Last year the Sharp Printing AG Group set a goal of having a colour mini

tablet available for the consumer and small business market for less than

$$200.$ A few months later the senior management met off$-$site to discuss the

new product. The results of this meeting were a set of general technical

specifications along with major deliverables, a product launch date and a cost

estimate based on past experience.

Shortly afterwards, a meeting was arranged for middle management

explaining the project goals, major responsibilities, the project start date the

importance of meeting the product launch date within the cost estimates.

Members of all departments involved attended the meeting. Excitement was

high. Although everyone saw the risks as high, the promised rewards for the

company and the personnel were emblazoned in their minds. A few

participants questioned the legitimacy of the project duration and cost

estimates. A couple of R&D people were worried about the technology

required to produce the high$-$quality product for less than $$200.$ But given the

excitement of the moment, everyone agreed the project was worth doing and

was doable. The colour mini tablet project was to have the highest project

priority in the company.

Lauren was selected to be the project manager. She had $15$ years of

experience in tablet design and manufacture, which included successful

management of several projects related to tablets for commercial markets.

Since she was one of those uncomfortable with the project time and cost

estimates, she felt getting good bottom$-$up time and cost estimates for the

deliverables was her first concern. She quickly had a meeting with the

significant stakeholders to create a WBS identifying the work packages and

organisational units responsible for implementing the work packages. Lauren

stressed that she wanted time and cost estimates from those who would do

the work or were the most knowledgeable, if possible. Getting estimates from

more than one source was encouraged. Estimates were due in two weeks.

The compiled estimates were placed in the WBS$/$OBS$.$ The cost estimate

seemed to be in error. It was $$1,250,000$ over the senior management

estimate; this represented about a $20$ percent overrun! The time estimate from

the developed project network was only four months over the top

management time estimate. Another meeting was scheduled with the

significant stakeholders to check the estimates and then to brainstorm for

alternative solutions. The cost and time estimates made by Lauren$$s team

seemed to be reasonable. Some of the suggestions for the brainstorming

session were:

$$ Change scope.

$$ Outsource the technology design.

$$ Use the priority matrix to get top management to clarify their priorities.

$$ Partner with another organisation or build a research consortium to

share costs and to share the newly developed technology and

production methods.

$$ Cancel the project.

$$ Commission a break$-$even study for the mini tablet.

Very little in the way of concrete savings was identified, although there was

consensus that time could be compressed to the market launch date, but at

additional cost.

Lauren met with the marketing $($Connor$),$ production $($Kim$)$ and design $($Sarah$)$

managers, who provided some ideas for cutting costs, but nothing significant

enough to have a large impact. Sarah remarked, $$I wouldn$$t want to be the

one to deliver the message to top management that their cost estimate is

$$1,250,000$ off! Good luck, Lauren.$$

Questions

$1.$ At this point, what would you do if you were the project manager?

$2.$ Was top management acting correctly in developing an estimate?

$3.$ What estimating techniques should be used for a mission$-$critical

project such as this?