PROJ6000 – PRINCIPLES OF PROJECT MANAGEMENT

PROJECT CHARTER PLAN

MERCK INNOVATION CENTER CASE STUDY

LEANDRO CARVALHO LUNA

05/05/2021

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PROJECT OVERVIEW

This project charter aims to resolve agency issues in client-contractor relationships in The

Merck Innovation Centre (MIC). The project charter provides the Project Manager the

official right to apply all available project resources, such as a summary of the project and

information about the stakeholders (Kukhnavets, 2020). The project charter will emphasize

the purpose and objectives of the project. The requirements demanded for the project will

be listed in the charter to define the requirement needed clearly. The risks that might affect

the project will be emphasized, and a possible solution to the risks will be discussed. The

schedule of the project will be defined in the project charter, as well as the time for the

project completion. The Center will be built according to the Platinum Standard of the

international LEED® Green Building.

EXECUTIVE SUMMARY

Merck is a science and technology company in healthcare, life science and performance

materials founded in 1668. The company employs approximately 52,000 people in 66

countries (Unterhitzenberger & Möller, 2020). The Merck Innovation Center (MIC) is

based in Darmstadt, Germany.

VISION

The project’s vision is to build a creative and agile environment where talented people can

create new technologies for the business of tomorrow. With its unique, open architecture,

the project will change the company’s image. The building will be an innovative science

and technology company where employees and visitors can exchange their ideas and

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collaborate across disciplines and functions. In order to set strategic directions, Merck

analyzes trends, technologies, and fields that will gain relevance in the future. The ideal

project team would be a team founded on trust, self-organization, and a focus on the

common challenge of the organization. In addition, Merck’s goal is to engage people,

create awareness, and implement a coaching culture.

BACKGROUND TO THE PROJECT

The project will be scheduled to start in 2016 and finish in 2018. The year of completion is

special because it is the year that the company celebrates its 350th anniversary.

According to the project, the building's architecture will clearly show the processes and

working methods of the people, which means that the areas are interconnected via

airspaces. The project areas also accommodate the workspaces for the international

research and innovation teams. A walkway creates a connection both for pedestrians and

the architecture to the employee restaurant to the West.

The engagement of concrete and steel works focused on many aspects such as design

(architectural) for the complex "concrete-cum-steel structure," which gives the spotlight to

the management team.

The Center will be built according to the Platinum Standard of the international LEED®

Green Building.

PROJECT PURPOSE
The MIC project will generate new technologies and businesses that would go beyond

Merck's previous activity. It also would be an instrument transforming the process-oriented

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culture of Merck into a culture of innovation by providing space for rethinking, testing, and

actively promoting ideas.

The Innovation Center will connect external startups and employees, companies, and

visionaries worldwide to create groundbreaking innovations.

The success of a project can be defined from the project's perspective, depending on the

interests of the stakeholder. (Bannerman, 2008).

To ensure the success of this project, the following steps were established in the listed

sequence:

 Developing plans/design

 Identifying stakeholder and management commitment

 Defining the scope in goals and objectives

 Setting blueprints

 Consolidating the project team and financial resources

 Managing communication

 Setting up internal control processes

 Actualizing the project

PROJECT OBJECTIVES
The objectives of the project are listed below:
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  Reduction in operating costs

 Enhanced customer service

 Enhance staff efficiencies

 Improve the organization’s image.

The project's success will be defined by the degree to which Merck's success metrics are

met. Once the production phase starts, it is necessary to set measurable criteria.

CONSTRAINTS
The following constraints pertain to the MIC project:

 The project manager needs to finish all the overall development related tasks under
the budget, the extra cost is excluded under the project.

 The company operates in a highly fragmented environment where risk allocation

and rewards are mismatched.

 Low labor productivity is expected to affect timelines and project quality.

 Lack of skills also indicates to hamper the growth of the industry meaning that the
company is also subjected to the effects.

