Brandberg AS manufactures advanced processed plastic components and specializes in pipes, among others, for the offshore sector. The company has a strong financial position and a stable customer base. However, the board is concerned about increasing competition and squeezed profit margins.
The board has approved a major replacement of production equipment, particularly focusing on turning, milling, and surface treatment machines. The replacement is justified due to:
- Worn-out production equipment leading to increasing scrap rates and reduced quality.
- Partially outdated production equipment resulting in limited flexibility and low capacity utilization.
- New products requiring a machining quality that is difficult to achieve with existing equipment.
- Improved equipment is available in the market, which could give competitors an advantage if the company doesn’t act relatively quickly.
The board of Brandberg AS appointed Kjartan Larsen as responsible for the replacement. According to rumors, the director had suggested the leader of the production department, Hans Olsen, as the project manager.
Kjartan Larsen’s responsibilities regarding the replacement include developing specifications, soliciting bids, procurement, installation, training, and commissioning of the new equipment. The total cost allocated by the board is 25 million Norwegian kroner. The financial framework was justified as it seemed to be an appropriate sum. At the same time, the board emphasized that the replacement must be completed within 18 weeks due to a contractually agreed delivery of new pipes to a highly significant customer.
Kjartan Larsen is well aware of the importance of the replacement. He wants to dedicate a considerable amount of his working time to the task, but he is also responsible for three other projects and his own department. The board has made it clear that the replacement should have minimal impact on production, implying that all contractually agreed deliveries must be executed as planned. Kjartan believes it will be challenging to get workers from other departments to prioritize this project, especially since the director initially wanted Hans Olsen as the project manager.
Clearly, both the director and the board want to closely monitor the replacement process. Detailed progress reports are required to be submitted every week to both the board leader and the director, and all plans must be approved by these gentlemen. However, Kjartan Larsen has discreetly been informed that neither the board nor the director can allocate much time for planning and following up on the project.
Discuss the choice of project manager in this project. Was it carried out well, or could it have been done differently?
The choice of project manager in this project can be discussed as follows:
Hans Olsen’s nomination: The director suggested the leader of the production department, Hans Olsen, as the project manager. It is positive that the director has confidence in Hans Olsen’s skills and abilities to handle projects. As the leader of the production department, he also has in-depth knowledge of the company’s production processes. This could be advantageous in understanding the needs and requirements for the new production equipment. However, it is not mentioned whether Hans Olsen has the time and resources to handle the project while also being responsible for his own department and three other projects. This could be a potential drawback as it may lead to overburdening and lack of focus on the replacement project.
Kjartan Larsen’s role: Kjartan Larsen has been appointed as responsible for the replacement and has been assigned tasks related to developing specifications, soliciting bids, procurement, installation, training, and commissioning of the new equipment. As the one in charge of the replacement, it is positive that he is highly engaged and willing to dedicate much of his time to the project. He also possesses knowledge of the company’s needs and challenges related to replacing production equipment. However, he is already responsible for three other projects and his own department. This could make it difficult for him to provide sufficient attention to the replacement project and ensure effective follow-up.
Conclusion: The choice of project manager in this project can be discussed as partially appropriate. Hans Olsen, the leader of the production department, has knowledge of the production processes and can contribute valuable insights. However, it is unclear if he has the time and resources to handle the project effectively, given his existing responsibilities for his own department and three other projects. Kjartan Larsen, who is responsible for the replacement, has the commitment and knowledge, but he also carries the burden of several other projects. The ideal choice would have been a dedicated project manager with sufficient time and resources to handle the project in an efficient manner.
Discuss the adverse repercussions a project can have on the ongoing operations of an organization. Which of these will affect Brandberg AS?
A project can have several adverse repercussions on the ongoing operations of an organization. In the case of Brandberg AS, the following repercussions may be relevant:
- Reduced production capacity: The replacement of production equipment may lead to downtime or limitations in production capacity. This could result in delays in deliveries and a reduced ability to meet customer demand. Brandberg AS must ensure that production is maintained as much as possible and that contractually agreed deliveries are carried out as planned.
