ase Study:

"This was not the reaction I was hoping for," thought Mitch Scaparelli as he stared at the e-mail on his computer screen.Mitch was the general manager of the GreetTree Hotel, a 400-room suburban chain property that had just completed the first phase of a major guestroom renovation.The e-mail was from Ted North, the GreenTree's owner representative.Ted wanted to meet with Mitch to talk about the project's delays and cost overruns.As Mitch scanned the e-mail again, ominous phrases jumped out: "deeply concerned," "unexpected costs," "adverse impact on the hotel's revenue stream," and so on.Mitch could read between the lines.Stated simply, Ted's message was, "I'm disappointed, and you've got some explaining to do."

Thankfully, Mitch had a good relationship with Ted, and he didn't think his job was in serious jeopardy.But he wasn't about to win the general manager of the year award, either."How did I get into this mess?" Mitch thought."Why didn't the renovation going as smoothly as I thought it would?"

Mitch leaned back in his chair and reviewed the project in his mind.It was almost a year ago that the hotel staff was putting the last pieces of the renovation plan together.The GreenTree, built twenty years ago, didn't have any major maintenance and engineering issues, but its guestrooms definitely needed some attention, and it was decided to complete the renovation project in two phases: 250 rooms the first year, the rest of the rooms the year after.With a budget of $10,000 per guestroom, it was costing the hotel $2.5 million in the first year alone, so it was important that the project be managed properly.Mitch remembered wrestling for quite a while with whether to save some money and let Bill, the hotel's chief engineer, manage the project, or spend the money to hire an outside firm to manage it.

To help him make that decision, Mitch had traveled to the chain's recently renovated 1,200-room flagship hotel to talk to Soo Landry, the general manager there."As you know, most hotels in our chain hire the Glazer Corporation to manage major renovation work,: Soo had told him, "but my director of engineering, Arjun Singh, has twenty years' experience in maintenance and engineering, and he not only knows our property inside and out, he has worked on major renovation projects before.

"He did a fantastic job," she continued."He kept in close contact with the contractors all the way, and the project was completed on budget and on time.He didn't forget about the eighty people in the engineering department either, so they never missed a beat with the hotel's regular maintenance work.Arjun kept the needs of our guests in mind all the way through the renovation, and the hotel looks great!"

After talking with Soo and hearing how well Arjun had done, Mitch had decided to let Bill take on the GreenTree renovation.After all, Bill had been the property's chief engineer for the past five years and had overseen GreenTree's lobby renovation three years ago, as well as other minor renovation projects, so he had some experience.Plus, Bill's twelve-person staff had a couple of engineers on it, so they could probably help him out if there were parts of the renovation he couldn't handle.Mitch liked the idea of giving Bill a chance to manage the project; Bill had been with the property for twelve years, arriving fresh from trade school and starting out as a mechanic before working his way up to chief engineer.This would be an opportunity for Bill to stretch and grow professionally.Best of all, Mitch remembered thinking, was that Ted North, who was always preaching cost containment, would love the idea of not hiring the Glazer Corporation, thereby saving money.Typically, hiring an outside project managements company could cost upwards of 10 percent of the project's budget, so, with Bill in charge, that would free up $250,000 for the hotel to spend on better guestroom upgrades.

Mitch remembered announcing his decision at the end of a Monday morning staff meeting.He had expected it to be greeted with smiles and approval all around, but the news received a mixed reaction.The controller had frowned and said, "Bill runs a good department, but are you sure we shouldn't bring in an outside guy, someone with expertise in this area?Cost overruns and guestrooms that aren't finished on time could really bust our budget this year."The food and beverage director said he didn't care who managed the project, as long as they stayed out of the restaurant and kitchen.The executive housekeeper smiled and said she was confident Bill would do a good job.But perhaps most puzzling of all had been Bill's reaction."I appreciate the vote of confidence," he had said, smiling, but there was a worried look in his eyes.

In the weeks and months that followed, it turned out that Bill's worried look had been justified, as the project hit snag after snag:

On the first day of the project, the construction workers arrived at 7:00am to get started.Soon the phones were ringing off the hook at the front desk, from angry guests calling about the noise.Bill forgot that construction crews like to start early, and he therefore also forgot to stipulate a 9:00am start time in the contract.

