Project Management

 

 

 

 

Project Management

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Introduction

Projects are unique and temporary processes and entail well though and controlled processes with definite due dates.  As such, they are undertaken to achieve individual goals and adhering to the specified requirements within a certain timeframe, budget, and quality so as to provide the specific benefit to the project stakeholders (Dinsmore & Cabanis-Brewin, 2006, p. 2). A project is deemed complete and ends when the set objectives are met, or it becomes apparent that such goals cannot be met, and hence such a project culminates in termination. Ideally, projects should be planned carefully while taking care of every aspect to ensure its success. However, in reality, the project requirements are impossible to define accurately. There are always associated risks that face the projects that can result in compromising the quality of the works, violation of schedules or cost overruns; all that can be deemed as a failure by project managers. Critically, many projects do not have a clean start. Many project managers commence of projects without a clear path to completion and hence cannot set timelines correctly or estimate costs properly. This emanates from uncertainties with product costing and inflation while changes in problems with the site result in many hidden costs. Also, many projects lack clarity on their end and thereby end up in conflicts and dissatisfaction from the stakeholders. This may be due to lack of contractual clarity on the deliverables and quality that should be achieved so that the works can be regarded as complete (Frese & Vicki, 2003). Critically, a myriad of factors influences the planning of the implementation phase that may affect the perception of the stakeholders on whether a project can be viewed as a success or failure.  Moreover, project management needs to have a clear way that future benefits can be defined. As such, lack of clarity in an estimation of the future benefits may lead to confusion over what parameters can be used to judge a project.

Background of Ford Edsel and the Project Case

Ford Motors Company had been a market leader for a long time offering a healthy competition to General Motors. However, General Motors offered a variety of cars in the 1950s such as the Pontiac, Oldsmobile, and Buick while another competitor, Chrysler Corporation offered varieties such as De Soto, Dodge, and Chrysler. Conversely, Ford only offered Mercury as its only brand. On this basis, Henry Ford II, then Ford’s president instituted a committee for investigating the variability of bringing to the fore a new brand of car that would offer competition in the medium-priced segment of the car market. In 1955, the board of directors at Ford oversaw the approval of a plan for the touted new medium priced product line, which resulted in the creation of a Special Products Division. The promoted product was to be built on two platforms, Mercury and Ford that were meant to improve manufacturing efficiency and economical production where parts interchangeability between two variants would be maximized.  Moreover, the car design was touted to offer recognizable design from all aspects and angles and as such would offer robust and unique styling of elements. Importantly, initially named E-Car, it would be integrated with unique functional aspects that would set it apart from the rest of the competition (Carlson, 2007).

In this period, the American population was experiencing a period of economic expansion in the decade post-World War II to some extent the Korean War. The American economic landscape was characterized by new ideas and innovations and a large market for the new products supported by the then burgeoning middle class and the full employment that in turn guaranteed high disposable income to the American middle class. As such, there was a general optimism that things were going to be better and hence Ford had to take advantage of these conditions to recoup the market share lost to General Motors in the 1920s (Pinto, 2013, p. 138).

To support its new initiative, Ford engaged in for distinct efforts to ensure that their project became a success. As such, marketing research, styling, creation of separate division and undertaking rigorous promotional activities were earmarked as the path to setting Ford to its new course of action. In the research conducted in the 1950s, it found that 20 percent of all car owners traded their low-cost cars to medium priced car models. Conversely, brand loyalty showed significant differences amongst the competing brands. For instance, it was found out that those individuals who owned cheap GM vehicles such as Chevrolet had a tendency to upgrade to medium priced GM vehicles such as the Buick or Pontiac with a probability of 0.87. Also, low priced Chrysler owners tended to improve to middle priced Chrysler models 47 percent of the time. However, low-priced Ford car owners managed to upgrade to the middle priced Ford models on 26% of the time. Hence, this portrayed a problem with the way customers perceived Ford as a brand (Pinto, 2013, p. 138).

