Teradyne - The Jaguar Project Case

T H E A M E R I C A N U N I V E R S I T Y I N C A I R O

PROJECT M ANAGEMENT OPMG 528

Dr. Ali H. Awni SPRING 2011

Teradyne Corporation The Jaguar Model

Prepared by:

Alaa El Din El Kordy Amr El Gamal Mohamed Abdel Samie Nancy Girgis Sara Khafagy

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Table T able of Cont Content entss Executive Summary ...............................................................................................................1 The Jaguar Project ................................................................................................................ 2 Project management tools &processes &processe s ................................................................................ 2 CPM in a product development setting ............................................................................... 5 Project execution strategy matrix ......................................................................................... 6 Phase gate process analysis .................................................................................................. 7 Risidual risk analysis ana lysis ............................................................................................................ 9





Executive Summary The Jaguar Model, which was a project undertaken by Teradyne Corporation, the World’s largest supplier of equipment for testing semiconductors. The aim of the project was to develop a highly flexible tester platform that could be easily adjusted to the needs of different device segments. It was a critical project that will determine the ability and success of Teradyne to compete in the market, especially that the market need was drastically shifting towards flexible tester platforms rather than different specific test systems for each type of semiconductor device.

With the Jaguar Model, Teradyne had used several Project Management PM tools to force discipline in the development process. Including the work breakdown structure WBS which is a detailed description of all the tasks required to complete the project and their interrelationships. The 3-point estimation which is a technique to incorporate uncertainty into projected schedule by estimating a best case, worst case and expected times for each task. The critical path analysis CPA which is a methodology that uses the WBS and 3-point estimates to identify bottleneck tasks in the development process, thus determining the overall lead time of the project. Finally the earned value analysis, which measures the project progress using three metrics: budgeted cost of work scheduled, actual cost of work performed and budgeted cost of work performed. Unfortunately, the project planning; tracking, metrics and reporting distracted many team members from real problems. Additionally, due to the nature of the project; being a development one. Each of the tools had its limitations: with the critical path method, there were many more unknowns and unclear estimates to be calculated which puts the accuracy of CPM at risk. The same applied to WBS, which mandates that each single task is recorded in proper sequence. Even the 3-point estimation tool highly relies on precise time estimates in order to be effective and with EV, it was difficult to apply because EV only works great if you know exactly what you need to do, which is not the case in development projects. After the development process was understood, Teradyne decided on their development team. They developed a project execution strategy matrix which listed the project dimensions, each with its corresponding principles, processes and structure with responsibilities. They also adopted a heavyweight team structure. This arrangement did not prove very successful as the project, although successful in the end, suffered a lot of delays. Basically this was attributed to the size and nature of the project which involved a hardware (sequential and straight forward) and a software (flexible) subprojects and it would have been better if Teradyne had looked at those two separately and adopted different approaches in managing each sub-project as a reflection to the dissimilarity in their natures. An overall leader needed to integrate the two subprojects successfully. Phase gate process analysis was also introduced, however lacked a discovery phase at the beginning of the project to generate more ideas even from the customer which would enhance the project overall success and make the voice of the customer more heard. The residual risk facing the Teradyne’s process was found to be the complexity of the





The Jaguar Proj Project ect Historically, all test equipment suppliers including Teradyne designed completely different test systems for each type of semiconductors device. This allowed the design of the tester to be optimized to the test requirements of the particular device. By m id 1990’s, changes in the market began to erode the logic of this strategy. Particularly as semiconductor manufacturers diversified into a broader range of device types, they were increasingly asking for a tester platform that could test multiple types of devices. This trend accelerated in the late 90’s with the growth of contract manufacturers whose business model was to offer a wide range of device-testing services. For these customers, utilization rates of device-specific testers were simply too low to be economically feasible. As Teradyne’s vice president described it “The platforms were getting more complicated and costly to develop and it was becoming increasingly infeasible to develop multiple platforms.” In the late 1990’s several of Teradyne’s comp etitors had started developing a single tester platform. Several competitors were already moving towards the direction of developing a more flexible, consolidated platform strategy.

