Sample Masters International Project Management Report

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Managing International Projects

1. Introduction

The case opens by introducing Boeing’s dilemma in the early 2000s (Shenhar et al, 2017). it describes one of the game-changing projects for Boeing – the 787 Dreamliner – and throws light upon the various project management strategies that Boeing used to reduce the cost of the project.

The project’s total cost was estimated to be USD 5 billion in 2000, whereas the total cost that the company incurred was estimated to be USD 23 billion (O’Donnellan, 2016).

This report analyses the case of the 787 Dreamliner project of Boeing concerning project management. If fundamentally divided into three sections that discuss the leadership challenges faced by Boeing in the project, the organisational structure that Boeing opted for to complete the project, and the management of stakeholders by Boeing throughout the time frame.

This analysis considers four key factors of effective project management including innovation, novelty, risk assessment and strategy execution.

Throughout the text, references to the existing literature are made regularly (Shenher et al, 2016). The report first gives an insight into the leadership and organisational structure of Boeing. It then proceeds to describing the project governance of the 787 Dreamliner project. Finally, it discusses the project governance of Boeing in the context of the stakeholders involved.

2. Leadership at Boeing

The leadership at Boeing focuses on the build leadership model, which proposes that the organization’s leaders are promoted in rank from within the organisation (Wagner and Norris, 2009).

This is in contrast to the buy and hybrid leadership models. However, there were many challenges faced by this leadership model when it was implemented in managing the 787 Dreamliner project of Boeing.

The challenges may be regarded as a consequence of certain personality leadership styles (Too and Weaver, 2014). Both of these factors are being discussed in the following lines.

2.1 Leadership Challenges

The leadership challenges faced by the company in the project are as under.

2.1.1. Managing Technology Innovation

The 787 Dreamliner project of Boeing fundamentally did not make use of the pre-existing technology in the industry; it expanded the horizon and with its novel style of technological transition, it introduced a new technology in the industry.

This technology carried with it costs and delays because technology innovation is not easy to incorporate. This gave Boeing its most significant challenge – to innovate and be the industry leader in the new technology and to use that technology in its new project that is the 787 Dreamliner – keeping in mind that the cost and schedule would also be affected by the leadership’s decisions.

2.1.2. Cost Assessment

The estimated cost of the 787 Dreamliner project of Boeing was USD 5 billion as of 2000. However, the constantly fluctuating leadership decisions added to this cost exponentially, such that the total cost incurred by the company, as estimated by the end of 2013, was USD 23 billion.

This leads to two different scenarios: the company either did not conduct a thorough cost analysis or it did not incorporate, in its decision model, the decision of outsourcing and offshoring.

Either of these scenarios eventually led the company to the gigantic cost towards the end of the project. But these costs are only qualitative cost in nature; there were many quantitative costs incurred by the company such as its declining reputation in product delivery (Wagner and Norris, 2009).

2.1.3. Decision Analysis

The decision of the senior leadership to outsource and offshore proved to be another important dilemma in the long run. The company traditionally used to produce major portions of the other projects in-house.

However, for this project, the leadership decided to outsource and offshore not only the additional components of the project but also the regular ones, thereby leading to an overall outsourcing of a major part of the project. This decision later faced severe challenges for the aerospace industry leader (Peterson, 2011).

2.1.4. Risk Assessment

The company’s leadership comprising the senior and the executive level management decided the various suppliers worldwide while devising an outsourcing and offshoring strategy.

However, not all the suppliers could take the load and eventually, many turned out to be unreliable. The risk assessment of each supplier was not thoroughly conducted, thereby leading to huge financial losses.

This added to the cost of Boeing as it then had to acquire the company midway for millions of US dollars. Hence, risk assessment was a challenge for the leadership and the company’s leadership failed to deliver in this domain (Peterson, 2011).

Boeing’s utilisation of the instructionist strategy to manage the Dreamliner project is instrumental towards a holistic view of project management at Boeing (Shenhar et al, 2017).

The company did not realize in the beginning that the circumstances did not favor the usage of an instructionist strategy as there were a lot of uncertainties and the external as well as internal environment of the business were dynamic, more so because of the build to performance business model used by the company for managing the project.

The risk associated with workplace dynamics along with using the instructionist strategy was not assessed properly. Therefore, the more suitable and the more appropriate strategy, namely the selectionist strategy was not used.

