Business operating management
Yuzhi Zhao
wenti.docx1. Why is it important for business units to continually revise their product or service offering? What new products or services is your employer, or an organization you are familiar with, considering? Recommend some metrics that could be used to measure the performance of the new product or service.
There are many reasons for business to continually revise their products and services. Primarily, changing consumer tastes, changing technologies, and competition drive businesses to update their products and services. To stay in business and continue to make a profit, businesses must stay relevant and evolve to the ever-changing market landscape. Changing technologies may force the obsolescence of some products. Small business owners may need to create other products to remain in business. Media preferences among consumers also change, which forces companies to adjust their advertising mixes or the media combinations they use to market their products. Some other drivers to change are ineffective business strategies or defects. The auto industry is a good example of that. In the United States, for example, the number of vehicle recalls has grown over the past 20 years to the point where in 2016, the market experienced more than 1,000 vehicle recalls for the first time (Exhibit 1). In 2017, on average, 3.1 vehicles were recalled for each vehicle sold. Design flaws, performance issues, and even safety regulation changes can drive these recalls. This not only drives changes to products but can also drive changes to manufacturing and assembly processes if those are found to be the root cause of a defect. Another potential cause of change in a product or service is the availability of information. In the world of big data and analytics, new insights are available that provide insight into markets, consumer preferences, how and where products are used. This information allows businesses to improve their offerings, improve their processes, drive down input costs, and better compete in the market.
I work for possibly the largest bureaucratic organization in the world, the U.S. government, and red tape is a real barrier to new product or service offerings, we do on occasion offer something new. For example, in the construction and contracting field (i.e. that’s where I work) we are developing a new contract vehicle for Direct Digital Controls (DDC) of Heating, Ventilation, and Air Conditioning (HVAC) Systems. While that doesn’t sound super exciting, it is a new product for a required system in all new construction projects. Traditionally, construction contractors are awarded contracts and required to design and/or build new facilities with fairly large, complex systems. They in turn would hire a subcontractor to perform certain aspects of the work, such as HVAC installation and DDC programming and operation. This often comes with mixed results as the quality of subcontractor varies significantly. Newly constructed buildings often have a large number of issues with these systems, which are costly to repair and maintain. The aim of the new contract vehicle is to hire a well experienced contractor using a Job Order Contract method. This allows a more expeditious awarding of task orders against a basic contract to the same contractor for a specified duration. While that type of contract isn’t new, the application of that method to DDC systems is very new for our organization.
The two prime metrics to measure success are going to be time required to bring a DDC system online and ultimately cost. We have a large amount of historical data on project timelines associated with bringing these systems online, some have taken up to two years. Using that data and comparing it to the time required to bring new systems online using this new method will be one simple metric to measure the success of the new approach. Using cost as a metric, there will be two areas to measure success. One will be cost of installation, i.e. how much it costs to install and bring the new DDC system online. In a similar fashion, comparing this to the historical costs of projects executed prior to using this tool. The second cost metric is related to the time savings. DDC systems, when implemented correctly, are used to efficiently manage energy consumption. On an installation, energy consumption can become a significant cost when tens of thousand of military members, civilian workers, and military assets are working and housed. Bringing these energy management systems online faster will result in significant energy cost savings. So, the primary metrics used to measure success will be process time, process cost savings, and energy cost savings.
Suttle, R. (n.d.). Why Is There a Constant Need for Change in Marketing? Houston Chronicle. Retrieved July 14, 2020, from https://smallbusiness.chron.com/
Ries, E. (February, 9, 2016). 5 Reasons Why You Should Continuously Update Your Product. Retrieved July 14, 2020, from https://heleo.com/ericries-5-reasons-continuously-update-product/5110/
Collier, D. A., & Evans, J. R. (2016). OM (with OM Online, 1 term (6 months) Printed Access Card) (6th ed.). Cengage Learning.
Aragon, A., Huber, U., Möller, T., & Nick, H. (2019, February 13). Return to sender: Resolving the automotive-recall resurgence. McKinsey & Company. https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/return-to-sender-resolving-the-automotive-recall-resurgence
2. What is project management? What is the definition of a project? What are the basic components of project management? What is the role of a project manager? Can you describe these topics in the context of a project being done within an organization of your choice?