RISKS
The following risks for the MIC project have been identified:

 Existence of conflicts in client-contractor relationships

 Indecisiveness by Mark and Steven

 Lack of sufficient of project knowledge with the contractors joining the bidding
process

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  Lack of understanding of the required materials provided by incoming bidders

 Lack of familiarization with the project requirements

LIMITATIONS
The following limitations refer to the MIC project:

 Lack of management support

 Financial limitations

 Poor legal environments

 Political climate 

LEADERSHIP STRUCTURE

Team role Responsibilities

Leading and managing the project team.
Assigning tasks to project team members.
Providing regular updates to upper management.

Project Manager Documenting the detailed Project Plan and Quality Plan.
Developing a work breakdown structure (WBS).
Reporting and escalating project risks and issues.
Establishing a project schedule and determine each phase.
Managing deliverables according to the plan
Establishing protocols, meetings, collaborations, and methodology.
Defining the vision and high level objectives for the project.
Watching the schedule and making sure major milestones are hit.
Project Sponsor Approving the requirements, timetable, resources and budget
Ensuring high-cost items are planned or contracted out to stay
within the budget.
Compliance with inspections, testing, specifications, and quality.

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 Ensuring job site is safe and all work is being performed correctly.
Documenting unknowns or unexpected delays.
Tracking daily activities among the project schedule

Construction Manager Overseeing field workers and onsite subcontractors.

Monitoring job site quality requirements.
Determining methods, means, and constructability.
Making sure design details are built properly.
Hiring and firing field crews as needed.
Tracking payroll for field workers.
Maintaining compliance with Federal, State and Local

Procurement Manager requirements.

Setting up new field crews.
Tracking the payment of subcontractors, vendors, and consultants.
Filing all key project documents.

RISKS & MITIGATION

Risk management is essential to ensure the project’s success because the project manager

can identify the project’s strengths, weaknesses, opportunities, and threats (Duggan, 2019).

Risk is categorized into different types, which are listed below:

External: Externally, a project needs help from vendors. This dependence is crucial in the

execution of a project but brings a high degree of risk.

Execution:  Originate from lack of organizational support; thus, people in the organization

will utilize the resources in some better field or project.

Technology: Technology has been increasing. For this reason, sometimes new projects

might need the implementation of the latest technology to align with market demands. This

situation gives rise to risk factors.

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Regulatory: To maintain a healthy relationship with the local authorities or the state

government, companies need to follow the rules and regulations set by these authorities. If

a project skips any strict rules, then it causes a higher risk factor.

Stakeholder: The risk factor arises when the stakeholders, such as customers, regulators,

investors, managers, and suppliers, do not have the competence to execute a project with

sound judgment.

COMMUNICATIONS MANAGEMENT PLAN

Below outlines the standard baseline communications methodology for this project.

Additional methods, such as workshops and community meetings, will be determined

during the project's development.

Communication
Description Frequency Owner
Type

News signage Update park users on the

boards and posters As needed Project Manager
project’s progress

Project email Update stakeholders on the

update As needed Project Manager
project’s progress

Face-to-face
meetings and Update key stakeholders on
As needed Project Manager
consultation the project’s progress

Letter or flyer Promote specific consultation At milestone

notification Project Manager
stage stages
Microsoft Teams Keep Microsoft Teams up to
platform date as the single source of As needed Project Manager
information on the project
Social media posts
Promote specific consultation At milestone
and targeted Project Manager
stage stages
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STAKEHOLDER ENGAGEMENT
Stakeholder engagement involves communicating with the stakeholders and frequently

includes consultation, negotiation, and relationship building. The project manager and the

project team can define the required communications based on stakeholder analysis

(Rajkumar, 2010).

The stakeholders in Merck’s project are: project manager, team members, internal

customers, suppliers, contractors, external customers, and the government.

Each stakeholder type comes with its particularities. How to improve stakeholder

interaction is described below.

Top management: planning and setting milestones, reporting systems while enhancing

communication

Team members: having one-on-one individual meetings, managing tasks transparently,

including them in project planning, encouraging them to participate fully, and giving

feedback.