However, the environmental circumstances were ideal for a selectionist strategy and Boeing’s build to performance model for the project.

2.1 Leadership Style

The traditional leadership style at Boeing is transformational. The management is democratic whereas the decision making is decentralized. The company carried these very traits at the start of the 787 Dreamliner project with a mind-set that this leadership, management and decision making style would help or, at the very least, suit the project (Sodhi and Tang, 2012).

The company then decided to offshore and outsource most of the components of the aircraft to external suppliers and built strategic partnership with them.

This was the point in time when experts and researchers in the theory of leadership suggested the company otherwise; according to them, Boeing should have kept the production in-house (Sodhi and Tang, 2012).

The experts suggested that the company would incur costs, but these costs will be much less than those incurred by the company after outsourcing. The experts in the theory of leadership were eventually proved right.

Boeing outsourced the major work load with a decentralized decision making policy, such that each supplier held the decision making authority in its hand.

Consequently, the hold of authority and the supreme decision making authority was taken away from the hands of Boeing. It eventually proved to be disastrous in that, the milestones that the company kept could not be completed and the deadlines not met.

The situation would have been entirely different had the basic principles of leadership theory customized for managing projects such as those of the 787 Dreamliner been kept in mind.

For instance, theorists suggest that Boeing’s leadership style was initially supposed to adapt for 787 Dreamliner project of the company is the transactional rather than transformational (Sodhi and Tang, 2012).

Similarly, the management style should have been semi autocratic in character rather than democratic because the milestones kept could have been achieved within the stipulated deadlines.

Due time had the a semi autocratic management style been adapted for the project. The third dimension of study is that of decision making. The leadership theory suggests that in this mega project, the company was supposed to have complete command over the decisions (Tang, Zimmerman and Nelson, 2009).

Hence, a centralized decision making style was suggested to Boeing and that too when the company was in the initial phases of its planning for the project. This advised was over ruled with the sole objective of saving costs, and the consequences, for the company, were disastrous.

3. Organisational Structure for 787 Dreamliner Project

It is interesting to note that the company conventionally uses a matrix organisational structure to carry out its operations. The matrix organisational structure has three levels of strength. The levels may be declared as strong, balanced and weak.

These levels indicate that the trade off or the distribution of authority between a project manager and the functional managers. For instance, the strong matrix organisational structure is the one which gives the major portion of authority to the project manager rather than the functional manager.

A weak organisational matrix structure, on the contrary, gives full power of authority and decision making to the functional manager. The balanced organisational matrix structure lies somewhere between the two other types, and Boeing uses this very organisational structure for all its projects.

However, due to the heavy outsourcing and offshoring, things changed for the 787 Dreamliner project of Boeing. Because of the heavy outsourcing, the company lost control over the decision making authority and the decision making power.

The matrix organisational structure did not suit the requirement of the company. The milestones could not be achieved and there were delays in the scheduling. Theorists and consultants such as Hart-Smith suggested to Boeing that the organisational structure for the 787 Dreamliner project of Boeing would not suit the requirement. However, no such amendment of change of any sort was made, thereby resulting in disastrous consequences for the company.

According to the theory of organisational structure in project management, the best organisational structure suited for a mega project such as these would have been the projectized organisational structure.

According to researchers, this project management organisational structure offers the project management team distributed into several hierarchy levels, each having different scales of authority and power over budget, scheduling and timing. The final power would ultimately rest with the project manager.

4. Project Governance of the 787 Dreamliner Project

The essential factor contributing to the failure of the 787 Dreamliner project of Boeing is that, the project was governed poorly with many factors in effect, such as missed milestones, objectives and deadlines, miscommunication with the suppliers etc., which are being discussed in this section.

Project governance is a technical term in the theory of project management, and it means that there was no check and balance in the process of production (Too and Weaver, 2014).). The supply chain of the company, for this project, was complex and the process of production needed to be handled skilfully.

It is supported by the conceptual model proposed by Shenhar and Dvir (2007). This model defines two important factors in the theory of project management, namely systems and arrays.

The model argues that because Boeing had a complex and wide supply chain structure; it had different arrays or groups of systems (companies) that worked to meet the deadlines and milestones. Consequently, it was pertinent that the company document the essential happenings such as supply chain contracts and agreements.