A project is temporary in that it has a defined beginning and end in time, and therefore defined scope and resources. It’s unique in that it is not a routine operation, but a specific set of operations designed to accomplish a singular goal. Construction of a new facility or infrastructure, software development, relief effort after a hurricane, and expanding sales into a new region are all projects that must be managed to deliver according to schedule and within budget. Project management is the application of knowledge, skills, tools, and techniques to project activities to meet those project requirements. It involves all activities associated with planning, scheduling, and controlling projects. Both our course text book and the Project Management Body of Knowledge will tell you there are five areas or stages of project management:
1. Defining (Initiating) – Determining project goals, responsibilities and deliverables, and associated deadlines. This is the process of formally authorizing a new project where you dig into the details, schedule, scope, resourcing, identifying stake holders, etc.
2. Planning – Arguably the most important phase to project success. Project costs estimates and schedule are developed here, as well as deciding what, when, how and who is responsible for taking actions to accomplish project objective.
3. Organizing (Executing) – Team formation, resource allocation, risk assessments, project documentation and communications plans are all developed during this phase.
4. Monitoring and Controlling – Information collecting, assessing status reports, managing changes to baselines (schedule and costs), this information is turned into actionable knowledge. Here the progress and performance of the project is tracked, reviewed and regulated, areas for change are identified and initiated as well.
5. Closing – Finalizing all activities to formally complete the project by assuring all work has been completed, all PM process have been executed (e.g. budget management and financial close out), and all team members agree the project has been completed.
Project management brings a unique focus shaped by the goals, resources and schedule of each project. The value of that focus is proved by the rapid, worldwide growth of project management as a recognized and strategic organizational competence, as a subject for training and education, and as a career path (Galbus, 2016).
The role of a PM, to make a sports analogy, is to quarterback the project, i.e. execute project objectives through managing the team as well as individuals, maintaining team commitment, and communicating across the organization. The project manager is ultimately responsible for ensuring that project members understand what is expected of them and what they should expect from one another and has full responsibility and accountability of the project. The PM is calling the plays by controlling the project plan. They track progress, performs risk management and manages project priorities, communicates project status upward and to the customer, drives decision making, escalates issues when necessary for resolution, and makes things happen. The PM needs to have the knowledge, skills and experience to recognize issues, communicate those issues, involve the right people to solve those issues, and know when the issue has been properly addressed.
Within my organization, we have entire divisions of project managers, and to some degree, sub-tiers of project managers who mange a portion of the project such as design or construction. While the PM assigned is ultimately responsible for the projects from definition through closeout, they rely on planners, design managers and construction managers to lead those specific phases. So, there are multiple levels of project management for each project, each phase being led by specific person. The PM has oversight and responsibility for the entire project, scope, schedule, and budget. The phase my team is focused on is construction, so execution through closing. The specific aspects we focus on in the organizing or executing phase are forming the owner management team (construction manager, engineering technician (quality and safety oversight in the field), contracting specialist, the customer team (end user)), the contractor team (quality control, safety management, superintendent) and developing effective communications plans between these entities. During monitoring and controlling, we work with the contractor to ensure the project maintains the appropriate schedule and the project is being constructed according to design and specification in a safe manner. Here the construction manager tracks progress, assess construction status against a baseline schedule and budget, and manages any potential changed conditions that may arise. The engineering technician is present in the field to monitor the quality of work in place and the safety program that is in place. Any deficiencies are documented and addressed with the project team. Once completed, all final inspections and testing are coordinated including HVAC systems commissioning, fire alarm and fire suppression systems testing and inspection, intrusion detection systems, and ensuring the complete scope of work was completed in accordance with the design, specification and regulations (building code, ADA compliance, life safety, etc.). Once all parties have agreed that the project is completed, the facility is then turned over to the customer for use. All closeout documentation, as built drawings, final invoicing, operations and maintenance manuals for systems, and warranty information is required before formally closing the project.
Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide)–Sixth Edition (Sixth Edition, Sixth edition). Project Management Institute.
Project Management Institute. (n.d.). PMI. Retrieved July 14, 2020, from https://www.pmi.org/about/learn-about-pmi/what-is-project-management
Galbus, A. C. (2016). Programme Management Initiation: What to Focus on in the First 90 Days. Paper presented at PMI® Global Congress 2016—EMEA, Barcelona, Spain. Newtown Square, PA: Project Management Institute.
Hayes Munson, K. A. (2012). How do you know the status of your project?: Project monitoring and controlling. Paper presented at PMI® Global Congress 2012—North America, Vancouver, British Columbia, Canada. Newtown Square, PA: Project Management Institute.
Whitten, N. (1999). Duties of the effective project manager. PM Network, 13(9), 16.
Collier, D. A., & Evans, J. R. (2016). OM (with OM Online, 1 term (6 months) Printed Access Card) (6th ed.). Cengage Learning.
Project Development Process, this is the phrase that my organization uses to describe the process through which a team of engineers and architects develop a scope of work, cost estimate, and a Request for Proposal (RFP) which is sent to prospective contractors for bidding purposes. This process takes place after the decision to execute a project has been made by the customer and the necessary planning documentation and funding is in place to develop the project. The result is a custom project package, that is one of a kind and specific to a customers’ specifications.
The basic steps in this process are:
1. Customer identifies a need for a project – Input is whatever is driving the need for a project. That could be an increase in the size of a military command, a new ship or submarine platform being introduced, identification of deteriorated or failed infrastructure, change in the mission of a command. Output is a basic project summary and identification of requirements.
2. Project requirements are submitted to the work induction board with project initiation funding
3. Project Manager assignment
4. Design/Planning cost estimate – Analysis to determine disciplines (Planners, Architects and Engineers) required and approximate number of hours for each to conduct design. Input is the project requirements package, information obtained through site assessments (size, location, utilities available, etc.). Output is the estimated cost to complete design and planning for the project as well as a schedule for completion.
5. Customer provides funding – Input is the funds request. Output is funding for design.
6. Design and planning – Since each project is unique, the list of inputs will change. The basic inputs are customer requirements and specifications (facility use, number of people, functions performed in the facility, etc.), study results (geotechnical surveys, lead and asbestos testing, structural analysis, electrical power distribution system analysis, environmental documentation), project site, and utility locations. The output, after several design reviews, is the completed design.
7. Cost Estimate – Main inputs are the design and specifications from which the costs are derived.
8. Request for Proposal Development – Inputs include design, specifications and cost estimate. Output is a six-part RFP that can be issued to prospective contractors for proposal of a cost, this is the basis of the contract to be awarded for construction of the project.
Overall, success criteria are whether it’s been completed in the prescribed amount of time, the quality of the deliverable at each step, and cost overruns. The amount of time is generally dictated by the requirement of the customer to have the completed project in place to support their mission. This is sometimes a negotiation early in the project development phase, but it is sometimes dictated by the larger Navy mission and usually faster than you would prefer. Quality is determined through multiple design reviews. This are typically five design reviews with stakeholder involvement. Not only does the customer participate, but facility managers and maintenance personnel do as well. Design quality can be subjective, but the important factors are does it meet it’s intended purpose or solve the problem it was intended to solve, is it within budget, is it constructible and functional, and is it maintainable once built.
As previously mentioned, timing considerations are generally dictated by the larger mission of the customer or Navy. Those are then balanced against feasibility. Project construction timelines and availability of funding also factor into to timeline. Sometimes project schedules need to be accelerated in order to meet an emergent mission requirement. This drives up project costs.
I think this process can be improved. There is a lot of variation in the project development phase, but there are also a lot of repeated tasks, areas that can be standardized, use of data analytics to improve project timelines and processes. Developing a standard process where applicable and training team members to that process and that standard and ensuring each discipline has the necessary skills to be proficient could greatly improve this process as well.
Collier, D. A., & Evans, J. R. (2016). OM (with OM Online, 1 term (6 months) Printed Access Card) (6th ed.). Cengage Learning.
