Woody Liberty and Fear Custom

Woody

Liberty and fear

Custom Woodworking Company: Overview of expansion project

Was the Woody 2000 project well conceived? Give reasons for your opinion.

The Woody 2000 was well-intended, but not well-conceived. The owners of The Custom Woodworking Company of British Columbia wished to take advantage of a current upsurge in the construction industry in the area. More lax trade restrictions between America and Canada spurred the company to explore opportunities to expand its business and to modernize corporate facilities. However, no clear, measurable benchmarks and objectives were stated at the beginning of the project.

Firstly, although the lifting of trade restrictions sparked the initial debate about reformulating and expanding the company, the attempt to capitalize upon the opportunity to 'go global' was put aside after the interest shifted towards improving Woody's central facilities. Then, no rationale was given as to why and how the specific modernization efforts were undertaken. As a result, entirely unnecessary elements were inserted into the project, such as the refurbishment of top management offices, which conveyed no additional value to the company. Some of the specific aspects of the project, such as enlarging manufacturing capacity, could have given additional value to the company, depending on how they were used. But without a clear plan as to how to exploit the additional materials, and if the cost of the upgrade was likely to be balanced out by the profits generated from the expanded workload, even this project were of dubious value. It was not clear what new consumer demand would be met, what new products could be produced, as the result of the upgrade.

At the end of the project, due to poor planning, the facilities were not being used to their utmost capacity. Demand within the industry had begun to abate, and while this was partially due to the delays in the project's completion, forecasting and risk assessment should have counseled that a mini-boom in the construction industry was unlikely continue indefinitely, thus the projects should be conceived as being of long-term, rather than short-term use for the company. A boom can quickly end, even during an on-time, major refurbishment project.

Question 2: What were Woody's real objectives that could and should have been articulated?

The real objectives for the company were not articulated at the beginning of the project, as evidenced by the fact that unnecessary elements such as air conditioning for Canadian-based facility were deemed top priorities. No revenue objectives were set: it was not clear that by increasing production by x amount a y increase in profit would result. The software modernization was surely necessary, given the changes in technology going on in the global market environment at the time. However, once again, there was no clear sense of what the software would improve, in terms of company standard operating procedures. Other opportunities, such as expansion into the American market, seemed to be entirely overlooked in the specifics of the plan, and it seemed to be vaguely assumed that expanded production would result in the ability to meet international demand.

Custom Woodworking seemed to wish to make itself into a more modern, globally-focused company. That may have been the rationale behind creating a more professional company in its appearance: hence the air-conditioning, the dust-free workplace, automation, upgraded computer systems, and the modernized corporate offices. But simply looking different does not make a company more modern. Furthermore, company standard operating procedures were not modernized accordingly. There was sloppy record-keeping and bookkeeping. Critical staff members took vacations, without seeming to be aware of their responsibilities.

Question 3: What strategies were there for achieving these objectives? What would you recommend?

To Woody's credit, some new, more professional strategies were implemented to keep track of company finances. For example, the company did create a monthly cash flow chart for the modernization project. However, this flow chart was not regularly re-evaluated over the course of the project on a regular and timely basis, once delays became a problem. There was no talk of scaling back or reformulating the approach, once it became clear that the project was going to be more expensive and take longer than anticipated. Additionally, there was no careful monitoring of the external market environment for opportunities or threats that could affect the future profitability of the project.

The lack of close monitoring was especially detrimental to the company because of the fact that the contracted firm, EIS, was paid at an hourly rate: once delays began to spiral out of control, so did costs. Another poor strategy was evident in their criteria for selecting members of the leadership team. For example, Ian Leadbetter did not have project management training and experience. A clear forecasting of how the project might transpire, with allowances for delays, under the guidance of someone experienced in project management could have prevented many of the obstacles Woody faced and ensured that the benefits of the projects outweighed the costs.

Question 4: Did they consider other solutions? Give examples.

Initially, when the firm was contemplating modernization they considered relocating. They could have relocated to an area more conducive to expansion, and with more competitive bids for the various components of the project. Moving may have been cheaper in the long run, but instead of coolly and dispassionately weighing the financial and logistical pros and cons between staying vs. moving, the company began to break down into personal in-fighting between the managers. The only source of agreement seemed to be that EIS's initial bid was too high; however the solution that was implemented lacked a firm strategy of cost control to ensure that hourly pay would result in substantial savings for the company.

Question 5: How would you gauge the project's success? Could success be measured? If so, when?

Sadly, this project was a failure even before it began, because of the lack of clarity of its objectives. It is not enough to merely have the goal to expand, or to make more money, or to expand one's global presence. Instead, specific targets for profits, costs, and timelines must all be tied together, along with forecasts about the evolution of the market environment.