Customers: creating a detailed project scope statement to determine the requirements and

outcomes of the project, clearly communicating about their outcomes, expectations, and

any change policies, and developing a project plan which includes check-in points,

milestones, and so on.

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Contractors and suppliers: communicating clearly with independent contractors, outlining

all the terms in an agreement, and integrating them into the team.

Government: Provides regulation of the industry environments and necessary licensing.

Implementing these regulations facilitates the activities within a project.

IMPLEMENTATION PLAN
A project management plan must be implemented to ensure the success of a project because

it guides the execution and monitoring phases (Malsam, 2019).

APPROACH
The following table describes the approach to be taken towards implementation of this

project.

Phase Overall Approach

After this Project Charter document has been approved, the next

Initiation step is the recruitment of the project team by appointing the project
board, engineering/architecture team members, and construction
team members.
Once the team appointed and the Project Office established, the next
step is begin the detailed planning phase of the project. It will be
created a suite of project planning documentation to specify the
Planning detailed tasks, finances, resources, and suppliers needed to
undertake this project. Moreover, plans will be created for project
communications, quality review, risk management and customer
acceptance of the deliverables.
Equipment and materials will be delivered to the work site. The

Execution project team will conduct the work defined in the plan and make
adjustments when the project factors changed. Hiring and training
labors.
Closure Turning over the newly constructed plant to the operations team of

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 the client. A list of a remaining construction items that was
developed and completed. The accounting books reconciled and
closed, final reports written and distributed.

PROJECT MANAGER
Leandro is named Project Manager for the duration of the Innovation Center and Employee

Restaurant Project. Leandro is a qualified architect who worked on construction projects as

an independent architect Leandro's responsibility is to manage all project tasks, scheduling,

and communication regarding the Innovation Center and Employee Restaurant project. His

team, consisting of Peter, the architect's project leader, John, the structural engineer, Paul,

the civil engineer, Frank, Merck's procurement manager, and Lilian, the external specialist

from the project management consultancy Drees & Sommer. Leandro is authorized to

approve all budget expenditures up to and including the allocated budget amounts. Any

additional funding must be requested through the Project Sponsors, Steven and Mark.

Leandro will provide weekly updates to the Project Sponsors.

Reference List

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Bannerman, P. L. (2008). Defining project success: a multilevel framework. Paper
presented at PMI® Research Conference: Defining the Future of Project
Management, Warsaw, Poland. Newtown Square, PA: Project Management
Institute. Retrieved from https://www.pmi.org/learning/library/defining-project-
success-multilevel-framework-7096

Duggan, T. (2019). Why is risk management important to project success? Retrieved from
https://smallbusiness.chron.com/risk-management-important-project-success-
56920.html

Kukhnavets, P. (2020). What is the importance of project integration management?

Retrieved from https://hygger.io/blog/the-role-of-project-integration-management/

Malsam, W. (2019). What is an implementation plan & how do I create one? Retrieved
from https://www.projectmanager.com/blog/implementation-plan

Project Management Institute. (2017). A guide to the project management body of

knowledge (pmbok guide) (Sixth, Ser. Pmbok guide). Project Management Institute.
Retrieved from https://ebookcentral-proquest-
com.ezproxy.laureate.net.au/lib/think/detail.action?docID=5180849

Rajkumar, S. (2010). Art of communication in project management. Paper presented at

PMI® Research Conference: Defining the Future of Project Management,
Washington, DC. Newtown Square, PA: Project Management Institute. Retrieved
from https://www.pmi.org/learning/library/effective-communication-better-project-
management-6480

Unterhitzenberger, C., & Möller, D. (2020). Resolving agency issues in client – contractor
relationships: The Merck Innovation Center, (2018), 1–2. Retrieved from
https://www.pmi.org/-/media/pmi/documents/public/pdf/academics/call-for-
proposal/merck-agency-theory-instructional-case.pdf?v=88ca6b10-9d26-4907-
9cd9-ed37bc01d330

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