Dreamliner: Time, Budget and Project Performance Analysis Essay

1 Introduction.1.1 In developing the Boeing 787 Dreamliner, Boeing executive vigilances initial decisions and make management strategies did not control the four major measurements of project success time, budget, performance and client acceptance (Pinto, 2013, pp. 35,36). This report analyses the methodology and project management decisions that led to a project crisis and risk to Boeings reputation.2 Boeing history.2.1 Boeing Aircraft Corporation, with a heritage of aircraft programme, manufacture and manufacturing, dates back to July 1916 (Boeing, 2004). Recent aircraft including 737, 747, 767, and 777 are all designed, assembled and arrest by Boeing (Boeing, 2014). 2.2 Boeing commercial aircraft division is a self-made aircraft manufacturing company with a proud history of in-house design and manufacture (Boeing, 2014).3 New aircraft requirement.3.1 Competition from Airbus, with its plus in market share through the 1990s to market share leader in 2003 (Hoiness, 2006), led Boeing to decide that a mid-sized, long range aircraft was indispensable for current and emerging markets. Boeing committed to a new aircraft line, the 787 Dreamliner (Hoiness, 2006). A significant technology advance to carbon fibre composite fuselage and wing construction with bear upon engine technology would aim to reduce fuel burn by 20%, and would provide a better operational experience for airlines and their customers (Boeing Aircraft Corporation, 2014).4 Outsourcing and damage overruns.4.1 Boeing outsourced approximately 70% of development and production toother companies in an attempt to reduce development time and costs (Denning, 2013).4.2 Early project management decisions to move away from the Boeing model of in-house design and manufacture (Boeing, 2014), to a model of out-sourcing large subassemblies and component sections to around fifty floor 1 partners (Boeing Company, 2013), would prove disastrous in estimating development costs (Ostrower & Lublin, 2013). Boein gs reliance on Tier 1 companies to complete assembly integration, control Tier 2 and Tier 3 suppliers and play problems in design aspects, led to cost and schedule overruns (Denning, 2013).4.3 Initial budget estimates from Boeing set the 787 costs at about $5 billion (USD). Ostrower stated Barclays dandy conservatively estimates the program ended up costing around $14 billion (USD), not including the penalties Boeing has had to pay customers for late deliveries (Ostrower & Lublin, 2013) and aircraft cancellations (Bloomburg News, 2012).4.4 The financial evidence suggests that Boeing and the 787 project management team did not fully translate the complexities of out-sourcing (Goatham, 2014). In a January 2011 speech at Seattle University, Albaugh is quoted as having said We spent a lot more gold in trying to recover than we ever would hire spent if wed tried to keep the key technologies closer to home (Calleam Consulting Ltd, 2013).5 Project leadership5.1 The Boeing Leadership project team did not understand the complexity of the Tier structure (Tang & Zimmerman, 2009). In adopting the Tier assembly approach the leadership team should have used logistics and supply chain management specialists (Denning, 2013).5.2 Implementation of management strategies to cope with component suppliers is paramount. In a Boeing publication Hart-Smith recognised the risks in out-sourcing and assembly without sufficient design control. He stated that in order to minimize potential problems, it is necessary for the Prime contractor to provide on-site, quality management, supplier-management, and sometimes technical support (Hart-Smith, 2001).5.3 The project leadership team failed to ensure each supplier received adequate design information to implement its part of the project (Tang & Zimmerman, 2009). This demonstrated they did not provide effective leadership nor sufficient communication (Pinto, 2013, p. 133).6 Design control6.1 Without fully understanding the complexities or difficulties in introducing a new design, and without a developed set of requirements and detailed design control, project difficulties and delays are inevitable (Denning, 2013). Other companies, for example the Toyota Motor Company, use out-sourcing successfully to trusted companies with a senior high degree of product design control as a method to reduce costs in production (Denning, 2013).6.2 The Boeing model adopted was to spread the design and development to suppliers on a global scale with costs met by suppliers (Ostrower & Lublin, 2013). A strategy such as this should have been tightly controlled from the outset. Without this control, difficulties in assembly and ill-fitting parts requiring redesign added to the delays experienced by the project (Denning, 2013), with hundreds of Boeing engineers sent to various companies to solve technical problems (Tang & Zimmerman, 2009).7 Communication and Cultural Risk.7.1 Boeing management opted to control Tier 1 and Tier 2 integrat ors and their suppliers using a computer web based system, Exostar (Denning, 2013). This system intended to provide supply chain and logistics visibility and truly time monitoring to control process, development, time and cost. Due to cultural differences and trust issues with this system, accurate and timely information was not entered by integrators and suppliers (Denning, 2013).7.2 A Failure to understand the cultural differences with international companies and suppliers, by both integrators and Boeing management, provides evidence that the project did not adequately consider organizational culture or fully understand its set up (Pinto, 2013, p. 79).7.3 If Boeing had relied on their own tribal knowledge culture, rather than outsourcing to other organizations, the cultural and communication risks would have been reduced (Reuters, 2011).8 Stakeholder management.8.1 Knowledge of stakeholder capability, strengths, and behaviours should be part of successful project management (Pin to, 2013, p. 58). Boeings leadership failed to appreciate that Tier 1 integrators did not have thecapability to control the supplier nor the supply chain (Tang & Zimmerman, 2009).9 Conclusion.9.1 Boeings decision to outsource the design and manufacture of the Dreamliner, along with the introduction of new technology, led to lengthy project delays and additional expenses (Ostrower & Lublin, 2013). Poor communication from the Boeing leadership team, along with cultural misunderstandings, led some key suppliers to mistrust the control systems. Cost overruns, schedule delays and supply chain issues all led to this project weakness to meet established goals within estimated parameters of cost, schedule, and quality (Pinto, 2013). 9.2 Modified management strategies were implemented to correct design flaws, provide technical and quality systems support at great cost (Denning, 2013). These actions have contributed to a project turnaround with increased orders (Boeing, 2014).BibliographyBl oomburg News. (2012, 08 23). Daily Herald Bussiness. Retrieved 03 16, 2014, from dailyherald.com http//www.dailyherald.com/article/20120823/business/708239912 Boeing. (2004). The Boeing Log Book 1881-1919. Retrieved 03 18, 2014, from History http//www.boeing.com/boeing/history/chronology/chron01.page Boeing. (2014). Boeing moneymaking(prenominal) Planes. Retrieved abut 8, 2014, from http//www.boeing.com/boeing/commercial/products.page Boeing Aircraft Corporation. (2014). Boeing 787 Dreamliner Provides New Sollutions for Airlines, Passangers. Retrieved 03 15, 2014, from Boeing http//www.boeing.com/boeing/commercial/787family/background.page Boeing Company. (2013). 787 Whos Building the 787 Dreamliner. Retrieved 03 16, 2014, from New Airplane http//www.newairplane.com/787/whos_building/ Calleam Consulting Ltd. (2013, 02 3). Boeing Commercial Aeroplanes. Retrieved 03 22, 2014, from Why Projects Fail http//calleam.com/WTPF/?p=4617 Denning, S. (2013). What Went Wrong At Boeing? Retriev ed March 8, 2014, from Emerald insight http//www.emeraldinsight.com.libraryproxy.griffith.edu.au/journals.htm?articleid=17086954 Goatham, R. (2014). Why Projects Fail Boeing Commercial