Running head: SHARP PRINTING 1

Sharp Printing, AG Case Study (Final Project)

Matthew Bell

MGMT505 – Project Management Fundamentals

September 18, 2012

Dorothy Cunningham

Southwestern College Professional Studies

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Abstract

Sharp Printing strategic management group set a goal of having a color laser printer

available to consumers and small businesses with the price not to exceed $200. After

establishing this goal, upper management met off site to discuss the new product. This meeting

established technical specifications, deliverables, launch date, and a cost estimate. After

compiling estimates and placing them in WBS/OBS, the project manager discovered that the cost

estimate was $1.25 million over the senior management estimate and the timeline was over by

four months. The project manager met with significant stakeholders to brainstorm ways to

reduce cost by changing scope, outsourcing, partnering with another organization, or cancel the

project. After the brainstorming session, there was very little they could do to save funds.
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Sharp Printing, AG Case Study (Final Project)

Two years ago, a company named Sharp Printing, set a goal to develop and sell a color

laser printer that would be available for the consumer and small business market. The key for

this project was that the laser printer had to be able to sell for less than $200. A few months after

establishing this goal, senior management met off-site to discuss the new product. The results of

the meeting between upper management were a set of general technical specifications, major

deliverables, product launch date, and a cost estimate based on prior experience. After upper

management met, a meeting between middle management was arranged. This meeting was to

explain the project goals, major responsibilities, project start date, and importance of meeting the

project launch date within the cost estimate. Every department involved with the project had a

member present at this meeting and excitement was high. Even though the risks were viewed on

as being high, the promised rewards for the company and the personnel were in their minds.

Some of the fears of the initial project, discovered by research and development, were the

affordability of the technology required to produce the high-quality printer for less than $200

(Larson & Gray, 2011).

Lauren, an employee with 15 years of experience in printer design and manufacture, was

selected to be the project manager. Lauren had successfully managed several projects related to

printers for commercial markets. She was one of the employees who were uncomfortable with

the whole project. She decided to get good bottom-up time and cost estimates for the

deliverables. Lauren quickly had a meeting with the significant stakeholders to create a work

breakdown structure (WBS) to identify the work packages and organizational unit responsible

for implementing the work packages. After all estimates were placed in the WBS and the

organization breakdown structure (OBS), it was discovered that the cost estimate was $1.25
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million over the senior management estimate. The time estimated also exceeded initial thought

by four months. These overages caused Lauren to have another meeting with the significant

stakeholders to verify the estimates and brainstorm for alternative solutions such as; changing the

scope, outsourcing the technology design, using the priority matrix to make top management

clarify their priorities, partner with another organization to share cost, and unfortunately, to

discuss cancelling the project. After thinking about these alternative solutions, Lauren, or any

other project manager, has to determine the next best step before proceeding and possibly losing

money (Larson & Gray, 2011).

It is human nature to begin a project with dreams of success. Because of implementation,

project teams plan that each step taken will be successful. Avoiding failure is separate from

planning for success. Because we live in the real world, large errors blindside us because we had

our sights set on looking forward to success. Any large project, such as the one taken on by

Sharp Printing, is as much an exercise in risk aversion as it is in task accomplishment (Capron,

n.d.). Successful project managers anticipate what could go wrong. While it is impossible to list

and discover all the potential flaws, just spotting a few can reduce the risk of complete project

failure or help with the determination of if the project should be started (Capron, n.d.).

Tough questions arise from a project such as this. The only way for Sharp, and project

manager Lauren, to increase success is by avoiding failure. There are 12 steps to reduce project

management risk that Lauren must look at to see if it would help. These steps are: Do not do

things for the wrong reasons, own the project, remembering that failure is not an option, warn off

the disbelievers, cast implementations in concrete, keep the project under control, designate a

single leader, not demonizing your vendor, keep functional managers accountable, ensure
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business objectives are the drivers of the project, not letting technology jargon intimidate system

users, and finally, do not over-modify (Capron, n.d.).

If key stakeholders agreed that a project had to exceed its initial budget, the project may

still be considered a success but project success and failure isn’t just about the facts, nor is it

simply about what was delivered. It is also, crucially, about how the project is perceived (Why

Do Projects Fail?, n.d.). A few participants of Sharp Printing questioned the legitimacy of the

original cost and time estimate established by senior management. A couple of Research &

Development people were worried about the technology required to produce the high-quality

product for less than $200. Already, this project is not being perceived well by the employees

and engineers at Sharp Printing.

