From the case study of Week # 5 please answer the question

Who is responsible for this costly oversight? Who should take responsibility?

Who is most likely to be blamed for the error?

11:33 1 5G+ 0 a docs.google.com IVEy Publishing W28172 DON'T SHOOT THE MESSENGER: COMMUNICATING DURING PROJECT CRISES Steve Charlier and John Harris wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, NG ON1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveypublishing.ca. Our goal is to publish materials of the highest quality; submit any errata to publishcases@ivey.ca. Copyright @ 2022, Ivey Business School Foundation Version: 2022-11-29 "This can't be right," thought Sharika Charlton as she sat in her suburban home office outside Washington, DC, in the afternoon of September 4, 2019. Charlton was the business program manager for the ShopCart project, a ten-year systems engineering and technology refresh effort for a large federal government agency. Charlton had been working for five months on the project, which was started in January 2019 after the contract was officially awarded to Zinthro, the company Charlton worked for. Authorized for use only in the course MGMT 227: Best practices in Project Management at Fleming College taught by Khushboo Sherwani from 1/9/2023 to 4/17/2023. Use outside these parameters is a copyright violation. Charlton joined the project in late March, almost three months after its start, and quickly realized that the scope of the project proposal and documentation was daunting. She had well over two hundred separate contractual documents to manage, and that number would only grow as the project moved forward. Charlton started the process by taking a great deal of time to review the project's financial details, or "cost case." The original project proposal from Zinthro to the US federal government included a cost case that detailed the financial plan for the project, including expected revenues, estimated expenses, and potential profit. A total amount of over US$260 million' in revenue was forecasted over the project's ten-year period, although the actual expected profit margin was relatively slim (see Exhibit 1). ShopCart was only one of hundreds of current Zinthro projects, but its large size and limited profit potential would mean that Zinthro's executives would scrutinize its financial performance. As Charlton sat in her home office reviewing the cost case for the proposal, for what seemed like the thousandth time, she discovered what appeared to be an unfortunate calculation error-an error that could cost her company over $40 million, and Charlton her job. SHARIKA CHARLTON When she joined the ShopCart project at age thirty-four, Charlton was one of the youngest project managers at Zinthro, and usually the youngest person by far in meetings with other Zinthro project managers or executives. In those settings, Charlton often felt undervalued: "Sometimes I feel like others within the organization do not give me the respect that I believe I deserve. The typical project manager here is an older white man-and I'm [ none] of those things. It's frustrating." All dollar amounts are in US dollars. Page 2 W28172 For example, when working with Lisa Marchenko, the high-level Zinthro executive with authority over all federal government projects including ShopCart, Charlton did not feel treated as an equal, saying, "When we worked together before, I often thought that Marchenko treated me like a 'little sister' instead of as a trusted colleague. The twenty-year age gap between us was a persistent issue in our relationship, at least from my perspective." Nevertheless, Charlton had enjoyed a successful career at Zinthro thus far. Fresh from her master of business administration (MBA) program, Charlton joined Zinthro in 2012. She started as a consultant and quickly took on leadership roles within her first twelve months with the company. She moved to a full-time project manager role in 2014, and was promoted twice within her first five years with the company. She was optimistic that she would be promoted to the executive project manager level in the near future. Her annual performance appraisals were consistently above average, and Charlton had earned a reputation College taught by Khushboo Sherwani from 1/9/2023 to 4/17/2023. among her co-workers for being highly reliable and sharp. Charlton had also earned her Project Management Professional certification three years before joining the ShopCart project, and had worked on a wide variety of projects-both large and small-during her tenure with Zinthro. However, the ShopCart project was by far the largest she had led during her career. Having specialized in e-commerce for her MBA degree, Charlton was confident in her technical skills. However, she shared the overall program management responsibilities with Jack Anderson, a twelve-year veteran of violation Zinthro. Anderson was assigned the role of technical program manager for ShopCart after the contract was L T . . + 13 . . .11:33 1 5G+ 0 a docs.google.com Having specialized in e-commerce for her MBA degree, Charlton was confident in her technical skills. However, she shared the overall program management responsibilities with Jack Anderson, a twelve-year veteran of Zinthro. Anderson was assigned the role of technical program manager for ShopCart after the contract was signed, while Charlton focused more on the business