Project Management: A Systems Approach to Planning, Scheduling, and Controlling by Harold Kerzner Ph.D

Author:Harold Kerzner Ph.D. [Ph.D., Harold Kerzner]
Language: eng
Format: epub
Tags: General, Case studies, Technology & Engineering, Business & Economics, Project Management, Industrial Engineering
ISBN: 9780470278703
Publisher: Wiley
Published: 2009-03-03T05:00:00+00:00

Page 546

Because there would be no installation and subsequent removal, the configuration was more likely to remain secure. Moreover, because modification would occur during production, all activities would be controlled by normal management procedures, rather than by a separate program.

The primary disadvantage of this approach was that the original production plan would be disrupted.

Separate plans would have to be developed for the first thirty airplanes, which required modification, and all subsequent planes. Learning curves would be disrupted as well, because a large number of additional workers would have to be added temporarily, at selected work stations, to complete the modification of the first thirty planes. If this method were used, modification was expected to require approximately two million additional labor hours.

Because all cockpit work would be deferred until engineering drawings and parts were available for two-crew models, test procedures would also have to change. Traditionally, functional testing was done sequentially, with each system (flaps, ailerons, etc.) tested as it became operational. That approach would be impossible here because all cockpit work would be deferred until complete plans and drawings were available. Functional testing would therefore have to be done after the two-person cockpit was fully installed. Problems might not be detected and corrected immediately and might well be hidden by systems that were installed later, making problem diagnosis much more difficult.

Thornton knew that it was time to make a choice between the two approaches so that production could continue. The risks, however, were great; as his staff kept telling him, the decision was a potential "show-stopper." He wondered: "Should I authorize after-the-fact conversion of planes or modification during production? And for what reasons?"

The Boeing 767:

From Concept to Production (B)10

Thornton elected to retrofit the thirty 767s with two -person cockpits, rather than installing them in-line. The project was managed as a separate production program with its own schedule and learning curves, and the storage problem was solved by special parking arrangements in the large stalls normally used for 747s. Managers were greatly pleased with the results. In August 1981, the first 767 was rolled out as planned, and only a few deliveries were delayed by as much as a month.

Six years later, the world of airframe manufacturing had changed. By August 1987, Boeing had received orders for 263 767s; of these, 181 had been delivered. But the monthly production rate was down from the planned level of eight to two, and forecasts had not been fully met. One reason was that most U.S. airlines had developed different needs because of deregulation. Routes that had previously been limited to a small number of carriers had been opened up. The resulting competition had depressed ticket prices and profits and led ultimately to both bankruptcies and mergers.

10 Copyright © 1988 by the President and Fellows of Harvard College. Harvard Business School case 688 -041.

This case was prepared by Lee Field, Janet Simpson, and David A. Garvin as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

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