In other words, the Jaguar project, which was an initiative taken by Teradyne to create a highly flexible tester platform that could be easily adapted to the needs of different device segments, was the only way for Teradyne to compete in its i ts market whose needs have dramatically changed from a tailored testing device to a more complex and flexible platform. It was highly critical to successfully launch the Jaguar project at this time. Especially that Teradyne’s competitors had already taken steps towards fulfilling this market’s new demand.

Project Management Tools and Processes Teradyne had used PM tools to force discipline disci pline in the development develop ment process. This was one of the critical elements of the Jaguar project execution strategy. strategy. With the data and information provided by the new tools people were able to know whether a team was team was having work done at the right pace or not. Others were more skeptical and thought the tools could be distracting by trying to figure out whether the tool reflected reality, rather than discussing what to do. Work breakdown Structure: A detailed description of all the tasks required to complete a project, and their relationship to one another.

Work Breakdown Structure (or WBS) breaks a project down into its individual tasks and identifies the relationships between them. WBS has two major goals. First, to ensure that the project has all the work needed to complete the project successfully. Second, to ensure that the project





identified and activity durations are estimated. WBS is often used to identify the tasks for the Critical Path Analysis. 3-Point Estimation: A technique for estimating the minimum (best case), maximum (worst case), and expected times required to complete each task.

This is a technique to incorporate uncertainty into schedule estimates. For each task, a best case, worst case, and expected lead time are estimated. This technique can be used in conjunction with CPA to identify those activities in the project most likely to cause a time delay. Critical Path Analysis: A technique uses the work breakdown structure and the 3-point estimates to identify “bottleneck” tasks in the development process which determine the overall lead time of the project.

Critical Path Analysis (CPA) is a methodology to identify the set of “rating limiting” activities that determine the overall length of the project. CPA identifies those tasks that, if delayed, will cause the final completion date to slip. The main benefit of Critical Path Analysis is that it helps a company to identify the minimum length of time needed to complete a project. Where the company need to run an accelerated project, it helps it to identify which project steps it should accelerate to complete the project within the available time. Earned Value Analysis: A method for measuring project progress by comparing actual and expected resources (or time) expended.

Earned value (EV) is a methodology for measuring a project’s progress. EV compares the actual and planned amount of work completed (at various milestones) in terms of time or costs. An EV uses three metrics: — planned 1) Budgeted Cost of Work Scheduled (BCWS) — planned cost of the total amount of work scheduled to be performed by the milestone date; 2) Actual Cost of Work Performed (ACWP) — — cost incurred to complete work performed to date; 3) Budgeted Cost of Work Performed (BCWP) — the planned cost to complete the work that has been — the performed to date. By comparing differences in these three metrics, it is possible to identify two sources of variance: cost variance (cv) and schedule variance (sv).





— computed The project is behind schedule if the schedule variance (sv) — computed as the difference between BCWP and BCWS — is is a negative number. The project is over cost if the cost variance — Computed as the difference between BCWP and ACWP — is (cv) — is a negative number. The mixture of these tools as declared by O’Brien helped to see different things that were going on in such a complex project like Jaguar. The tools provided visibility into the project. This allowed Teradyne to respond to AlphaTech and be confident that could hit all the milestones.

At Teradyne, the output of a development project was judged by two criteria: first, did the project achieve its target objectives and, second, did it build new organizational capabilities for future projects? As it pertained to project management tools and practices, some managers felt that, by and large, the project management tools worked and contributed to the success of the project. Their concerns revolved around the implementation. Others were much less convinced of the value of the tools, and were concerned that they could actually be a distraction. It’s always worth mentioning that project planning; tracking, metrics, and reporting could distract team members from from real problems. In the Jaguar project Primavera was an awkward tool. The interface is terrible. Many of the first-level engineering managers hated it. Primavera requires a very static work breakdown structure; once you enter it, it is very difficult to modify. The problem is that as you execute a project like this, you actually discover things you have to do differently. But, the schedule is produced and updated using the original work breakdown structure. So the reported scheduled becomes less meaningful over time. Some groups had a weekly struggle with Primavera. They worked it to get the schedule completion date to come out OK by constantly rearranging the critical path, but missed the fact that deliverables in general were slipping and work was not getting done at the planned rate.

