The New Horizon Public Hospital Project

A Project Management Case Study

Introduction

Developed for a Project Management course, the case thereafter describes a fictious project
which derailed due to the lack of understanding of project management practices by the project
sponsors and manager.
Using the tools and skills learned during your classes, you will have to detect the
mismanagement problems that occurred and highlight their consequences. Moreover, from the
project conception to its closure and using project management best practices, you will have to design
a project management plan that would have led the project to a successful conclusion if used.
The case study is divided into two parts: the case, in which the events are mainly depicted in
their chronological order, and a questionnaire designed to help you reflect on the case and consider
the many aspects of project management before you develop your own solution.

The case
The Horizon Public Hospital

In the city of Greenport, Nowhere, JD, the Horizon Public Hospital (HPH) is an institution.
Situated in the working class area near the Industrial Port, the general hospital, built in 1955, is with
its 250 beds a key element of the community it serves. For the last twenty years, the hospital has been
administered by the For Good Health Network (FGHN), a non-profit organization managing several
healthcare facilities in the state of Nowhere, with most of its financing coming from the city and state
budgets.
At various occasions in its history, due to its growing role in the community and the evolution
of healthcare services and techniques, investments have been made to expand the hospital
infrastructures and provide new equipment. But for the past ten years the city officials have been
reluctant to unlock the budget for the greatly needed revamping of the hospital buildings and its
equipment replacement.
Despite the deteriorated state of the Horizon Public Hospital, its services are still appreciated
by the members of the Industrial Port district and the institution is cherished and loved by the
community.
The calamity

At around 2:00 pm on July 19th, 2014, a tropical depression formed at two hundred kilometres
from the coast of Nowhere. In the early hours of July 20th, the formation strengthened into a tropical
storm, which was named Odette by the meteorologists of the national observatory. The tropical storm
quickly evolved into a Category-1 hurricane with winds at over 140 km/h.
By 5:00 am on July 21st, Odette had reached Pearle Beach in Nearstate with a Category-2
intensity. The state of emergency was declared by the governors of Nearstate and by its neighbouring
states of Nowhere and Justhere, putting into action emergency response plans.
In the late afternoon Odette had reached a Category-3 intensity, the counties on its expected
path were ordered to evacuate, an evacuation helped by the deployment of the troops of the
neighbouring garrison of Tempest, Safehere. The mandatory evacuation of Greenport was ordered 40
hours before the passage of Odette which had in the meantime been rated to a Category-4 and then
a Category-5 hurricane with 273 km/h winds.
Odette made its second landfall at around 5:00 pm on July 23rd with a Category-3 intensity. As
it neared the city of Greenport, the waters around the city rose and topped the city’s levees in the
lower parts of the city. The city stadium was opened to shelter the inhabitants who had not been able
to leave the city in time.
Several flood banks gave way in the following hours, causing major flooding in the lower parts
of the city, particularly in the industrial port district. Odette continued its path for hours, ravaging the
coast of Justhere, it was downgraded to a tropical depression in the late afternoon of July 24th.

In the middle of the hurricane

When the mandatory evacuation of Greenport was ordered, the Horizon Public Hospital had
already been emptied of most of its patients and personnel, who had been dispatched to hospitals in
the inland states of Safehere and Nowind. School and private buses had to be requisitioned by city and
state officials for the emergency transfer.
When the flood banks started breaching, water had already flooded the basement levels of
the hospital and the high winds had broken most of the windows. The personnel that had stayed
behind took shelter in the higher storeys of the building and had to wait two days to be evacuated
after the weather had cleared.
Unfortunately, the HPH had suffered catastrophic damages as most of the infrastructures and
houses in the industrial district. The whole district stayed under a meter or so of water for almost a
week before it started declining. Long enough to damp the walls of the hospital and make most of its
equipment completely unusable.
The situation of the Horizon Public Hospital and other healthcare facilities in the city forced
the authorities to sign collaboration agreements with the hospitals in the neighbouring cities and
states, and erect field hospitals around the city, to ensure access to care to the inhabitants, while long
term solutions would be developed.
The Rebirth Program