Therefore, the new Model targeted correcting those views by targeting young couples and those people who were moving up the corporate ladder, ready to upgrade to a new car that reflected their status. The company embarked on a mission to research the appropriate name since no name had been given, with researchers coming up with more than 20,000 names. As such, these were test marketed with the focus groups and street interviews to determine which name would be most appropriate to capture the imagination and appeal to the young professionals in the market. The committee tasked with the role came up with final ten names. However, Edsel, the final name given to the car was not amongst the ten final candidates, but emerged after the committee could not come up with a consensus (Feloni, 2015).

Styling another strategy that Ford applied was an aspect that it wanted to act as a way of differentiation and therefore gain a competitive advantage over the rivals. From 1954, Ford embarked on a styling project, bringing together more than 800 stylists to work on the project in different periods. As such, these stylists came up with multiple hundred designs of which most were altered, modified and some rejected before Ford committee made the final approval. The car was built with distinctive features that were meant to remind the buyers of the previous luxury cars and utilizing push button technology which enhanced usability. Besides, the car was equipped with a large V-8 engine, with a 345 horsepower, giving the car a stylish and powerful feature that were meant to send shock waves in the market, making it a car of choice to the upcoming young customer (Pinto, 2013, p. 139).

Also, Ford created an Edsel automobile division, creating a different line of production from the other Ford Motors product line. The need to create an aura around the manufacturing of the new car seemed a necessity, an aspect that led to a complicated search for a car dealer that would offer the new brand exclusively. This lead to a long process where Ford identified 5000 dealers before trimming that number to 2000 dealers would be selling the Edsel brand on their showrooms. Further, other major decisions were made on dealership locations and many other facets such as logistics and dealer reputations. All these were meant to bring a swift introduction of Edsel in the market (Roberts, 2016).

Furthermore, vigorous promotional activities were carried out to ensure that its introduction was an event. As such, this led to the company allocating a budget of $50 million in advertising and promotional activities, an enormous amount of money by any standards for a new release. Importantly, the company was determined to keep the car a secret, to heighten the curiosity of the public, and when the advertising began on July 22, 1957, the advertisements did not show the vehicle itself. The Ford executives ensured that no shots of the cars were leaked, and the first photos of the car appeared in late August. Besides, Ford made a decision that had serious ramifications for the new car: they decided to release the car earlier than anticipated to ensure that no competition was present from its other two competitors, GM and Chrysler. Hence, in the fall of 1957, the stage was all set for Edsel to conquer the market (Pinto, 2013, p. 139; Roberts, 2016).

Introduction of Edsel

When Ford introduced Edsel on September 4, 1957, the event turned to be one of the most underwhelming incidents in the United States corporate history.  The eagerly anticipated Edsel had arrived but with underwhelming results. The public in the U.S. had waited for an extraordinary development in auto technology, but on releasing the prototype for the first time, the public was greatly disappointed. According to Ford estimates, 200,000 orders were supposed to be executed in the first year. Despite a relatively successful first day where 6,500 orders were received, the sales began to nose dive with only 2,750 cars sold in the first ten days after the launch, a mere two-thirds of the anticipated volume of sales. The sales levels continued to drag as the information filtered out to the general public of the weak sales, who made out that there must have been something wrong with the car. By the end of 1958, Ford Motors had anticipated selling over 250,000 vehicles. However, the year was a disaster for the company as, by the end of the year, the company had managed to sell 34,481 cars. The company hit a new low as an introduction of a new Edsel model with lower price did not influence the sales volume. Less than two years after the introduction of the much-hyped Ford Edsel, the Edsel division was formally closed in 1959 culminating in the merger of Mercury and Lincoln production lines. This move was viewed as a cost-cutting before Ford made a decision on what to do with the Edsel models. When the final models were introduced in the fall of 1959, the sales were weak which led to the discontinuation of production in November 1959.  By the end of its two-year life, Edsel sold 109,466 cars, less than six times the projected sales when the product was earmarked. The closure of Edsel saw Ford record more than $200 million in losses, the costs of initial investment, advertising, and operational losses (Pinto, 2013).