At this point in the project, it would be smart to decide to cancel the project altogether.

After conducting the initial WBS, Lauren discovered that before they even start the project that

they were already going to be over budget by $1.25 million. This number is also before any

interruptions or “hiccups” the project may run into which means the number can keep increasing.

The ultimate goal was to make a high quality color laser printer for under $200 and by already

having the expected budget exceed by over one million dollars does not make the overall ending

seem possible or feasible.

Time is another important factor of the project. The time frame that the project manager,

Lauren, had figured would be four months past the deadline of the agreed on senior management

deadline. Once again this timeline is based on everything running smoothly and hoping that any

major setback can be quickly fixed. Two major components of a project, time and money, have

already been miscalculated in the original estimate and because of this, the project does not have

a fair chance of succeeding and therefore should be cancelled by the project manager. Lauren
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performed her brainstorming with stakeholders and even though they determined they could

reduce time that would mean it would cost more money. There was also no identification of any

concrete savings. Already being $1.25 million over budget, there is not any more room for more

money being spent.

Senior management met to discuss the project shortly after it was announced that they

were going to be designing a color laser printer. They came up with a time and cost estimate

based on prior experience. They were absolutely wrong for doing this before the project actually

was started officially. They were not acting correctly in developing these estimates. That task

should have been the responsibility of the project manager who would get with the respected

employees of each department to accurately give a cost and time estimate for the overall project

based on the facts. Lauren chose to have her own meeting with stakeholders to create a WBS

identifying the work packages and organizational unit responsible for implementing the work

package (Larson & Gray, 2011). She felt that good bottom-up time and cost estimates were her

first concern since she was one of the employees who worried about the success of the project in

the first place. Her numbers were much different and more accurate than senior managements

and because of that, they should have never stated their estimates until talking to the project

manager.

Having a realistic estimate from the experts will generate a good estimate for a given

scope. Without a good estimate basis, can result in an estimate which, in this case, will be very

low. When the estimate basis and assumptions are not realistic, the estimate for a given scope

will not benchmark favorably (Jambhekar, n.d.). In this case, the project targets were unrealistic

which jeopardized approval from one stage to the next. Estimate review and challenge is a major

step in project approval. Typically, projects will go through an estimate review about three times
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before funding will be approved (Jambhekar, n.d.). The original estimate by Sharp Printing

senior management and since they felt that they were experts, they decided to go forward with

the project and designate a project manager to get it started. It was during the second estimate

that the project manager discovered that the project would go over budget and over time. It was

also determined that if the project wanted to be completed in the timeline originally provided that

it would cost more money than the second estimate already provided.

Estimate review is used to establish the validity of the business case or project.

Uncertainty will surround the cost estimates developed in the early stages of the project such as it

did at Sharp Printing. Most organizations will have the business development or research and

development groups generate the cost estimates. The danger at this point is primarily from

management’s attachment to the first estimate generated which is exactly what happened at

Sharp Printing (Jambhekar, n.d.). The first number made a long-lasting impression on the

employees and engineers who were scared from the beginning. To guard against this tendency,

estimates at the beginning stage should take the form of ranges only. Having an internal

consultant, or consulting with the project manager, will provide a reasonableness check on the

estimates and will usually be able to provide benchmarks by analogy to similar projects

completed, built, or estimated in the past (Jambhekar, n.d.). The senior management for this

company should not have approved the project and raised the hopes of themselves, and other in

the company until the second estimate was at least completed.

Senior management did not seem to run any type of risk analysis as well. They had one

goal in mind which was to make an affordable color laser printer. Before deciding to move

forward on any project, teams need to evaluate the risks using some type of workshop to assist in

determining project contingency. Sometimes, an outside facilitator can be used to organize and
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conduct each workshop. The inputs from the workshops can be used with estimating techniques,

such as the Monte Carlo, to form a probabilistic view of the possible project outcomes for both

time and cost (Jambhekar, n.d.).

Using a Monte Carlo is a valuable tool when assessing project scheduling risks. From the

viewpoint of project managers, there are three major considerations about any project. These

considerations are cost, schedule, and quality. Each has its own risk but are frequently

interrelated (Finley, n.d.). One of the main problems in planning major projects is uncertainty.

