PROJECT MANAGENENT INDIVIDUAL ASSIGNMENT III
KUSOM
CASE ANALYSIS
OF UJELI PVT LTD. Submitted by: GAURAV POTE Roll No.: 11726 Room: 301
D A T E : J U L Y 3 0 , 2 0 1 5
CASE SYNOPOSIS Presented here is a very relevant case study of an emerging solar energy company called Ujeli Pvt Ltd, which is in distress from the perils of ineffective project management practices despite the favourable framework of project management.
CASE SUMMARY To summarise the case, Ujeli, a manufacturer of solar water heater panels and solar electricity panels, has a 5-person senior management team, qualified and competent, and is pursuing a lucrative market opportunity of marketing solar heaters and panels given the prolonged energy crisis, supplemented by ineffective solutions and growing energy demand. Between the two product lines, the sales of solar heaters has increased where as the sales of solar panels has not yet picked up due to technical gaps and weak product design. The corporate strategy of Ujeli is “growth by expansion in domestic market”. The business strategy is “to remain the low cost producer and use the local materials as much as possible”. As such, Ujeli has not chased any aggressive growth targets but has remained under a modest annual growth rate of 10 percent. The slow growth is due to and offsets the high cost of production, and to remain a low cost manufacturer, the need for more R&D projects has been perceived. Ujeli follows project-based management system where by projects are formed and run using the matrix structure. That said, Ujeli takes on two types of projects— first, the revenue projects that are essentially the customised orders for their consumers, and second, the change projects that are actually R&D projects that benefit the organisation. These projects are prioritised by the management based on their perceived importance to the company. However, there are several underlying problems in Ujeli project-based management practice, which are— • Lack of technical support and management coordination • Lack of resources, their efficient allocation and funding in time • Over-commitment of the employees on projects than on departmental functions • Customer service is perceived below standard, and that has annoyed customers • Delayed payment to suppliers has infuriated them. Moreover, the employees have been demanding to receive bonus payments out of the company profit. But, the senior management has been pressing on reinvesting the profits on new projects in the near future. So, there is a trade-off here— if bonus is paid to the
employees, the projects will lose their budget, but for the projects to get funded, the employee bonus has to be postponed. These issues have made the employees highly doubtful about the whole project management practices of the organisation. The project management in Ujeli lacks project performance evaluation practices, and reliable solutions to the exiting problems. The employees are unaware of the impact of projects on the organisations. The external stakeholders, too, cannot clearly perceive the impact and quality of the projects. While the leadership creates high expectations in the media, the customers have raised their expectations from Ujeli, while the management-employee conflict, project-department conflict, and project management conflicts continue to persist and weaken the organisation.
CASE ANALYSIS The analysis of the case has been presented as the answers to the questions provided along with the case, which are as follows: a. Understand the company and its current corporate and business strategies. The case involves an alternative energy company named Ujeli Pvt Ltd, which is a manufacturer of low cost solar water heaters and solar electricity panels. It seeks to explore the business opportunity of solar heaters and panels presented by the prolonged energy crisis in the market, and further supplemented by the growing population and unavailability of a reliable long-term solution. This organisation has implemented project-based management but has not been able to be more effective about it and, thus, faces a tremendous level of problems and conflicts. Having said that, the current corporate strategy of Ujeli is to seek “growth by expansion in domestic market”, where as its current business strategy is “to remain the low cost producer and use the local materials as much as possible”. b. Why are projects important to the organisations like Ujeli? What type of projects are they undertaking? The projects are important to the organiastions like Ujeli for several reasons like: • Projects help in building a strong project team with a culture of cooperation and teamwork. With each successful project those teams will gain more experience and competency to run more complex projects. • Projects put equal focus on the process and product/outcome, there by assuring quality standards across the production process and after the delivery of the product.
•
•
•
When unique projects, like product development or process reengineering, market research, R&D projects, etc. yield positive results, they might add to the competitive advantage of the organisation, and provide them a unique positioning with valuable goodwill in the market. Projects are based on predefined constrains and objectives, which means there is a comprehensive planning, allocation, and control of valuable resources— funds, overheads and logistics, time and quality. Effective project management practices always align the project goals with strategic organisational goals. So, for an organisation, the projects, as strategic capabilities, can be effective means to deliver organisational strategies and objectives.