side. Together, Charlton and Anderson held the primary responsibility for the overall success of the project (see Exhibit 2 for a high-level project organizational chart). THE SHOPCART PROJECT Use outside these parameters is a copyright violation Over its ten-year period, the ShopCart project covered two main phases: implementation and maintenance. The implementation phase started in January 2019 and would take approximately three years to complete During this phase, Zinthro would implement new hardware and custom-developed software solutions across 180 physical locations around the world for its government client. About half of the overall project's revenues would be earned, and costs incurred, during this phase. The maintenance phase covered the project's remaining term of approximately seven years. During this Authorized for use only in the course MGMT 227: Best practices in Project Management at Fleming College taught b period, Zinthro was contractually obligated to maintain all hardware and software that was implemented for the client, which could include equipment repair or replacement, fixing software glitches, and anything else that was needed to keep the overall technical solution running. Zinthro's proposed plan for the maintenance phase was the combined effort of internal and external providers. A separate Zinthro division was solely focused on hardware maintenance for all Zinthro projects and clients, while Charlton's division was responsible for all software issues. In both cases-hardware and software-a number of external vendors were also on board to provide support for specific aspects of the technical solution. Therefore, the maintenance effort would require coordination across two Zinthro divisions and various external vendors, along with the associated costs. As with any project, client coordination was a key success factor. Charlton's main contact on the client side was Jean Villegas, who held the similar role of business program control lead within her own organization. Villegas was a career government administrator who had worked for the client organization for over twenty years. Charlton felt confident that she and Villegas had quickly established a good relationship. Villegas had made it clear to Charlton from the start that she did things "by the book" and did not like surprises. Therefore, both parties made it a point to communicate potential risks and issues as early as possible. They worked together to proactively solve problems as best they could. Page 3 W28172 WINNING THE SHOPCART DEAL Within the Zinthro division where Charlton worked, a so-called "tiger team" had been formed several years earlier by the executive management group specifically for major government contract opportunities. Tiger team members were seasoned technology professionals. Their full-time job responsibilities were focused on the development of proposals for potential contracts, whenever bid opportunities were announced by the government. The team usually worked concurrently on multiple bid proposals, with overtime and weekend work occurring occasionally to meet government deadlines. The tiger team had been successful over the years in landing several new contracts for Zinthro, including the ShopCart project. In return, the team members were well compensated for their efforts. Overall, the tiger team was a tight and cohesive unit. Its members had earned a great deal of respect from Marchenko, the executive that supervised the team. Given its scope, the ShopCart proposal was particularly complex, and the turnaround time for initial bids was relatively short-only a matter of weeks. The tiger team had to develop a high-level technical solution, which required interfacing with many technical experts across Zinthro. The team also had to aggregate cost estimates from over a dozen external hardware and software vendors, as well as from multiple internal Zinthro divisions. One key complication had been the departure of a tiger team member midway through the proposal development process of the ShopCart project, forcing the rest of the team to take on additional work. By working nearly around the clock for multiple weeks, the tiger team was able to prepare and submit a proposal to the government by the imposed deadline (see Exhibit 3 for a timeline of the ShopCart proposal and project.) As per standard protocol for government contracts, the government entered a review period course MGMT 227: Best practices in Project Management at Fleming College taught by Khushboo Sherwani from 1/9/2023 to 4/17/2023. after the proposal deadline. During this time, government decision-makers reviewed all proposals received from contractors and asked clarifying questions, if necessary. The government client submitted various questions to Zinthro about its ShopCart proposal, many of them regarding the maintenance phase of the proposal. Upon review by the tiger team, Zinthro was confident that its solution and pricing were valid, and Use outside these parameters is a copyright violation. the team confirmed all proposal details with the government client. In the end, Zinthro was awarded the fixed-price contract for the ShopCart project, over all other competing contractors. THE FIRST EIGHT MONTHS Work on the ShopCart project began in earnest on January 2, 2019. An initial team of technical architects and specialists from within Zinthro, led by program manager