However, several errors were made on part of the company. The contracts were constructed poorly and the important minutes of the meetings with the suppliers were not finalized with the company management and senior leadership beforehand.

The emphasis on a new and innovative business model for the 787 Dreamliner project of Boeing also contributed towards the lack of understanding of the financial viability of each contract with the supplying companies in the supply chain. All of these factors point towards the poor project governance of the company for the project.

Further, there were no clear rules and regulations for each array that the company held as the strategic partner. According to the project management theory, these rules and regulations regarding the contract of strategic partnership ought to be laid down explicitly before the launch of arrays across the globe. However, Boeing refrained from this principle and ultimately, the company incurred qualitative and quantitative costs for the project.

For an effective project governance for the 787 Dreamliner project of Boeing, the company should have laid down more focus on the outlining of clear rules and regulations. The minutes of the meetings with individual strategic partners or suppliers should have been explained and discussed thoroughly with the company’s senior leadership.

In the case of Boeing, the sole objective was the reduction in cost and this objective harmed the company in that, not only did the cost rise exponentially but also incorporated various other qualitative costs to the total amount.

Therefore, a takeaway from the case is that, if the project governance is not customized such that it meets the benchmark which varies from case to case, the project is most likely to fail in the long run. The example of the 787 Dreamliner project of Boeing is an ideal one in this case.

The case describes that the main objective was to reduce the cost of the production. The project’s announcement was made in 2000 while the project was estimated to be completed by 2004.

However, due to bad project management practices and various decisions made without analysing the situation holistically, an extreme lagging behind the schedule and delay occurred in the production process and the project itself imposed massive costs on the company.

According to the case, the first delivery of Boeing 787 Dreamliner was made in 2013 which was nine years behind the schedule. Worth mentioning is that bad project governance is influenced by leadership and the organisational structure for the project (Shenhar et al, 2017).

5. 787 Dreamliner Project and Boeing’s Stakeholders

There are several stakeholders of Boeing – both, external and internal, primary and secondary. Similarly, the 787 Dreamliner project of Boeing had many stakeholders and the management of the different stakeholders demanded skill on part of the company.

As the company drew near to failure in the 787 Dreamliner project, the management of these stakeholders itself became extremely difficult. A huge range of challenges arose as the company eventually became closer to failure because of poor project governance and a large number of assessments and decisions.

Suppliers, customers and employees are the three main stakeholders for a business organisation. These three stakeholders hold the largest most stake in any company and are often considered the “vital” business organs (Sinha and de Wack, 2013).

Leadership of various organisations plan and devise distinct strategies for these three stakeholders, thereby ensuring that these stakeholders’ stake does not blur out the stream of profits in the long run.

This idea has been discussed by Stewart (2009), who proposes that in the 787 Dreamliner project, the company, that is Boeing, did not consider stakeholders.

Consequently, the company did not keep in mind the stake of these such that no policy was designed for the three stakeholders. In the following lines, an attempt is being made to shed light upon some of the most significant challenges faced by the 787 Dreamliner project of Boeing.

5.1. Managing Suppliers

For the 787 Dreamliner project, the company had previously decided to outsource and offshore to other companies manufacturing parts of aircrafts. Due to many suppliers, it eventually became very challenging for the company to manage the suppliers.

The complexity in the supply chain added to this dilemma. Consequently, milestones were not met and deadlines were not considered which, in turn, added to the miseries. Due to the company’s poor governance, the rules of contract were not clear (Ross, 2013).

Furthermore, the democratic leadership style added considerable damage to the company’s court because the company had lost power over its suppliers (Elahi, Sheikhzadeh and Lamba, 2014).

Managing suppliers was a hefty affair because Boeing had introduced a relatively new business model for the Dreamliner project. This business model was called the build to performance business model and the underlying principle of the model was that of sharing the risk and revenue with the suppliers.

Training of the suppliers also added weight to the quantitative as well as qualitative cost of the company. These challenges have been discussed extensively in the case study (Shenhar et al, 2017).

These conditions could have been averted with good project governance and a semi autocratic leadership style (Marsh, 2009). The company had ample to review the supplier contracts and that time should have been used effectively (Stewart, 2009).

