PROJECT MANAGEMENT

1. "And the contractors have no incentive to push back: The cost-plus

contract puts all the risk on the CAA. The agency and the contractors have
different goals and objectives. - Examine the impact of the contracts on
the project outcomes?
Cost plus fixed fee contract is used when both the owner and the contractor are in
agreement that the contractor would get a fee in addition to the project expenses.
Under CPFF one does not know what the actual costs are going to be. So estimation
of cost is done initially. Finally, the fee is calculated as a percentage of the
estimated cost.
In the cost plus fixed fee contract, the profit or the fee is fixed at the beginning of
the contract. In this case, it was the cost of labor, materials, and overheads. The
incentive for the contractors here is to complete the task assigned to them as
quickly and as cheaply as possible because they would earn more profit on the
actual cost.
In the case, CPFF contract allowed the contractor (Hollenbeck-Eskina) to cut corners
as they were more focused to complete the prototype as soon as possible. The
contractor was using computer simulations instead of ground testing. On doing so
they skipped the iterative development process where the prototype could be
tested after its completion. The company was also cutting cost on the iteration
process and could not identify the weaknesses in the prototype. Additionally, the
prototypes were not even equipped with the instruments that would provide the
desired test data.

Triple constraint
Time

Quality

Cost

Scope

We can see from the above figure that the contractor wanted to complete the
prototype spending minimum amount of time thereby reducing the cost, leading to
poor quality of REACH. Additionally, REACH was designed to replace the batteries.
However, its scope was also increased to service for repair.
CPFF had a negative impact on the project as the current prototype also failed and
the astronaut had to spacewalk to complete the task that was to be done by REACH.
Additionally, this contract did not provide any incentive to the contractors to
complete the project quickly.

2. What, in your opinion, were some of the key project management

mistakes in the running of REACH?
The first phase of the REACH project met the deadline and within the budget,
however, there are key project management mistakes in the running of REACH as
follows:

Although the project was able to meet the deadline but the problem faced by
them was of quality, as the original contract between Canadian Aeronautics
Administration (CAA) and contractors reflects the desire of CAA to have the
job done at the earliest possible time, emphasizing more on speed than
quality. The quality was compromised because the projects schedule was too
compressed. It was rushing a decades worth of work in six years.
Sticking purely to the parallel development strategy of the project phases R&D, prototyping, testing, production, and quality control which is a violation
in the aerospace circle and the project phases should be done sequentially.
To cut down on cost and time, contractors used computer simulations instead
of thorough and rigorous ground testing which was indeed a recipe for
disaster in such complex project, as one of the reasons behind the system
failure that REACH experienced in space station was that the same problem
was neglected when it came during one of their on-ground testings and there
was no electronic data management system that would allow both the parties
to access current data for analysis.
In this project, all risk was taken by the CAA, since a cost-plus-fixed fee
contract was being implemented between the CAA and the contractors. In
this type of contract, the contractors were not incentivized to give their best
and produce an effective and efficient REACH. Contractors prioritized the
speed and cost and compromised the objective and overall quality of the
project so that they got most out of the contract.
The lack of knowledge and leadership skills for such a complex project which
were demonstrated by David Macdonagle the head of CAA and the program
manager Samantha Van Sant, as they were more focused on the completion
of the REACH in the stipulated time to keep the project in the budgeted cost,
and even though there were facts that showed not a single test in four years
had gone flawlessly, even after that they went ahead with the REACH project.

3. Critique the statement, "Human beings, no matter how brilliant, cannot

foresee all the issues that might arise in a complex project."
A project involves various phases with different functional groups interlinked to
obtain an outcome or result. A project also spans over a duration and hence
different parties and different people.
Hence a project operation and execution from the beginning to end involves a
number of risks and uncertainties. A project may come across Financial resource
risk, human resource risk, supply risk and quality risk.
Financial risk is the risk related to the cash flows in the projects. Financial risk
matters can arise from investors or sponsors, from outsourced contractor etc.
Similarly, human resource risk might arise also. Any personnel involved in the
project might be facing issues such as health, resignation etc. Risk related to the
supply of materials can be numerous. The risk of suppliers business being
shutdown, risks during transportation, risks involving availability and much more
can be related to supply risk. The quality risk can be due to low cost, machinery
used etc.
In addition to this, operational functional uncertainties may arise due to
unaccounted political events, unfavorable weather conditions and much more. A
major uncertainty that might arise could be the clients request for a modification or
addition in their proposals that might affect the earlier work progress and so on.
Unexpected economic and market conditions in a suppliers country such as
currency uncertainties, market demand, and supply might result in further
negotiations with the supplier thereby causing delay to the project.
Thus, it is definitely impossible for human beings to foresee all the risks and
uncertainties involved in the project. It is only possible for the members of the
project team to have a contingency plan to mitigate the effects that occur during
risks. For example, if materials cannot be delivered via air freight due to
unfavorable weather conditions from a supplier, a supplier from another location
could be arranged for the work to be carried out.

4. Highlights the merits and de-merits of the "Iterative development

process". Contrast the iterative process with the conventional project
management approach.
Advantages:

With each iteration, new weaknesses could be identified

The company could design, develop and test additional features
Iterative provides more flexibility for changes
The product can be improved step by step at each stage. This means that
its defects could be identified at early stages

It is a recipe for a successful product

3

Disadvantages:

An iterative development process would take lot of time

It would cost more
Unaware of the completion time of the product

Iterative process is different from the conventional project management approach in

the following ways:

Conventional project management approach is time bound. On the other

had iterative process is not time bound as the organization may go
through several iterations for a successful product leading to delays
Conventional project management has fixed cost as opposed to iterative
process where the cost is flexible
Conventional project management is risky as compared to the iterative
process as the product is sent to the customer without any testing
Conventional project management has a low quality as it does not give
the contractor any incentive to rework on the product