Anderson, were assembled to take the technical solution developed during the proposal process and begin fleshing out the details. This technical staff quickly grew to thirty project team members and was slated to further increase to fifty-five by June 2019. By February 2019, it was apparent to the executive management group that because the program was so complex from a contracting perspective, a second program manager was needed to work with Anderson and manage the overall business operations of the project. An internal search was conducted within Zinthro, and Charlton was persuaded away from another project to take on the business program manager role for + 13 . . .11:33 1 5G+ 0 a docs.google.com THE FIRST EIGHT MONTHS Use outside the Work on the ShopCart project began in earnest on January 2, 2019. An initial team of technical architects and specialists from within Zinthro, led by program manager Anderson, were assembled to take the technical solution developed during the proposal process and begin fleshing out the details. This technical staff quickly grew to thirty project team members and was slated to further increase to fifty-five by June 2019. By February 2019, it was apparent to the executive management group that because the program was so complex from a contracting perspective, a second program manager was needed to work with Anderson and manage the overall business operations of the project. An internal search was conducted within Zinthro, Authorized for use only in the course MGMT 227: Best practices in Proje and Charlton was persuaded away from another project to take on the business program manager role for ShopCart in late March 2019. Upon joining the ShopCart team, Charlton was given various relevant documents to review, including the original cost case file that was used to develop and submit the formal proposal to the government. Charlton had worked on a few bid proposals in the past and had developed financial projections for several projects that she managed. However, she was struck by the vast amount of data that had been collected and used by the tiger team to form the ShopCart proposal. The cost case file consisted of a Microsoft Excel workbook that contained thirty worksheets of information. Some of the worksheets included thousands of lines of data for various aspects of the project, such as labour costs, hardware, travel expenditures, maintenance, and help desk support. After receiving the file, Charlton began the gruelling process of becoming familiar with the extensive amount of data. Page 4 W28172 As the project progressed through the first six months of 2019, a myriad of technical and business issues arose. The staffing plan in the proposal was considered a "bare-bones" model. The tiger team had made a minimum level of provisions for staff members that were expected to be needed for the design and development phase of the implementation. As a result, several technical team leads complained that they were severely short-staffed, and requested permission to bring on additional team members. With requests for changes already rolling in from the government client, Anderson and Charlton believed that additional funding would be available to cover the increase in staff members, and the team grew in proportion. The requests for changes from the government resulted in additional contract modifications, or new contractual documents altogether, adding to Charlton's already heavy workload. The primary subcontractor for on-site implementations also withdrew from the project during this time, leaving Zinthro to scramble to find other outside support to fill that gap. Additional concerns regarding the proposed software solutions only increased the already high-risk nature of the project. A SIGN OF TROUBLE In late August 2019, Charlton received a phone call from Ed Zhang, the maintenance team lead. In the phone call, the two colleagues discussed the projected costs for maintenance in the proposal: Zhang: "Hi Sharika, it's Ed. How are things going on your end?" Charlton: "Hi Ed, I'm hanging in there. Just trying to keep from being buried in contracts and change orders. What can I do for you?" Zhang "Well, I've spent a lot of time with the proposal, trying to make heads or tails of what we've Use outside these parameters is a copyright violation. Authorized for use only in the course MGMT 227: Best practices in Project Management at Fleming College taught by Khushboo Sherwani from 1/9/2023 to 4/17/2023. put forward for maintenance, and I'm concerned that we don't have enough resources allocated to this effort after implementation." Charlton: "Why do you think that, Ed?" Zhang: "I can't really put my finger on it, because honestly, the cost spreadsheet is impossible to figure out! But you already know that . . ." Charlton: "All too well, Ed. But are there specific things that stick out to you?" Zhang: "I'm hoping you can help with that. All I know is that when I put together my 'guesstimate' of what maintenance should cost over the life of the project, my number is nowhere close to the figure in the proposal . . . and not in a good way." Charlton: "Hmm . . . that's not good news. Tell you what, Ed. Give me some time to do a deep dive into the cost build-up for maintenance. I honestly haven't spent much time investigating that area of the proposal since we haven't even started implementations yet. But I'll see what I can