The best way to deal with this uncertainty with regard to scheduling is to make some sort of

effort to measure it. Range estimates are then used with Monte Carlo techniques to make an

overall picture of the extent of risk involved (Finley, n.d.). Estimating that includes ranges of

significant factors puts many situations into better perspective. Using the Monte Carlo method

can help a project manager overcome limitations and still quantify risks (Finley, n.d.). The

Monte Carlo method involves using random numbers in a calculation that has the structure of

some process. The process used must be one driven by quantifiable random events (Finley, n.d.).

All projects and businesses are subject to the effects of uncertainty that arise from

multiplicity of sources, including technical, management, environmental, commercial etc.

(Hillson, n.d.). A simple list of risk sources does not provide the richness of the work

breakdown structure, since it only represents a single level of organization. Using a risk

breakdown structure (RBS) will allow an organization to create a source-oriented grouping of

risks that organizes and defines the total risk exposure of the project (Hillson, n.d.). Basically,

this is a more in-depth look at the potential risk of a project that might not be listed in the work

breakdown structure. There are benefits of using the RBS as an estimating technique.
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The RBS can decompose potential sources of risk into layers of increasing detail. The

RBS has the potential to become the most valuable single tool in assisting any manger in

understanding and managing risks to the project (Hillson, n.d.). It is also a power aid to risk

identification, assessment and reporting, and the ability to adjust to the appropriate level provides

new insights into overall risk exposure (Hillson, n.d.). The only other thing that needs good

estimating techniques is cost estimates.

Cost estimating techniques such as the cost-to-capacity analyses have proven beneficial

when developing cost estimates for project construction cost such as building printers for the

public (Ellsworth, n.d.). This estimation seeks to establish a reasonable estimate of the costs

associated with project development. Costs vary by individual project and are influenced by

factors such as project characteristics, site conditions, and design specifications. The costs

associated with the project are influenced by the complexity, design standards, and processes and

technology (Ellsworth, n.d.). Cost and project capacity information is the foundation for

developing a cost-to-capacity relationship for a particular project. There are going to be times

when cost information is not available so a cost-to-capacity analysis can be based off of previous

projects. Obviously the senior management at Sharp Printing based their cost estimate from

previous projects but no project like this has been tried. This was a new process and they failed

to recognize that and instead let their emotions cloud their judgment.

In conclusion, Sharp Printing senior management jumped the gun on this color laser

printer that would be available to the general public and small business market for under $200.

After consulting with each other and using their past experiences, they concluded that this could

happen and will benefit the company. What they should have done is planned this out better

with the project manager and engineers. Their biggest failure was improperly estimating the
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cost that it would take to complete the project. The project should not be attempted until all the

issues with money and time are worked out. Senior management was not acting correctly in

anything they did. They should not have announced this to the public until everything was

finalized. Using the estimating techniques listed above would have helped senior management at

Sharp Printing to correctly assess the project and determine if it was feasible in the first place.

The next thing that immediately should have happened was senior management getting the

project manager and engineers involved in the planning process to have another set of eyes

review their thoughts and assessment. This project should be stopped immediately or else Sharp

Printing is guaranteed to lose a lot of money and credibility in the eyes of its stakeholders.
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References

Capron, B. (n.d). Increase success by avoiding failure. Manufacturing Systems, A6.

Ellsworth, R. (n.d). COST-TO-CAPACITY ANALYSIS FOR ESTIMATING PROJECT

COSTS. Construction Accounting & Taxation, 15(5),

Finley, E. (n.d). Project scheduling risk assessment using Monte Carlo methods. Cost
Engineering, 36(10)

Hillson, D. (n.d). Using a risk breakdown structure in project management. Journal Of Facilities
Management, 2(1)

Jambhekar, V. (n.d). Estimate Review and Assurance - Owners Challenges. AACE International
Transactions, OW21.

Larson, E. W., & Gray, C. F. (2011). Project management: the managerial process (5th ed.).
New York: McGraw-Hill Irwin.

Why Do Projects Fail? - Project Management Training from MindTools.com. (n.d.). Mind Tools
- Management Training, Leadership Training and Career Training. Retrieved September
17, 2012, from http://www.mindtools.com/pages/article/newPPM_58.htm