In recalling the struggles of the software team, the tools allowed the software team to lie to themselves. Some very strong people allowed themselves to be fooled by the data. The software disaster was evident from the EV. There are things that do not show up in the EV tool. Progress on EV can be done without making progress on the project. With more experience and training, team members would know how to get value from the tools they were using more efficiently and thought they would figure out what went wrong. O’Brien was also a strong believer in the value of the project tools. He saw the tools as working but was critical of himself and other members of the organization for not always reacting to the data. d ata.







The mixture of the PM tools used in the Jaguar project helped to see different things that were going on in such a complex project. The tools provided visibility into the project. This allowed Teradyne to respond to AlphaTech and be confident that could hit all the milestones. The PM tools helped as well to force discipline in the development process. This was one of the critical elements of the Jaguar project execution execution strategy. With the data and information provided by the new tools people were able to know whether a team was having work done at the right pace or not. Others were more skeptical and thought the tools could be distracting by trying to figure out whether the tool reflected reality, rather than discussing what to do.

CPM in a Product Development Development Setting The critical path method (CPM) is one of many tools used by project managers to help them manage and control the many tasks they oversee oversee in each project they lead. It is used in concert with several other tools to plan, coordinate, and execute these tasks so that the vital time variable is well harnessed and so that project completion is not delayed. There are several components of CPM that need to be identified in the outset in order for CPM to be utilized well. One of these is work breakdown structure (WBS), which is "a detailed description of all the tasks required to complete a project, and their relationship to one another" as the case explained. Another is the 3-point estimation, which the case explained as being "a technique for estimating the minimum (best case), maximum (worst case), and expected expected times required to complete each task". Earned value analysis is a tool used during the course of the project to compare budgeted figures with actual ones and can be applied to various parameters such as time and financials. Under regular circumstances, there is much tedious planning and meticulous work required in order to reach dependable results that make these tools useful to CPM. However, all this planning and its related work is heightened heightened when the project involves product product development. There are many more unknowns to be dealt with and many unclear estimates to be calculated, which puts accuracy of CPM at stake. One such example is the WBS, which mandates that each single task be contemplated and recorded in proper sequence and in correct relation relation to the other listed tasks. By ensuring that no important task is left out and that no unneeded task is added, WBS serves as a foundation for CPM. When this is applied to a product development project, the challenge is great. When a new product is developed, there is a disadvantage of doing things for the first time without the guidance of past successful or even unsuccessful similar projects. Even with a great deal of tenacity to get things right, there is great great risk of either not including significant tasks or incorporating irrelevant ones. Another





All these limitations of CPM could be reduced through constant and frequent meetings by the core team whose members would compile recent results, analyze their effects on the project, and adjust the CPM and all its tools accordingly. This way, any deviations from from the plan would be detected early and managed accordingly.

Project Execution Strategy Matrix and Heavyweight Team Through its product development, Teradyne often experienced significant delays and quality problems caused by failures of coordination and communication. The reasons behind this were that projects were handled by individual engineering functions and the lack of one individual responsible for the entire project. To address this problem, Teradyne launched several improvement initiatives. One of which is the Project Execution Strategy Matrix (PESM), where the project dimensions (including Project Definition, Governance and Staffing, Structure of Project Tasks and Activities, its Design, Prototype and Test, Senior Management Management Review and Control and finally the Real-Time MidMidCourse Corrections) are listed, each with its corresponding principles, processes and structure with responsibilities. Although the PESM seemed well organized, it was neither practically applicable nor ensured adequate control, and on the other hand responsibilities were not precisely defined. In general once the development process is understood, the formation and operation of the development team are critical to the project’s outcome. The optimal team composition is influenced by many factors including company size, reporting structure, geographical proximity of employees, product nature, available resources and so forth. In applying this to Teradyne’s Jaguar Project, we find that Teradyne is a large company which has major engineering operations located in Boston, North Reading, Minneapolis, Tualatin, San Jose and Agoura Hills (in 4 different states across the US). In addition the Teradyne’s engineering organizations in Boston and Agoura Hills had their own flexible tester projects underway. The launching of the Jaguar project meant merging the efforts of these two teams although both teams had their preferred approaches. Consequently tensions arouse over whose approach will overrule. It was not a group that came together willingly. Teradyne’s choice of a heavyweight project team for project/task governance was not the most suitable choice for such a huge, monumental and strategic project. Heavyweight teams are typically composed of full-time members from various functions, who often are physically co-located (which is not the case in our Project). Members of a heavyweight team play an active role in shaping project-level decisions. Although some major decisions may still be