The days and weeks after the hurricane had hit the city of Greenport, the attention was
focused on rescuing people trapped by the flooding, restoring power, and limiting further damage and
casualties. But when the water started receding and people could go back to their homes and assess
the damage, discussions were all about rebuilding.
On the political level, just hours after the flooding of the industrial port district, state and city
representatives were already promising exceptional budgets for the reconstruction.
One week after the hurricane, when there were still flooded streets and thousands of people
without shelter, a first council to design the city’s rebuilding was already organized. To preside this
meeting was Allen K. Coles, Greenport’s mayor. With this first council, Mayor Coles, who was blamed
by the media and the public for the breached flood banks and the flooding, was looking for public
support by showing that he was the one who was going to rebuild the city.
Three weeks and a few councils later, Allen K. Coles gathered local and national medias to
unveil the main lines of the Rebirth Program. Thanks to the Rebirth Program, new public facilities
would be built and integrated into new neighbourhoods to replace the homes and infrastructures that
had been destroyed or damaged.
The structure behind the Rebirth Program was created to facilitate the access to funding and
take care of land acquisition from public or private owners for the various projects it encompassed.
The funds of the Rebirth Program were coming from the city of Greenport, the state of Nowhere and
local private investors and would be dispatched to the different projects after their approval by the
city council.
One of the main news of the mayor’s presentation was the construction of a brand new general
hospital with state-of-the-art medical equipment and infrastructures, to replace the Horizon Public
Hospital which was deemed not salvageable. The new hospital was to be the symbol of the city’s
rebirth and thus the project was conveniently named Project New Horizon Public Hospital (NHPH).
The mayor gathered his counsellors, the morning after, to make decisions on more practical
aspects of the city rebuilding. After a few hours of discussion, they chose James Keith to work on the
early concepts and oversee the whole NHPH Project for the mayor’s office, as project sponsor.
James Keith, born and raised in the industrial port district, had benefited of a positive public
opinion since his role in organizing the evacuation and rescue during the hurricane. Mayor Coles
stressed to James Keith that the New Horizon had to be a priority for him from day one, that this was
the symbol the city needed to go forward.

The concepts

Keith quickly assembled around him a cabinet to begin the early works. One of his long-time
friend and business associates, Samuel Hint quickly took a role of right-hand man for James Keith, using
his network in the construction sector of Greenport to make an early estimation of the expected cost
of the project.
James Keith also invited to the table Dr. Jane Fry, chairwoman of the board of the now
decommissioned Horizon Public Hospital and vice-president of the For Good Health Network, to act as
a consultant for the design of the new facilities.
During one of Keith’s meeting with the mayor, a debate emerged when one of Coles’
counsellor, Craig Lewis, suggested to build the new hospital at the exact location of the old one. James
Keith stated that it was a solution that they were exploring but that it was still too early in the feasibility
study to say if that was indeed a viable option. But Mayor Coles, seduced by the idea of erasing any
memory of the Horizon Public Hospital, insisted that James Keith’s cabinet should focus on exploring
this possibility. Keith, irritated, put an end to the debate by stating that this option would be further
explored but that due to the location there would probably be issues expensive to resolve.
A few weeks later, to gain time on the project start-up, James Keith proposed Samuel Hint as
project manager, putting forward that Hint had a good knowledge of the project and that his previous
real estate endeavours were a proof of his organization and management skills.
During the same meeting, Keith presented a first rough design, part of the feasibility study
currently in progress, for a hospital just outside the district, that would approximately take 48 months
to build for an estimated cost of 400 million $. Mayor Coles first congratulated Keith on presenting a
first concept in such a short time, but he also made clear that he was disappointed that Keith had
pursued a different solution than the one Coles favoured. Keith told the assembly that the design of
the hospital wanted by Coles would be presented during the next meeting.
Two weeks after his meeting with Keith and without having seen the other design or the
conclusions of the feasibility study, the mayor took the initiative to announce to the press that the
NHPH Project was well underway and that he could unveil a few details. He announced that the
hospital was to be built on the same location as the old Horizon Public Hospital and that he planned to
celebrate its opening in four and half years from now at the latest. The next morning it was revealed
in a local newspaper that Samuel Hint, the well-known real estate mogul, was to manage the project.

