Case Analysis Corwin Corporation

Executive Summery

This report has been prepared to examine the reasons why the Peters and Corwin project, initiate
in late December 2011, was terminated during the testing phase by the client. This led to
financial loss for Corwin and termination of relations with Peters, an important customer. Corwin
has long-standing internal protocols with regard to project selection around product-based
initiatives from outside clients. However, in this instance, these measures were entirely
disregarded.

Thus, the project failed to meet the brief due to lack of proper management at the initiation and
execution stages. Also due to lack of communication breakdown. Fixed price contract was also
signed without proper risk analysis. The purpose of this report is to analyze and determine which
factors lead to the fallout between Corwin and Peters and, to prevent the reoccurrence. The first
part of the report consists of an in-depth analysis and discussion of the major issues faced in the
project. The second part of the report consists of the conclusions drawn from the analysis and
discussion section. The recommendation sections focuses on means of ensuring project
management success and Corwin's future direction.
INTRODUCTION

The Corwin Corporation is an internationally reputed manufacture of low-cost and high-quality

rubber products. They are a non-project driven company that employ a market development,
product market strategy, in which, they sought out new markets for their existing product line.
This strategy has enabled them to grow and generate annual revenue of $150 million. Their
reputation and the aid of their research and development (R&D) unit that is responsible for
examining technological advances and its possible application in the existing product line has
enabled them to increase the longevity of their product lifecycle. Furthermore, their reputation
results in many requests to manufacture specialty products. However, Corwin practices a
conservative, risk adverse management style, and implements a stringent management policy to
evaluate specialty product requests. This policy includes an evaluation of whether the specialty
product will provide a 20% profit margin, if there is a potential for follow-on contracts, whether
the product can be integrated into the existing product line and, if the product development will
interfere with the existing product line. Consequently, Corwin no-bids on over 90% of specialty
product requests.
The Peters Company is known for being a problematic customer. Despite this fact, Corwin
developed a good working relationship with them and accepted specialty product projects from
Peters in 1980, 1981 and 1982, based on potential follow-on contracts. However, their fourth
collaboration resulted in the disintegration of the working relationship and a major financial loss.
For the purpose of the case study, we will discuss on how these project management principles
and concepts, if followed properly could have prevented Corwin from accepting this project.

DISCUSSION AND ANALYSIS

Project Selection

Project selection should not be perceived as unnecessary exercise but an important exercise that
would be beneficial for the customer and the contactor. a number of factors such as marketing
consideration, production consideration, financial consideration, personal consideration and
administration consideration need to be taken in to consideration to insure that the project is in
line with the organizations strategic objective.
Pertaining to the project selection process, four main dysfunctional issues were identified. These
are 1) deviation from standard policy,
2) Incomplete specifications and short bid preparation time,
3) Absence of key decision makers and
4) fixed-price contract. Each issue is addressed in detail below.
Corwin has a ridged informal project management standard in place to assess specialty product
inquiries. As stated previously, Corwin had accepted specialty project inquiries from Peters in the
past, based solely on follow on contracts. However, in this instance, from the initial discussion,
Most Corwin corporation Executives were away due to the Christmas holiday season which
meant that the deals worth was not evaluated via the usual criteria and in-house managerial
consultation. Frimels failure was to follow the management put the companys reputation at risk.