There were issues with the elevators throughout the project.Employees complained about elevator wait times when construction workers used them to move materials.At times, the contractor forgot to lock out the floor on which the construction crews were working, so that guests sometimes found themselves looking at scaffolding and dusty tarps when the elevator doors opened.

The water supply for sixteen room was disrupted when the contractor began renovation work on the vacated ninth floor; he didn't realize that the water supply lines ran vertically in the building, serving adjacent rooms, so some guests on every floor found themselves without water until the issue was resolved.Again, the front desk was besieged with complaint calls and the hotel had to give out many rebates and refunds to disgruntled guests.

Some of the heavy equipment that the contractor used at times caused electrical circuit breakers to blow, which interrupted electrical service to guestrooms and resulted in more complaint calls to the front desk and numerous maintenance calls for the engineering staff.

The periodic electrical power disruptions caused the hotel's bedside alarm clocks to temporarily lose power, so many of them would be blinking "12:00" when guests checked into their guestrooms.Some guests could reset their own clocks, and some could not, but none of them was happy about it.This added to the number of calls the front desk had to take from irritated guests.

Twice during construction, the hotel's fire alarm went off and the entire hotel had to be evacuated.Bill didn't realize that the dust generated when the construction workers were sanding the new drywall could get thick enough to set off the alarms.

The hotel's regular maintenance work suffered as Bill's staff of twelve struggled to move the old furniture out of, and the new furniture into, the affected rooms.Haste and fatigue led to damaged walls and dropped furniture, which led to more costs because of change orders to get the walls repaired and the need to order replacement furniture for some items.

Bill was glad to see the 250 new television sets arrive one morning, but he was confused when, an hour later, he found all of them still sitting in the receiving area.Bill called the contractor, who reminded Bill with sympathy - well-feigned but for the twinkle in his eye - that, according to the contract, TV installation was not part of his scope of work.He helpfully offered to write up a change order and install and program the TVs for an additional $10,000.Not wanting to add another burden to his already overworked engineering staff, Bill reluctantly agreed to the change order.

The 250 remotes that came with the televisions did not have a button for close captioning; they had to be shipped back to the company for replacement, causing a delay and more costs.When the new remotes arrived, Bill discovered that none of them had batteries - an oversight that he failed to catch when the wrong remotes arrived the first time.It took one of the hotel's shuttle drivers all afternoon to go from store to store and buy up enough batteries for the new remotes.

Bill didn't notice that the contract specifications called for custom carpet from China.Not only did this special carpet have a sixteen-week delivery time instead of the usual six to eight weeks, it was also delayed in customs.Due to this unexpected variable, some of the guestrooms that otherwise were finished could not be rented to guests, because the carpet was till in transit.

Bill forgot to stipulate in the contract that the contractor was supposed to clean the guestrooms after construction work was completed, so the GreenTree's housekeeping staff had to clean up the dust and construction debris in each renovated guestroom, causing delays and affecting the housekeeping staff's morale.

As the renovation dragged on, overtime costs mounted as the harried engineering and housekeeping staffs tried to keep up with the extra demands.

Despite all the problems, Phase 1 of the renovation was eventually completed, and the new guestrooms looked great.Bill did grow professionally as he recovered from his mistakes and learned how to better deal with the extra workload and the contractors.However, the project came in late and over budget.Mitch was disappointed about that, to say the least.And, judging by this morning's e-mail, so was Ted North."Maybe I made a mistake in letting Bill manage the project," Mitch thought glumly as he started gathering documents to prepare for his meeting with Ted.

Discussion Questions

1.List and explain at least 3 pros and 3 cons of having Bill manage the renovation.

2.List and explain at least 3 pros and 3 cons of having an outside project manager oversee the renovation.

3.Did Mitch make a mistake in letting Bill manage Phase 1 of the guestroom renovation project?Why or why not?

4.Should Bill be allowed to manage Phase 2 of the project, or should the Glazer Corporation be hired to manage it