and should be managed in different ways for example in hardware the physical attributes of a part often determine the appropriate sequence and structure of tasks, whilst in software you don’t have these physical constraints, which gives you a lot more flexibility. Thus different approaches should have been applied as appropriate. In other words, it would have been better to run two parallel subprojects (software and hardware) completely separate and have different ways in managing them with an overall Project Leader who will be responsible for the overseeing of their successful integration. Another major reason for the struggle that Teradyne was experiencing was the lack of sufficien t staff training, unlike the TQM initiative where everybody received enough training. Although the Jaguar project represented a drastic change; not only in the methodology but also in the whole organizational culture which used to encourage individual initiative (warning new employees that they will have to dive in without expecting to be told what to do). Instead in the implementation of the Jaguar Project collaboration of different teams from different ways of doing things was expected. However inadequate effort was exerted to coach teams and to align the whole organizational culture. To mitigate this complexity, we suggest that Terdayne divides the Jaguar Project into 2 subprojects (software and hardware) with different teams and methods of management as appropriate. Hardware is usually sequential and straight forward whilst software projects are flexible and could easily fall behind schedules or go beyond their scope. The overall Project Leader will be responsible for ensuring that both subprojects run well, stick to their timeframes, scopes and budgets. In addition, he will be accountable for the successful integration of both sub-projects.

Phase gate process analysis Teradyne aimed at changing the way product development is being done via tackling one the problems the company faces, which is poor planning for individual projects. That’s because the goals and scope were often not clearly defined up front and thus, projects tended to expand as new thoughts or additional features were thought of. This lead to missed milestones, lack of ownership, significant delays and quality issues. So, Teradyne launched the phase gate model for developing new projects. The phase gate model consisted of five stages, concept development, project and product





functionality to the product that was not included in the original plan and committing to the shipment of the product to AlphaTech three months earlier than the original timeframe set and agreed upon. The consequences of all these disruptions included the extra costs, adding more resources, consuming the team efforts, introducing the software of the product with bugs and without all the functionality that AlphaTech asked for and more importantly stopping the development of the product for other customers which lead to delays in other launches. It was clear that the gates were not very strict between the stages. The deliverables must have been reviewed properly with solid data to track the pr oject’s progress. In addition, potential customers and their requirements must have been identified earlier to avoid ad hoc changes that disrupt the project flow and other projects as a consequence. Adding a discovery stage at the front end of the phase gate process would generate project ideas (see below Fig.). Some of these ideas might come from the customers. So, building voice of customer work into the discovery stage to help identify customers’ problems, unmet needs and even unarticulated ones. The research might involve working closely with the customers to know their problems and understand their business and its workflow. This helps in incorporating the customers’ requirements in the project plan from the beginning and engaging the customers in the development process.





Residual Risk Analysis The residual risk is the risk or risk or danger of an action or an event, a method or a (technical) process that, although being abreast with science, still conceives these dangers, even if all theoretically possible safety measures would be applied (scientifically conceivable measures). In other words it is the exposure to loss remaining after other known risks have been countered, factored in, or eliminated. The risk facing Teradyne process is simply any factor that jeopardizes its time schedule, budget, project scope or accuracy and quality, most of which could be mitigated. However the residual risks are discussed below: The complexity of the semiconductor technology. The job of a semiconductor tester was to determine whether or not a chip met its target specifications by interrogating the device electronically i.e. sending it signals and then measuring the response. This task in reality is one of the most challenging problems in the entire electronics industry. Additionally, as devices became ever more complex and precise, this challenge increased exponentially. The rapid rate of technological innovation in semiconductors puts a constant pressure on Teradyne’s R&D investment and time wise. The difficulty in acquiring new accounts. Customers are the manufacturers of semiconductors such as Intel, Texas Instruments, IBM, Hitachi and Samsung who usually place their orders when they were transitioning to a new generation of technology (cyclic market). They tend to stick with existing systems to leverage past experience.

Semiconductor Vendors looked for technical performance and features. They focused heavily on test economics which were largely driven by test speed, as testing was often a bottleneck in the total semiconductor production process. Therefore speed in developing systems and rapid technical support was considered essential to competing in this market.

Teradyne - The Jaguar Project Case

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