As such, Ujeli undertakes two types of projects. They are: • Revenue Projects: These are the customised orders for their solar heaters and panels that they receive from their clients. These projects generate direct revenue for Ujeli. • Change Projects: There are the internal R&D projects that are run by Ujeli. It hopes to benefit from these projects in terms of new technology, design and cost innovation, etc. c. Explain the current problems and issues faced by Ujeli as given in the case. Do you think projects have contributed to Ujeli? The current problems and issues faced by Ujeli as given in the case are as follows: • Lack of technical support and management coordination • Lack of resources, their efficient allocation and funding in time • Over-commitment of the employees on projects than on departmental functions • Customer service is perceived below standard, and that has annoyed customers • Delayed payment to suppliers has infuriated them. • Employee-Management conflict due to reinvestment of profits on projects rather than distributing bonus. Those projects are perceived to be less effective in terms of their impact on the organisation, • Employee-employee conflict between the employees working in projects and those in departments. • Lack of management of project perception and expectations of the stakeholders and leadership creating higher expectations in the public. • Lack of efficient project evaluation and control mechanism that would otherwise have ensured the quality and applicability of the project process and outcomes. As such, the projects seem to have only partially contributed to Ujeli. The projectbased management in Ujeli could be made more effective by not only generating the
revenue for the company but also adding innovative technology and improved products to the competitive strengths. However, they just seem to be generating the profits at modest levels for now. d. How are projects formulated and planned in Ujeli?? Do you agree with the project formulation practices and project management practices in Ujeli? The projects are formulated and planned in Ujeli by the top management team. They select the projects on the basis of need and the company strategy. The details of these projects are then announced to the employees. At any given time, multiple projects could be operational in Ujeli. The project formulation practices and project management practices in Ujeli cannot be agreed with because only the senior management seems to be involved in this process and practices. They keep formulating and implementing projects based on their perception of needs but they clearly overlook the needs and grievances of supervisors and employees, along with the underlying problems in their management approach. e. How are the projects organised in Ujeli? What type of structure they have been following? Do you agree with the structure they are following? In Ujeli, the projects are organised on the basis of the need and the company strategy. This is done by the senior management of the organisation. In Ujeli, they have been following the matrix structure to form and run the projects. Ujeli has to cater many customers in urban and rural locations, and has to run revenue and change projects simultaneously. Since, the matrix structure works best in situations where the firm needs to process more information simultaneously or if it has to serve many customers distributed in several markets— similar to Ujeli — I would agree with the use of matrix structure. However, as given in the case, they can increase their productivity more. f. Critically evaluate the Project Plan and the ranking made by the management or next year (2010). Among the four projects Project NPD and Project CD seem to be relevant. But their order should be reversed— with Project CD with higher ranking than Project NPD. Projects FS and Trade Fair seem to be less relevant and too burdensome for the financial capacity of the company. So, they have to be removed from this year’s annual project plan.
Here, Projects CD has highest priority because when it is completed, the company will have a new product design with ratified defects. They can sell this new design in the existing market. Project NPD might be relevant too because the outcome of this project may open doors to new rural markets for Ujeli. However, Project Trade Fair is completely irrelevant as it has the highest expenditure with almost no beneficial yield. Since Ujeli’d corporate and business strategy focus on local market and low cost production, there is no necessity to explore the foreign market. It is not as if the company had necessary production capacity, technology and competitive advantage for exporting to developed market like Germany. Then, there is Project FS which is only a feasibility study that has the second highest expenditure without any immediate benefit for the company in terms of technological innovation and profits. g. Which projects do you think are best suited for Ujeli and why? As discussed in (f), the best projects for Ujeli are Projects CD and Project NPD. For Ujeli, the outcome of Project CD will add to the technological expertise of the company and improve the existing product, solar heaters, by removing the defects and improving the design. This will increase the durability and utility of their products there by increasing their sales and goodwill of the brand. In the meantime, Project NPD will result in new innovation in the form of new solar heating product for the rural market. This will, in turn, increase the market size and profitability of the company. h. Do you think the bonus should be distributed rather than investment in projects? How will you handle this problem? The bonus should definitely be distributed to the employees but investment in the new projects is also equally necessary for Ujeli. However, there is a solution to this issue. The bonus should be distributed because the employees have been demanding for it for quite some time and the profitability of the company is adequate to meet this obligation. Human resource management— compensation and rewards —are part of team management and organisational continuity, which are in turn part of project management when organisations depend on projects. Happy employees are more productive and motivated, and are more likely to stay with the company and accept company goals as theirs. Hence, the need to distribute bonus is urgent and beneficial to the company in the long run. Now to meet this obligation, we can source funds from the project budgets of the two projects that we have decided to postpone for this year. If these two projects— Project Trade Fair is worth Rs 10,00,000 and Project FS is worth Rs 3,00,000 — are
postponed for a t least this year, a total of Rs 13,00,000 can be saved. This extra fund can be used to pay the employee bonus.
RECOMMENDATIONS i. What suggestions will you give to management and project managers for future improvement? The answers to (i) and the recommendations to the management and project managers for future improvement are as follows: • Re-prioritise the projects and postpone projects that can be done without for now like the Porjects Trade Fair and FS. This will save the expenses, which can be used for other purposes like new revenue and change projects, and bonus distribution. • Use participative approach while formulating projects. Include the feedbacks and inputs from the project managers along with the project team and use senior management expertise to make the project outcomes more strategic and beneficial for all the stakeholders. • Address employee grievances more effectively and in time so as to avoid employee turnover and lack of morale. • Address customer complains and improve the quality control mechanisms to improve the brand perception and manage customer expectation in better way. • Make the payments to suppliers in time so as to retain them and improve the relationship with them, which goes a long way into strengthening the supplychain of the company in the future. • Allocate the resources more efficiently and provide proper management coordination and technical support to the project teams. • Hire more employees if the current number is inadequate for the departmental tasks or if the volume of projects is likely to increase. • Formulate more R&D projects to improve the design and innovate new products while cutting down costs and increasing the product utility and design.