- Lack of flexibility: If the current production equipment is outdated and has limited flexibility, it could affect the company’s ability to adapt to changes in the market or customer needs. This may lead to a loss of competitiveness and missed opportunities.
- Lack of training and expertise: Introducing new equipment may require training of employees to handle it effectively. If adequate training or resources to develop necessary expertise are not provided, it could lead to underutilization of the new equipment and reduced efficiency in the production process.
- Overloading of resources: If the project does not receive sufficient attention and resources, it could lead to overloading of employees who already have responsibilities for other projects or daily tasks. This could decrease productivity, increase stress levels, and impact the overall operational efficiency of the organization.
- Negative impact on profit margins: If the project involving the replacement of production equipment is not carried out efficiently, it could result in higher costs, delays, and reduced quality. This could negatively impact profit margins, especially when the company is already experiencing squeezed profit margins and increasing competition.
For Brandberg AS, these repercussions could affect their ability to maintain production, deliver according to contracts, adapt to market changes, and sustain profitability. It is essential for them to consider these potential repercussions and take measures to minimize unwanted effects on ongoing operations.
The project is not going well, and Kjartan Larsen is on the brink of a breakdown. Below are outlined some general reasons why the project is failing. Choose and comment on the three reasons you believe are the most important in relation to the case.
- Top management does not understand the unique nature of the project as a way of working.
- Unclear goals.
- Unclear relations towards the base organization.
- The project manager has a significant responsibility but little authority.
- No one takes on the actual responsibility for the project.
- The project manager does not fit into the project management role.
- The project is based on unrealistic budgets and plans.
- The project management has insufficient influence on the project’s plans.
- The project does not receive the necessary resources.
- The organization carries out too many projects simultaneously.
- Inadequate coordination between goals, plans, and follow-up.
- The organization operates with unclear or shifting priorities.
- The project is poorly organized.
- Poor follow-up of change work.
In relation to the case with Brandberg AS, where the project of replacing production equipment is not going well, and Kjartan Larsen is on the brink of a breakdown, the three most important causes of project failure could be as follows:
- Unclear goals: If the project’s goals are not clearly defined or communicated, it can lead to confusion and lack of focus. In this case, the lack of clear goals for the replacement of production equipment may result in the project lacking direction and prioritization. This can lead to inaccurate specifications, incorrect bids, and overall uncertainty about what needs to be achieved.
- Lack of planning and follow-up: If the project lacks sufficient planning and follow-up from management, it can lead to poor coordination, delays, and inefficiency. In the case, it is mentioned that both the board and the director have limited time to follow up on the project, and this can result in a lack of monitoring of milestones, poor coordination with other projects, and an inability to address problems that arise along the way.
- The project manager has a significant responsibility but little authority: The case indicates that Kjartan Larsen, the project manager, is responsible for the replacement of production equipment, but it is unclear if he has sufficient authority and power to make decisions and drive the project forward. This can lead to delayed or non-existent decision-making, issues with coordination and resource allocation. The lack of authority can also make it difficult for the project manager to delegate tasks and ensure that all involved parties understand their responsibilities and contribute to the project’s success.
These three reasons are relevant to the case as they highlight potential weaknesses in the project’s management and organization. Unclear goals can lead to a lack of direction and prioritization, lack of planning and follow-up can result in delays and inefficiencies, and limited authority for the project manager can hinder effective decision-making and project implementation. To address the situation, it is essential to tackle these causes and implement measures to clarify the goals, improve planning and follow-up, and ensure that the project manager has enough authority to drive the project forward.
This case is taken from the book “Prosjektledelse – fra initiering til gevinstrealisering” – 2016, 4. Edition, by Jan Terje Karlsen.
