1.1 What are some of the principal reasons why project management has become such a popular business tool in recent years?
1.2 What do you see as the primary challenges to introducing a project management philosophy in most organizations? That is, why is it difficult to shift to a project-based approach in many companies?
1.11 Compare and contrast the four project management maturity models shown in Table 1.3 . What strengths and weaknesses do you perceive in each of the models?
1.12 The largest professional project management organization in the world is the Project Management Institute (PMI). Go to its Web site, www.pmi.org, and examine the links you find. Which links suggest that project management has become a sophisticated and vital element in corporate success? Select at least three of the related links and report briefly on the content of these links.
2.1 The chapter suggests that a definition of strategic management includes four components:
Devpeloping a strategic vision and sense of mission
Formulating, implementing, and evaluating
Making cross-functional decisions
Discuss how each of these four elements is important in understanding the challenge of strategic project management. How do projects serve to allow an organization to realize each of these four components of strategic management?
2.7 You are a member of the senior management staff at XYZ Corporation. You have historically been using a functional structure setup with five departments: finance, human resources, marketing, production, and engineering.
Create a drawing of your simplified functional structure, identifying the five departments.
Assume you have decided to move to a project structure. What might be some of the environmental pressures that would contribute to your belief that it is necessary to alter the structure?
With the project structure, you have four ongoing projects: stereo equipment, instrumentation and testing equipment, optical scanners, and defense communications. Draw the new structure that creates these four projects as part of the organizational chart.
CASE STUDY 2.1 Rolls-Royce Corporation
Although the name Rolls-Royce is inextricably linked with its ultra-luxurious automobiles, the modern Rolls-Royce operates in an entirely different competitive environment. A leading manufacturer of power systems for aerospace, marine, and power companies, Rolls-Royces market is focused on developing jet engines for a variety of uses, both commercial and defense-related. In this market, the company has two principal competitors, General Electric and Pratt & Whitney (owned by United Technologies). There are a limited number of smaller niche players in the jet engine market, but their impact from a technical and commercial perspective is minor. Rolls-Royce, GE, and Pratt & Whitney routinely engage in fierce competition for sales to defense contractors and the commercial aviation industry. The two main airframe manufacturers, Boeing and Airbus, make continual multimillion-dollar purchase decisions that are vital for the ongoing success of the engine makers. Airbus, a private consortium of several European partner companies, has drawn level with Boeing in sales in recent years. Because the cost of a single jet engine, including spare parts, can run to several million dollars, winning large orders from either defense or commercial aircraft builders represents an ongoing challenge for each of the big three jet engine manufacturers.
Airlines in developing countries can often be a lucrative but risky market for these firms. Because the countries do not maintain high levels of foreign exchange, it is not unknown, for example, for Rolls-Royce or its competitors to take partial payment in cash with assorted commodities to pay the balance. Hence, a contract with Turkeys national airline may lead to some monetary payment for Rolls-Royce, along with several tons of pistachios or other trade goods! To maintain their sales and service targets, these jet engine makers routinely resort to creative financing, long-term contracts, or asset-based trading deals. Overall, however, the market for jet engines is projected to continue to expand at huge rates. Rolls-Royce anticipates a 20-year window with a potential market demand of 70,000 engines valued at over $400 billion in civil aerospace alone. When defense contracts are factored in as well, the revenue projections for jet engine sales are likely to be enormous. As Rolls-Royce sees the future, the single biggest market growth opportunity is in larger, greater thrust engines that are designed to be paired with larger jet aircraft.
Rolls-Royce is currently engaged in a series of strategic decisions with the potential for huge payoffs or significant losses. It is coupling its latest engine technology, the Trent series, with Boeing and Airbus focus on more efficient designs. Airbus A350 and Boeings 777 and 787 are highly popular and strong-selling models designed to maximize the efficient transportation of air travelers at the lowest cost. To gain market share in powering these jets, Rolls-Royce developed the new Trent XWB engine the worlds most efficient commercial jet engine. Development of the engine started in 2005 when Rolls-Royces engineers sat down with Airbus to design an engine powerful enough to service its A350 XWB (Extra Wide Body) jet, an airframe powered by only two engines. In order for Airbus and Boeing to make their aircraft attractive to airlines, these aircraft must be efficient (that is, cheap to operate) but also powerful enough to carry a large passenger load. The decision to make an initial investment in new engine technology can cost a jet engine manufacturer over $1 billion in non-recoverable costs. As a result, it is critical that Rolls-Royce and its competition make the right strategic decisions about which aircraft to support. Recall from our project profile at the beginning of the chapter that Rolls-Royce invested in servicing the A380 double-decker airplane, whose disappointing sales may result in its cancellation. This potential cancellation will have a serious impact on Rolls-Royces bottom line.
Rolls-Royces decision to pursue engine design efficiency that pairs up with the Airbus and Boeing models represents a strategic choice for the future. Rolls-Royce anticipates that the commercial passenger market will triple in the next 20 years. As a result, future opportunities will involve more economically viable aircraft. Boeing, Airbus and Rolls-Royce have all collectively taken a large financial gamble that their strategic vision of the future is correct.
Who are Rolls-Royces principal project management stakeholders? How would you design stakeholder management strategies to address their concerns?
Given the financial risks inherent in developing a jet engine, make an argument, either pro or con, for Rolls-Royce to develop strategic partnerships with other jet engine manufacturers in a manner similar to Airbuss consortium arrangement. What are the benefits and drawbacks in such an arrangement?