and sell a color laser printer for $200. Both the time constraints, resources, the actions needed, as well as the risks are evaluated in this case study. Lauren is tasked with this project and will be acting as project manager she will be backed by a team of three to help her decide how to get this project accomplished. Upper management has given her two tough constraints of time and cost that once evaluated, will prove that this project will not be able to meet both. One of these areas will have to be evaluated again and allotted either more time or more finances.
Laura immediately requested time costs from all responsible to get a solid understanding of the cost estimates that would be involved and the bottom-up time on meeting the timeline. She gave the different working groups a two-week deadline for estimates. Once Laura received the estimates and put them into the workflow breakdown structure/organization breakdown structure (WBS/OBS). The estimates were all over the time constraints as well as the budget. The cost estimate was $1,250,000 over the budget and the timeframe was four months over the timeline given from senior management.
What I would do in this situation is:
Address the significance of the dollar amount allotted for the end product as being too small, not practical, and also technologically not possible.
Time constraints – Looking at both the time line and product we are dealing with being a technologically advanced printer, I would urge the importance of time due to the fact there will be competitors trying to produce a like product with an earlier shelf date. I would suggest not compromising time and possibly cut some time at the price of paying more.
Cost – Cost has already increased by $1,250,000 than the senior management’s initial estimate. Both marketing and production managers were not able to make a huge impact to that number after their attempts. Therefore, since time is crucial and performance is required, the only option we have is to accept the high cost.
Once I established this I would present it to upper management; I would explain the detailed priority matrix and ask that they accept the cost increase. Furthermore, I would have the three individuals working under me take a look at the WBS/OBS, to see any and all risks involved. I would do a little research and get a better idea on costs for outsourcing some of the work, to save us on time and costs. Next I’ll do the break-even analysis with the new estimated cost to know whether we can get the maximum profit by this product. Finally, I would schedule a meeting with my team and explain the revised budget estimate and revised WBS/OBS and get their feedback. If the team were satisfied with the plan, I would continue with the project or if they are in disagreement, abandon the project.
I believe top management was not acting correctly when establishing an estimate. This is due in part by not first discussing Design, major deliverables, product launch date, start date, project goals, specifications, time, and cost constraints from the bottom-up. Laura and her team had no idea going into this that they were going to be able to accomplish all the deliverables in this product, they simply just liked the status quo of the project, and the possible rewards if they met the requirements for completion. Laura having 15 years of experience behind her in printing design and manufacturing should “appear” to upper management, as possessing significant experience when presenting the constraints and new plan with hopes they would consider.
The types of estimating Laura should utilize on her current project when developing a laser printer is analogous estimating coupled with bottom-up estimating. Beginning at the start of her project when not much is known, Laura can apply analogous techniques so she can apply both her fifteen years of experience, and use her analytical skills to compass her way to the best result based on her past experiences in the printing manufacturing industry. Laura can then utilize bottom-up estimating using both her details about the project, resources, the teams capabilities, the revised plan for the project, time estimates, and develop the best result. I will urge bottom-up ultimately would be the most accurate method but also the most time-consuming and expensive form of estimating for this project, but it will fine tune the initial problem of the final value cost of the machine $200 to a more practical number.