Corwin was able to assess that the Peters project was beyond their capabilities and had the
potential to disrupt the existing product line. According to their policy, the fact that the project
had the potential to disrupt Corwin's existing product line should have been a deciding factor in
rejecting the bid. From the case analysis, it is evident that the project did interfere with the
existing product line. Constant changes to the test matrix made it hard for the staff to schedule
their time appropriately. peters project was selected without evaluation and executives
consultation and it was out of Corwins scope and should have never been accepted.
The decision to bid was based on a rough set of specifications and Corwin was given only 48
hours to deliberate. Uncertainty or incompleteness of project information results in a higher level
of risk This is because of the complexities involved in decision making that makes it harder to
effectively determine and manage the scope of the project. The inability to adequately manage
the scope of a project has been cited as being a major cause of project failure. It is important to
prepare proposals with relevant skill and expertise like subject matter experts to help prepare
quality proposals. Roys used inappropriate and unskilled resource to prepare the proposal. It was
prepared by the contracts that were no familiar with fixed price contracts. Royce was overly
optimistic in estimating the cost and didnt include contingency to cover unexpected situations
that may arise during the project. The case analysis does prove that Corwin had poor risk and
scope management, such as, the inability of the project manager to manage scope change, which
resulted in a cost overrun. Furthermore, the short bid preparation time did lead to errors, such as
that of the inadequate contract management.
The decision to accept or reject a bid was deliberated upon by "a four-man committee composed
of the president and the vice president (V.P.) of manufacturing, marketing and engineering".
Since, most of the staff was on vacation at the time, only the V.P. of marketing and the V.P. of
engineering were present in the deliberation of the project. We suggest that the project selection
process is a very complex task, especially for R&D undertakings and often involves multiple
decision makers who assess the project from various perspectives. Additionally, "a lack of
communication between the marketing, R&D, and manufacturing functions of a company can be
extremely detrimental to the new product development process" .The absence of key decision
makers indicated that the decision to bid was based on the knowledge repositories of two
decision makers and thus, not all the facets of the project were sufficiently assessed.
The contract was predetermined to be fixed-price. Fixed price contracts are favorable in
circumstances where the risks are low and the scope of the entire project is clearly specified
Because of the short bids preparation time, Corwin's failure to adequately manage costs is further
noticeable by the fact that the project ran over budget because of a change in scope. It is good
practice to start working on a project after the contract has been signed Corwin worked first and
sign later. And never advisable to accept a fixed price contracts without determining the client
needs and whether or not they are achievable.
Contract negotiation
Fixed-price contracts are beneficial to the customer but not the contractor. Before signing this
type of contract, the customer should have a detailed scope work from the customer. There are
risks associated with this type of contract for contractors, i.e. the customer is liable for any cost
overruns should the project run beyond schedule, budget and time. Agreeing to a fixed-price
contract was also one of the contributing factors that led to the projects failure. Although the
profit margins sounded appealing on the phone during Delia and Frimels conversation, they
looked different on paper. The disadvantages of such a contract for Corwin far outweighed the
advantages for Peters Company. Fixed-price contracts are most appropriate for projects that are
well defined and entail little risk. It is good practice to start working on a project after the
contract has been signed. Corwin worked first and signed later

Risk management ignored

Royce made a commitment to assess the risks once he got hold of the specification sheets.
Looking at the Cost Summary in the proposal, one can conclude that he never kept to his
commitment since it didnt even include the contingency amount. Some level of risk planning
should be done during the initiation phase of the project life cycle to make sure, for example, that
the contractor understands the risks involved with bidding on a proposed project. Risk
assessment therefore is an important aspect of project initiation because it helps the contractors
make better decisions, negotiate fair contracts and create risk mitigation methods. A good risk
assessment takes into consideration anything that could go wrong with the project and
determines what it would cost. Accepting a project outside Corwins scope area of expertise was
a risk, appointing an inexperienced scientist from the R&D department was a risk, agreeing to a
fixed-price contract was a risk and procurement of all materials was a risk. Corwin resorted to
risk aversion.

Change management

At the start of the project, a change control system needs to be established

to define how changes will be documented, approved and communicated.
The project manager did not have proper change control procedure in place.
The in-house representative made changes to the scope, which resulted in
scope creep. His changes were not documented and communicated and
were not within the budget. When he requested an additional five tests
beyond the agreed scope, the project manager should have evaluated the
request and provided Peters Company with a proposal outlining the costs to
add the tests to the scope. Uncontrolled change exposed Corwin to
unnecessary risk. A change control process is significant to the successful
delivery of a project and ensures that each change introduced to the project
environment is appropriately defined, evaluated and approved. The project
manager in this case struggled to control changes in the project because he
didnt have proper process in place and that he lacked project management
experience.

Lack of Management Support

Top management support is the most critical success factor for project success. Executives set
strategic goal for organizations and using projects to meet those goals. Many fails due to having
passive management support. Most of Corwin's executives failed to participate and support the
project. They had reservations about the success of the project and distanced themselves from the
project.
Having accepted the contract, some managerial staff distanced themselves which endangered the
project from the off. The VP Marketing (VPM) who initiated the project then became
unavailable and handed the task over to the VPE. Royse (VP engineering) should act as project
sponsor because most of the times in projects executives are the project sponsors. The role of a
sponsor is to ensure that the correct information from the contractors organization reach in to the
customers organization. Issues that could have been rectified by the presence of a project sponsor
were the clarification of the in-house representatives' boundary of authority and the fact that
there was no direct communication between Corwin and Peters after the signing of the contract.
The only progress report received by Peters was from the in-house representative who had a
different view of the progress of the tests. For example, he reported that the first five tests were
total failures when in fact they were "marginally acceptable". R&D admitted he had reservations
and also said he would not have chosen that PM. He then proceeded to instruct the PM, on two
separate occasions, to keep him informed on a very casual basis. R&D later contradicted himself
by reporting that the PM had kept him in the dark. R&D later elected to exclude the PCR from
the new testing schedule which amounted to avoidance behavior.