Discussion of Standard Criteria

Many arguments have been made of what is the most plausible criterion to judge the success of failure or projects. According to Cadle & Yeates (2001), most projects fail, and hence it is only justifiable to agree on the extent of failure that could be defined as success. In many cases, project managers do not know when they can describe their projects as successful since many people view success from their point of view. As such, projects have many stakeholders who are difficult to please, while taking into consideration the important aspects such as the costs, schedules, scopes, and safety. Critically, some people will view project success as when client signs of the project or when the scope of the work is completed.  According to Pozin (2012), every individual possess their criterion of judging success in projects. Among the factors that Pozin (2012) indicate is the project schedule. The due dates are an important indicator of whether the project was a success. This can be seen in projects such as the drainage upgrade project before the commencement of the Sydney 2000 Olympic Games as well as improvement of infrastructure before the 2010 world cup in South Africa.  In these types of projects, failure to observe schedules will be deemed as failure.

Importantly, the budget is an important criterion that can be used to measure whether the project has been a success.  For project managers, sticking to the budget ensures that they know exactly where the project stands concerning money spent versus the budget set for the project. According to Atkinson (1999), the parts of the iron triangle of project management can be used to measure project success (Atkinson, 1999, p. 339; Pozin, 2012).

The scope of the project can determine project success. The scope defines what needs to be done within a certain timeframe and therefore should act as the driving force of the project. International Project Leadership Academy (2016) argues that to have to have criteria to define the success of the projects must be set so as to define failure. As such, they categorize success in five tiers. The first tier represents the scope of the project and would be defined as a success if it delivered whatever was earmarked as its scope irrespective of the schedule or the budgetary performance.

Moreover, Tier two would term a project a success if it delivered the deliverables on schedule or within the set budget while tier three reinforces on meeting the budgetary expectations, time schedules and following the agreed quality standard of work. On the other hand, tier four defines project success as delivery of all agreed objectives that range from the project scope, schedule, budget, and the expected quality standards.  Finally, tier five would only consider a project as a success if the outcome of the project provides a considerable net value for the owner after completion.

In most cases, people refer to the tier four when seeking to define project success or failure. Critically, people will focus on the most visible aspects of the project such as cost overruns and schedule delays in their judgment. However, upon the completion of the project, it project whose rank highly in the power-interest matrix (high power, high interest) such as the project sponsors, the public and media look for tier five definition in making their judgments.

Hence, this implies that people will have differing perspectives on the success or failure, and such views may change over time. For example, despite the Sydney Opera House exceeding its earmarked costs by $103M and taking additional six years to complete, the projected has been lauded as a success. This means that conflict occurs in separating the two criterion of judgment: the project management success versus the end product success. As such, this brings into contention tier four definitions against tier five. Hence, it is possible to have genuinely troubled projects that end up being successful products.

On the other hand, it is imperative to understand project termination does not serve as criteria to judge the success of failure. According to Boehm (2001), it is common for projects to be terminated especially in the period of rapid research due to inherent change in underlying assumptions. As such, a continuation of such projects become a risk as they end up consuming company resources and hence would serve the company well if terminated. Therefore, the project managers should be well advised to identify and stop projects without their careers being put under threat (Boehm, 2000, p. 96).

Identification and Justification of the Appropriate Criteria

Although many criteria have been advanced to judge project success or failure, it is imperative to judge projects on the value that they give rather than following the most visible parameters such as cost and schedules. It is imperative to note that criterion such as plans and budgets should not be dismissed in the pursuit of value. However, relying on those parameters exclusively can be misleading especially to the project owners who seek for the real value created by the project. Importantly, all decisions made should be within the context of value addition, and therefore projects should be ultimately judged on this parameter. As such, this will imply critical assessment and evaluation of the corporate culture so as to integrate meaningful trade-off, which might sometimes prioritize value over costs and schedules. Therefore, product success should act as the primary yardstick to measure product success rather than focusing on the project management success.

Analysis of Ford Edsel Based on the Product Success

According to Feloni (2015), Ford Edsel failed so spectacularly to the extent that it became a classic example of how to never launch a product. As such, it is argued that few names in corporate history are synonymous with failure than Ford Edsel. Despite the legendary project failure, it is imperative to note that the project was not an abject project failure; rather it was a disastrous case of product failure. According to Pinto (2013), Ford made several right moves in the process of the introduction of the car. Although the project followed the technical definitions of project management such as the timelines and costs, projects cannot be lauded for such technical achievements alone. Therefore, such projects would require solid commercial backup to ensure product success.