find, and I'll get back to you." Zhang: "Sounds good, Sharika. Thanks for your help!" + 13 . . .11:33 1 5G+ 0 a docs.google.com Page 5 W28172 SEPTEMBER 4, 2019 By the afternoon of September 4, 2019, Charlton had already spent several days poring over details of the cost case spreadsheet, focusing her efforts on the maintenance portion of the file, as Zhang had requested (see Exhibit 4 for a snapshot of the maintenance cost worksheet). Simply put, the spreadsheet was a mess. There was a rainbow of colour-coded fields, hundreds of calculations, and over two hundred rows of cost figures spanning the ten-year duration of the project. To make sense of it all, Charlton began reviewing the chain of calculations used to derive the cost amounts for maintaining each particular hardware and software item listed on the spreadsheet. As she clicked on individual fields in the spreadsheet to view the formulas, her heart sank. First, the worksheet referenced data from other Excel files that were also developed during the information gathering phase of the proposal process, but there were several versions of these additional files. Charlton was lucky enough to have the files on hand to consult. However, she noticed that the final proposal cost case file was referencing files that were not in their final versions-the calculations were using data from interim files that were still considered "work in progress" at the time. When she adjusted the links to pull data from the final version of those external files, the overall cost figures increased-by a large amount. The interim files that were used for the final cost case had several items that were not yet priced; therefore, the cost case for the proposal did not include any cost for those items. Also, cost estimates had increased for several items between the time that the interim files were created and when the final pricing was confirmed-again resulting in cost estimates for the proposal that were too low. Next, Charlton discovered that there were consistent errors in the calculations within the maintenance portion of the cost case spreadsheet. For example, when the spreadsheet should have been multiplying the number of devices by the unit maintenance cost for each device each year, some formulas were referencing the wrong fields, thus multiplying the wrong numbers (and in several cases, multiplying blank fields). Authorized for use only in the course MGMT 227: Best practices in Project Management at Fleming College taught by Khushboo Sherwani from 1/9/2023 to 4/17/2023. Use outside these parameters is a copyright violation. At this point, Charlton knew that she had to create a new spreadsheet from scratch that calculated cost estimates properly, using the final cost estimates from the various vendors involved in the maintenance activities. The process took several days. By September 7, 2019, Charlton had an overall picture of what the proposed maintenance effort would cost based on correct individual estimates and appropriately calculated costs. She triple-checked that all formulas and all data were correct, and she then compared her results to the cost case. The cost case used in the initial proposal that was submitted, and for which the ShopCart bid had been awarded, estimated the maintenance effort at approximately $32 million across the life of the project This was the cost figure allotted for Zinthro to perform all necessary maintenance-related activities. However, Charlton's revised estimate of that cost for Zinthro's work was closer to $75 million-more than double the original cost estimate. WHAT NEXT? Charlton knew that this was a major crisis situation. Given the current financial status of the project, there was already concern that the program was on financial thin ice. But if nothing was done about the maintenance issue, the program would never turn a profit. In fact, according to her estimates, Zinthro could stand to lose tens of millions of dollars, turning the estimated $13 million profit into a $30 million loss. And because of the contractual nature of the project, there was no turning back. Zinthro had to deliver on its promise. Charlton wondered about her next steps. Key individuals related to the project needed this new information: Anderson, the technical program manager and Charlton's colleague; Zhang, the maintenance team lead who reported to Page 6 W28172 Charlton and Anderson; Marchenko, the portfolio executive who Charlton and Anderson reported to; and numerous other stakeholders, internal Zinthro divisions, and external vendors. Certainly, the government client would also need to be informed at some point. Villegas had been helpful in sorting out several potential problems in the past, but Charlton knew that an issue of this magnitude would potentially require some significant changes to the maintenance program, threatening to send the client-and Villegas-into a frenzy. Managing the client relationship through this period would be a tough but important task. Charlton also suspected that the tiger team could face significant backlash from other key members in the organization-Marchenko, in particular. The error she uncovered was so serious that some tiger team members could be held responsible and potentially lose their jobs. Such an event would have significant College taught by Khushboo Sherwani from 1/9/2023 to 4/17/2023. ramifications for the business-and of course, for