Resource optimization should have been made an integral part of the planning and designing process. Various other techniques such as risk assessment of each supplier should have been conducted and utilised to make wiser decisions about the suppliers (Nolan, 2012).

3.2.Managing Customers

One of the most significant costs associated with the delays in the scheduling procedures was that of customer satisfaction (Sinha and de Wack, 2013).

Unfortunately for Boeing, this qualitative cost was the most harming in the 787 Dreamliner project of Boeing. According to the timeline discussed in the case, the first orders were taken in 2004 and the delivery was supposed to be made in 2007 (Nolan, 2012).

However, two delays in delivery were caused and the product was later decided to be delivered in 2008. The third delay was caused in 2008 (Marsh, 2009).

These delays accumulated the time of delivery for Boeing and the product was ultimately delivered in 2013 (Stewart, 2009). Even after the delivery, the product did not meet the quality control benchmark and all the aircrafts were grounded for their usage of lithium ion batteries (Sinha and de Wack, 2013).

3.3. Managing Employees

The employees working for the company with the 787 Dreamliner project were not happy and there occurred a collective employee association strike (Nolan, 2012). This situation arose when, due to lack of profitability, rather declining business performance, the company did not pay its employees their due payments for a very long time (Sinha and de Wack, 2013).

Theories of leadership and project management point towards this fact that employee motivation and satisfaction are necessary because the employees of a business are its real asset (Stewart, 2009).

In the 787 Dreamliner project, Boeing eventually neglected its employees which ultimately led to employee dissatisfaction of the employees which could prove hazardous to the company in the long run (Marsh, 2009; Sinha and de Wack, 2013).

3.4.Managing the Government

When the fleet of the aircraft was grounded due to usage of lithium ion batteries, the management was government sanctions proved to be another challenge for the leadership of the organisation.

The government sanctions on the 787 Dreamliner project of Boeing was another challenge for the company in that, it had then to make some modification in the design to attempt to remove the sanctions imposed by the government (Ross, 2013).

6. Conclusion

To conclude, it is pertinent to say that there project management relies heavily on process or, in simpler terms, is process oriented. In the case of 787 Dreamliner project of Boeing, the company neglected the various stakeholders such that it eventually had to reconsider its management principles and management practices.

One of the leadership issues was that the company could not conduct a detailed cost analysis before commencing the project. One of the governance issues was that, the company could not keep track of deadlines and milestones.

One of the stakeholders’ issues was that, the company could not put forward its demands and thereby, could not control the operation and effectiveness of the suppliers.

References

Elahi, E., Sheikhzadeh, M. and Lamba, N., 2014. An integrated outsourcing framework: Analyzing Boeing’s outsourcing program for Dreamliner (B787). Knowledge and Process Management, 21(1), pp.13-28.

Emery, B., 2010. Innovation in commercial aircraft: The 787 dreamliner cabin. Research-Technology Management, 53(6), pp.24-29.

Kotha, S. and Srikanth, K., 2013. Managing a global partnership model: Lessons from the Boeing 787 ‘Dreamliner’program. Global Strategy Journal, 3(1), pp.41-66.

Marsh, G., 2009. Boeing’s 787: trials, tribulations, and restoring the dream. Reinforced plastics, 53(8), pp.16-21.

Mishra, A., Chandrasekaran, A. and MacCormack, A., 2015. Collaboration in Multi-Partner R&D projects: The impact of partnering scale and scope. Journal of Operations Management, 33, pp.1-14.

Nolan, R.L., 2012. Ubiquitous IT: The case of the Boeing 787 and implications for strategic IT research. The Journal of Strategic Information Systems, 21(2), pp.91-102.

O’Donnellan, R. (2016). Project Failures: Boeing’s 787 Dreamliner. [online] BrightWork. Available at: https://www.brightwork.com/blog/project-failures-boeings-787-dreamliner#.Ws36gy5ubIU [Accessed 11 Apr. 2018].

Peterson, K., 2011. A wing and a prayer: Outsourcing at Boeing. Rep. Everett: Reuters.

Ross, P.E., 2013. Boeing’s battery blues [News]. iEEE Spectrum, 50(3), pp.11-12.

Shenhar, A., 2011. Meeting Time, Cost, and Money-making Goals with Strategic Project Leadership®. Project Management Institute.

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