In this exercise, you play the role of Shawna, a project manager for ZAP Pharmaceutical Company. Currently, you are managing a large IT project in the healthcare industry for ZAP. Your project is to refurbish an existing office building, install the IT infrastructure, and outfit the area for use as a new telephone answering hub for your company. You took over this project a week ago from John, the previous project manager. John had overseen the project since its inception.
This project is in the execution phase, with the refurbishing and installation of the infrastructure currently being done in concert with each other. All of the new office equipment is on order and is scheduled for delivery on the day after the refurbishment and infrastructure work are scheduled for completion. The overall work progress is about three quarters finished. Senior management is pleased with the progress of the project so far.
There are four vendors working with you on the project. Bear’s Construction Company is handling all the refurbishment. This work includes all structural work, drywall, and electrical work in the building. Anne’s Interior Design is doing the carpeting, painting, and cubicle work. Roxy’s IT Services is installing all IT components, including servers, IT cabling, and a wireless network. Sheba’s Office Equipment is providing all desks, computers, and phones. All contracts associated with this project are fixed price contracts.
Since taking over for John, you have had a number of contractual issues arise associated with this project. You have delayed making any decisions about these issues, hoping they would work themselves out. Today, a third contractual issue was brought to your attention.
Realizing you can no longer postpone action on these issues, you call a meeting of your project team. You project team is made up of three individuals. Iris is the future manager of the telephone hub. Tony is the IT lead on the project. Phil is the facility specialist assigned to your team.
You describe each of the three issues to the team and ask for input.
- Bear’s Construction Company is making a claim that it is not responsible for inspections required by the local township. Bear has produced a memo signed by John during negotiations that states that ZAP is responsible for all permits and inspections. However, a quick review of the contract shows that Bear is responsible for all inspections. Failure to resolve this issue will likely delay the project at least 1 week, because Bear is making no effort toward arranging for the required inspections.
- Anne’s Interior Design has brought to you another issue. In the contract, under the section labeled Special Conditions, it states that carpeting must meet a specific wear rating. In the same contract, in the General Conditions section, the contract prohibits the use of any nongeneric materials within the work of the contract. This would include carpets with special wear rating, because these would be nongeneric materials. Anne has already purchased and begun the installation of the generic carpet that does not meet the wear rating.
- Sheba’s Office Equipment has informed you of a minor typographic error in the contract with you to provide office equipment for this project. In the contract, it states Sheba shall be paid as follows.
$350,000 (Three hundred and fifty thousand dollars)
Sheba apologizes for any inconvenience this may have caused and is awaiting the payment of $350,000. The company further states $350,000 would have not likely even begun to cover the shipping costs. Sheba informs you that it will ship the office equipment when the remainder of its fee is received. After receiving this information from Sheba, you priced out the cost of the office equipment from other vendors and the average price was $40,000.
As the project manager, the project team is looking to you for direction on each of these issues. Review the comments of the key players, consult the grading rubric below and then answer the following questions.
- Is Bear or is ZAP responsible for the inspections? What is a reasonable course of action given that the project may have to be delayed a week or more?
- What carpet should be installed? Should work be stopped to evaluate this issue? What do you do to resolve this?
- How much is owed to Sheba? What actions would you take as the project manager?
As for Bear, I remember the memo. Yes we signed it. I was there at the time. I don’t remember why it is missing from the contract. I say we arrange for the inspections just to keep this project going.
Second, I don’t care what carpet is installed as long as I get to open this telephone hub on time! That is the most important thing to me. The company is counting on us!
Last, wow, $350,000 for $40,000 dollars worth of office equipment is a bit steep, but if it means keeping the project on schedule, I am in favor of paying the extra costs.
Future Building Manager
I don’t care what the memo says. The contract is the contract. Bear is responsible. If we lose a week, we lose a week. Bear is getting paid for the work. Make them do it!
I say stop the carpet installation right now! Make them put in the better carpet. After all, it will last longer for ZAP. I don’t want to have to redo this work next year.
Further, I would not pay Sheba one dime more than $350,000 dollars. I say cancel the contract with them and order the materials from someone else. Sure, it will put us behind schedule about a month, but look at the money savings.
IT Project Lead
I don’t know about contracts, so I don’t know which side is correct. In any event, does it matter? I think what is important is how much time we have already lost and how much more we will lose while we resolve this.
By the local township codes, either carpet will do. The better one will of course last much, much longer. But we will lose about 6–8 weeks removing the one currently being installed, ordering the better one, and installing the better one. I hope this information helps.
I am not sure if it makes sense to pay $350,000 for $40,000 dollars worth of office desks and chairs. But can we really just cancel a contract on our own? I am not sure about that. And then there is the issue of time—an additional month before the grand opening. Senior management might not be happy.
Project Facility Specialist
Deliverable: Turn in a three- to five-page paper outlining your complete responses to the above questions.
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