On the outwards scrutiny, Ford Edsel was supposed to be a success after long and thorough planning of its design, hiring hundreds of individuals to ensure that the designs were cutting edge while the promotional basis was approached with care and looking for a creative touch. As such, from the tier four criteria, Ford Edsel was a success for the project managers. However, various factors resulted in the miserable failure of the product.

Among the key factors that led to product failure was the associated bad timing of the product introduction in the market. Its introduction coincided with the first economic downswing in the U.S. and subsequent stock market collapse in late 1957 followed by the recession in 1958 that critically affected automobile sales. By the time that sales volumes returned to their pre-recession levels in 1960, Ford Edsel was already out of the market.

Also, Ford had specialized in the low-cost vehicles since the 1920s. Its decision to move to middle-cost cars coincided with the change in consumer tastes to the average American, whom Edsel was supposed to target. This meant that the American middle class sought low-cost cars when Edsel was shifting to higher cost cars. Besides, the consumer attitudes were mainly affected by the National Safety Council initiative to downplay aspects such as speed and horsepower in advertisements, the exact elements that were Edsel strengths.

Critically, the key to the product failure was the overhyped image that Ford marketed as revolutionary. Hence, this meant that the customers’ expectations were raised so high that it was impossible to satiate them with any product. A few changes notwithstanding, when the Edsel model was released to customers, it was quite underwhelming when the customers realized it was nothing new from the options they had from competitors. Also, to ensure that the company fended off competition, Ford rushed to the market. As such, this meant that the car featured in the market before it was expected, resulting in many complaints with oil leakages, brake failures, and rattles. Besides, the timing affected the Edsel sales as it found itself competing with previous year models that dealers were clearing from showrooms at low costs.

Critically, Ford made a serious mistake in setting up an Edsel division. Setting up this line created unnecessary costs that required a higher level of revenue to break even the project. This made it imperative that the model is successful, but also required it to be a major hit to pay back its initial costs and operational costs. Finally, mistakes in marketing research compounded Ford Edsel to its product failure. Despite an extensive undertaking of research, the Ford Edsel market research commenced ten years before the product was developed and implemented. As such, the underlying assumptions that held in 1947 were no longer viable by the time the product arrived in the marketplace. Importantly, aspects such as large engines had being replaced by smaller more efficient engines from European cars more than four years before its Edsel debut.

Conclusions

Many criteria can be used to judge whether projects have been a success or failure. Although such authors argue that all projects fail, it is important to determine the perspective from the most important stakeholders. As such, focusing on the iron triangle of project management is an excellent guide to start for a project manager to determine project success. Ensuring that there are not cost overruns, time overruns and ensuring that quality work has been done should be the ultimate goal of the project manager. Importantly, ensuring that the project is completed within its scope guides the project manager to hold to his end of a bargain. However, the ultimate measure of project success should be the product success. Although most project managers are reluctant to use this method, and rightly so, product success culminates in a successful product. As depicted by the production of Ford Edsel, a project can be successful from the project management perspective but end up being a spectacular failure as a product. Hence, project managers should not be judged on terminating projects as a method of measuring success or failure, rather, by ensuring elements are right to ensure product success.

Recommendations

Following the spectacular failure of the Ford Edsel, it would be recommended that in case such a project should be repeated in the future;

  • It should be ensured that technical and commercial performance of the product is evaluated before the product launch
  • Market research conducted should be up-to-date with current trends and tastes and preferences
  • Ensure that the company focuses on the strong points and practice lean manufacturing rather than mass production
  • Consult research before approval of designs and brand names
  • Terminate the project if it proves unsustainable

 

 

References

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Atkinson, R., 1999. Project management: cost, time and quality, two best guesses and a phenomenon, its time to accept other success criteria. International Journal of Project Management, 17(6), pp. 337-342.

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Boehm, B., 2000. Project Termination Doesn’t Equal to Project Failure. Software Management, 1(1), pp. 94-96.

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