the team members themselves. However, Charlton knew that Marchenko currently held the tiger team in such high esteem that she might find it hard to even believe the news about such a disastrous error. Charlton worried about the level of resistance against her findings that she would receive from Marchenko and from the entire tiger team, all of whom shared a dynamic relationship. Charlton knew that she would be mounting a challenge against a successful and well- established team by raising this issue. Charlton's professional goal was to continue rising among the ranks of the Zinthro organization, as she had it violation done for years. But being the business manager for a critical project of this size-and watching it fail + 13 . . .11:33 1 5G+ 0 a docs.google.com Page 7 W28172 EXHIBIT 1: PROJECTED INCOME STATEMENT FOR SHOPCART PROJECT (IN US$) 2019 2020 2021 2022 2023 2024-2028 Total Total Program Revenue $22,326,343 $58,207.698 $52,946,010 $14,230.002 $14,599,702 $105,848,910 $268.158,663 - Subcontractor Revenue ($9,826,610) ($11,553,048) ($15,003,129) ($6,208,213) ($7,522,155) ($47,014,352) ($97,127.510) Total Zinthro Revenue $12,499,733 $46,654,650 $37,942,881 $8,021,789 $7,077,547 $58,834,558 $171,031,153 ement at Fleming College taught by Khushboo Sherwani from 1/9/2023 to 4/17/2023. Zinthro Expense $11,008,545 $41,059,362 $31,600,956 $6,604,829 $5,968,194 $46,706,569 $142,948,456 + Royalties/Miscellaneous $1,074.642 $4.040.542 $3,187.148 $673,443 $602,131 $4.847.643 $14,303,361 Total Zinthro Expense $12,083,187 $45,099,904 $34.788,104 $7.278.272 $6.570.325 $51.554,212 $157.251.817 Zinthro Net Income $416,546 $1,554,746 $3,154,777 $743,517 $507,222 $7,280,346 $13,779,336 Source: Company documents. Authorized for use only in the cou Page 8 W28172 EXHIBIT 2: SHOPCART PROJECT ORGANIZATIONAL CHART hboo Sherwani from 1/9/2023 to 4/17/2023. - - - - - - Tiger Team" Lisa Marchenko Portfolio Executive Jack Anderson Sharika Charlton Bus. Support Technical Program Business Program (5 FTEs) Matt Ciprio Rajev Singh Tamara Keith Dick Williams Ed Zhang Systems Eng Installation Mar Training Mar. Fulfillment Mar Maintenance Mgr 23 FTEs 2-25 FTEs"* 3-15 FTEs"* 10 FTEs 3.5 FTEs utside these p s: " = tiger team was no longer part of the project team after the contract was awarded and the project work began; Mgr. = manager; Bus. = business; FTE = full-time actices in Project Mana equivalent; Eng. = engineer; *= specific FTEs amounts (2-25 and 3-15) were projected to grow significantly, based on the number of active installations. Source: Created by the case authors based on company documents. Authorized for use Page 9 W28172 EXHIBIT 3: TIMELINE OF MAJOR EVENTS FOR SHOPCART PROPOSAL AND PROJECT Khushboo Sherwani from 1/9/2023 to 4/17/2023. March 2019: Charlton joins October 2018: Proposal project as business program submitted by tiger team manager December 2018: Contract September 2019: Charlton awarded to Zinthro uncovers cost case errors + 13 . . .11:34 1 5G+ 0 a docs.google.com Notes: " = liger team was no longer part of the project team after the contract was awa nager; Bus. = business; FTE = full-time equivalent; Eng. = engineer, *= specific FTEs amounts (2-25 and 3-15) were proje Source: Created by the case authors based on company documents Use outside Authorized for use only in the course MGMT 227: Best practices in P Page 9 W28172 EXHIBIT 3: TIMELINE OF MAJOR EVENTS FOR SHOPCART PROPOSAL AND PROJECT March 2019: Charlton joins October 2018: Proposal project as business program submitted by tiger team manager ent at Fleming College taught by Khushboo Sherwani from 1/9/2023 to 4/17/2023. December 2018: Contract September 2019: Charlton awarded to Zinthro uncovers cost case errors November 2018: Government August 2019: Zhang review and Q&A approaches Charlton regarding maintenance January 2019: Project begins; Anderson joins as technical program manager Note: Q&A = question and answer session. Source: Created by the case authors based on company documents. Authorized for use only in the course MGMT 227: Best practices in Project Manag Page 10 W28172 EXHIBIT 4: SNAPSHOT OF MAINTENANCE TAB OF PROPOSAL COST CASE (IN US$) Total Unit of CY1 CY 1 Unit CY 1 Total CY 2 CY 3 CLIN/SLIN CONCATENATE Estimated Price Estimated CY 2 Unit CY 2 Total Price Estimated CY 3 Unit Measure Company Estimated Quantities Quantity Price Quantity Price Quantity price 0011AA gement at Fleming College taught by Khushboo Sherwani from 1/9/2023 to 4/17/2023. 0001AA 396.72 $ 396.72 $ 649.80 $ 396.72 YR1 costs 2-107 39 1.69% 0001AB 396.72 $ 396.72 396.72 62.07% 2.10%% 54.07% 396 17.21% 0001AC 396.72 $ 396.72 396.72 22 37.93% 1.29% 39 849% 154 6.69% 0.025206 1.56% 0.718818 0.255976 0.96% 0011AA 0011AAZinthro48 Zinthro48 12 $ 99.18 $ 1,190.16 780 $33.06 $25,786.80 20748 $33.06 0011A 0009AA $3,231.60 269.3 0009AB $2.838.12 236.51 YR 1 costs 0009AA No Change $ 3,231.60 42 13 58 arameters is a copyright v 0009AB No Change $ 2.838.12 51 0.75 54.88% 53.21% 0.25 45.12% 46.79% 0011AB 0011ABZinthro48 inthro48 12 505.81 6069.72 $261.10 $15.666.15 2352 $254.50 act Man Dependent on YR1 and 2 being the same do these para 0011AC YR1 204.60 S 204.60 S 0009AC $ 204.60 39 YR4 5.45% 94.55% YR5 76.36% 23.64% Use of Note: CLIN = contract line item number; SLIN = sub-line item number; CY = calendar year; YR = year. Source: Company documents. only in the course MGMT 227: Best practices in Project + 13