Two years ago, the Centurion Aviation strategic management group set a goal of having a solar unmanned aircraft available for government and business use for less than $2M. 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 prior experience. Shortly afterward a meeting was arranged for middle management explaining the project goals, major responsibilities, project start date, and importance of meeting the product launch date within the cost estimate. 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 $2M. But given the excitement of the moment, everyone agreed the project was worth doing and doable. The solar unmanned aircraft project was to have the highest project priority in the company. Mark was selected to be the project manager. He had 18 years of experience in unmanned aircraft design and manufacture, which included successful management of several projects related to UAVs for commercial markets. Since he was one of those uncomfortable with the project cost and time estimates, he felt getting good bottom-up time and cost estimates for the deliverables was his first concern. He quickly had a meeting with the significant stakeholders to create a WBS identifying the work packages and organization unit responsible for implementing the work packages. Mark stressed that he 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 corresponding cost estimate seemed to be in error. The cost estimate was $10,250,000 over the top-down senior management estimate; this represented about a 20 percent overrun! Furthermore, the bottom-up time estimate based on the project network was six months longer than the top management time estimate. Another meeting was scheduled with the significant stakeholders to check the estimates and to brainstorm for alternative solutions. At this meeting everyone agreed the bottom-up cost and time estimates appeared to be accurate. The following are some of the suggestions from the brainstorming session.

• Change scope.
• Outsource technology design.
• Use the priority matrix (found in Chapter 4) to get top management to clarify their priorities.
• Partner with another organization 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 laser printer.

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 costs. Mark met with the marketing (Ken), production (Meg), and design (Luke) managers, who yielded some ideas for cutting costs, but nothing significant enough to have a large impact. Luke remarked, I wouldnt want to be the one to deliver the message to top management that their cost estimate is $10,250,000 off! Good luck, Mark. 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?