Corwin fail to assign the right person to manage the project. Inexperienced project manager was
tasked to lead the project and although one of the senior managers had doubts about the project
manager capabilities to lead such a project but his concerns were ignored.

Organizational structure and culture

Organizational culture influence for project to perform. This is how a company operates in the
day to day breeds its corporate culture, the underlying belief and value structure of an
organization collectively shared by the employees. However, cultures can become dysfunctional,
for interdepartmental conflict, clashing personalities and a lack of trust may impede the
collaborative work, which will in turn affect the successful attainment of objectives. Corwin
maintains functional organizational structure for more than 15 years. In functional structure
project managers do not full control over the project teams. One of the disadvantages is
computation among functional departments.

Marketing department manager made almost all decision of the specialty products to come out to
marketing but the engineering department was considered as a support group.

Healthy organizational culture encourages accountability and personal responsibility, Daniel

blame and excuses harden relationships and intensify conflicts.

Communication Issues for Internal and External Stakeholders

A reluctant voice sounds differently from an enthusiastic voice on the phone. The project
manager failed to communicate timely to the executives about the representatives interfering
behavior; he thought he could handle it. The situation spiraled out of control when the
representatives started giving orders to the project manager about removing functional
employees on the team. The project manager himself, made fault .He allowed the in-house
representative to run away with the project and do all of the communication with Delia rather
than sending his own reports and communication to the Peters Company.

Providing the customer with progress reports frequently, keeps the customer in the loop and
informed about the status of the project. Communication skills are one of the most important
skills every project manager should possess, it very important that the project manager
communicates with the stakeholders and project team. The project manager should have
escalated problems as they occurred and scheduled meetings to resolve them. He should know
what needs to be communicated to who and when.

Communication breakdown escalated regarding the testing procedures because they had not been
laid down sufficiently at project initiation. All these problems arise because everyone operates
under their own personal filter, or perception However, when it comes to stakeholders, the issue
is further complicated because they often have different objectives. Missing input from central
stakeholders also meant the scope was not clear for either side, an absolute must for project
success PMs need to be aware that stakeholders include everyone from the client, suppliers, in-
house technical and marketing staff, all the way up to top executives.

CONCLUSIONS

Corwin Corporation failed to follow its own management policy, took on a project, and neglected
to apply the proper management principles. The executives were not part of the contract
acquisition and failed to develop and nurture the project manager. The organizational culture was
such that all departments were equal but some were equal more than the others were. This
resulted in people wanting to prove themselves worthy by taking on big projects even though
they lacked experience. The project manager was set deliberately set to fail, the manager knew
his strength and weaknesses but was unavailable to assist until the last minute. Corwin did not
have a house rules in place with regards to in-house representatives. Corwin didnt work the plan
and therefore couldnt plan the work.

RECOMMENDATIONS
Corwin's current management policy prevents them from bidding on more than 90% of specialty
product inquiries. Based on the analysis it is evident that if Corwin were to follow the same
policy or only focus on the manufacturing of their existing product line, it will not only result in
a financial loss resulting from lost opportunities, but it will impede their ability to obtain a
sustained competitive advantage. Thus, it is recommended that Corwin relinquish the policy. In
order to ensure that Corwin is safeguarded in their future project undertakings, it is
recommended that they employ a structured project management framework. The purpose of this
framework is to provide a toolkit for managing all the components of a project thought out the
project lifecycle. This will ensure that Corwin has a formal protocol to plan and implement
future projects and thus increase their chances of obtaining successful project outcomes.
Top management need to educate employees on the management policy regarding new projects.
Functional managers need to lead this drive. The Engineering department plays as much a role in
decision making as the Marketing and Manufacturing department. The R&D brings innovation of
the products in the organization and thus should not be seen as a support group. The project
managers mistakes were attributed to his lack of experience. The PM should continue to lead
small projects and the organization must provide Project Management training for aspiring
project managers within the company. The staffs morale is low at this point, management needs
to organize team-building to boost confidence and foster and repair relationships Create cross
functional teams to function as self directed respond to specific directives