The planning

Quickly after the mayor’s announcement, Samuel Hint, confident in his skills and network, built
a team of trusted partners. Dr. Jane Fry, with her experience in administering the HPH, would officially
take charge of the Design Department, continuing working with an external contractor to design the
future hospital in detail. For the financial side, Samuel Hint brought in Darnell Kearney, who had
overseen the finances of Hint’s recent real estate projects. Hint also decided that the best way to
proceed was to let his associates manage their staff on their own as he had himself done.
Dr. Jane Fry had to begin the work on the detailed design for the old hospital site from scratch.
Indeed, Keith had decided to focus the feasibility study on the site at the border of the district after a
preparatory study had shown that it was probably the least expensive solution. Keith had not relayed
the demand of the mayor’s office to explore other options more thoroughly.
 After the feasibility study that had cost 900 000 $ in consultancy fees, it had been decided to
continue with HW advisors, a specialized consultancy firm which had helped with the study, for the
final design as their knowledge of the project was going to reduce the time required for the design.
After a few weeks of negotiation, they had finally agreed upon a cost plus contract.
The design was based, as the feasibility study and as commanded by the mayor’s office, on a
four-year-old study. This study had been requested at the time by the city to evaluate the need in
health care in the city in case of a renovation of the old HPH. The study suggested that to meet the
need in health services for the next twenty years, the Horizon Public Hospital would need 300
overnight beds and 85 day care beds. It had been decided by the mayor’s office to use this study to
gain time on the project conception.
As the NHPH project was part of the Rebirth Program, it was also decided to build a 150-place
exterior carpark in addition to the 600-place covered carpark, to meet partly the needs of future shops
and offices in the neighbourhood.
A few weeks after Samuel Hint had been appointed as project manager, an unexpected
announcement was made by the Mayor’s office that James Keith was stepping down as project sponsor
and that Craig Lewis was to take his place. The mayor’s office invoked health problems, but local
medias suggested that Keith had fallen out of favour in the mayor’s office due to diverging opinions.
Darnell Kearney, in charge of the financial part, was tasked by Hint to quickly put in place a
cash flow chart. They indeed both knew from experience that bureaucracy takes time and that if they
were to meet Hint’s schedule, they would need to submit their cash flow chart to the council as soon
as possible for it to be approved in time.
Kearney had not yet formed his staff when he was tasked with the cash flow design, he thus
worked on it mainly on his own. He based his cash flow on the figures of the discarded design because
he had no access to Dr. Jane Fry’s work and because he guessed that the new design would be similar
enough to the old one so that the cash flow would fit.
It took Samuel Hint almost six weeks to have his first appointment with Craig Lewis. During the
meeting, Lewis stressed that the mayor wanted the Hospital to be operational by the end of his second
term in 4 years and a half. Samuel Hint knew that this time constraint was short for this type of project,
but not impossible if they acted quickly. He explained his opinion to the politician and that if they were
to meet the deadline, they would need to start the demolition work as soon as possible. Lewis offered
to push for a faster issuance of the demolition permits.
Two weeks later, Craig Lewis had delivered them: the demolition permits for the old hospital
were on Samuel Hint’s desk.
Dr. Jane Fry made good progress on the new design, even if there were still details to work
out, they had a pretty good estimate of the overall implementation cost: 475 million $. The increase in
cost compared to the first estimation was due to the demolition costs but also the compared lack of
space, which forced Dr. Fry to integrate more floors in certain parts of the facility than previously
designed.
The design & demolition work

Thanks to Craig Lewis’ work and Samuel Hint’s contacts, the demolition work of the Horizon
Public Hospital started early and progressed quickly. The old Hospital torn down was taken care of by
Handy Andy, a local company, for a fixed fee of 5 Million $.
Meanwhile, the design that was to be voted by the city council had to go back to the drawing
board. A new report, requested by the state of Nowhere, concluded that the hurricane had stricken
such a blow at the Health care system of Greenport that the current design was deemed not suitable.
Moreover, the social impact of the disaster was expected to be felt for decades and to increase the
need for health care services.
This meant that the New Horizon Public Hospital had to integrate more services and beds than
previously thought, to be in line with the new reality. The modifications needed were the following:
50 more overnight beds, 35 new day care beds and the addition of a whole new burn care facility. The
integration of the new requirements took 3 months to the design team. The modifications resulted in
the need of 20% more floor area and increased the cost to 580 million $. The expected duration of the
project was also extended from 48 to 60 months.
As the new version of the design had taken so long, Kearney decided to gain time and
instructed his team to base the new cash flow chart on the one he had made a few months back and
to add the budget increase to the cash flow of year 5. The new design and related Cash Flow Chart
were quickly accepted by the city council even if there were some protests by the opposition over the
increased costs of the construction compared to the 400 million $ first mentioned.
To cut on expenses, the contract with the consultancy firm was limited to the production of
plans, thus the monitoring of the project and the procurement management were taken care of
internally. Hint and Dr. Fry proceeded to draft the documentation needed for the publication of a
public request for tender to find the contractors that would carry out the work.
The scope of the work was as follows: construction of all the infrastructures, the equipment in
furniture and medical appliances of the facilities and the development of the hospital IT systems. After
a first round of selection, three offers retained the attention:
 Unity Workers and Quality Services, both local companies, had made a joint offer. Unity Workers
would oversee the infrastructure development, while Quality Services would take care of
equipping the facilities with furniture, medical appliances, and develop the IT systems. They
proposed separate contracts both costs plus fixed fee: Unity Workers, a contract estimated at 460
million $ and Quality Services with one estimated at 120 million $.
 Integra Design, a foreign firm specialized in the development of infrastructures in the health sector
with experience in complex hospital projects, proposed to develop the buildings but also to work
with its suppliers and contractors for the equipment of the building and the IT systems. For a fixed
price of 600 million $.
 Scotty’s Builders, also a local construction company, proposed to develop the infrastructures, but
specified that they would not take care of equipping the facilities in medical material or any
furniture and that they would not develop the IT systems. They offered their services for a fixed
price of 480 million $.
 The study of the remaining offers had to be delayed for a few weeks because Craig Lewis, who
insisted on being present, was unavailable due to a busy schedule. When the meeting finally took
place, Craig Lewis explained that from the Mayor’s point of view there was a need to bring the cost of
the whole affair down and that the offer of Unity Workers and Quality Services, both local companies
which had already worked for the city, was the only one they should consider. After Lewis’
intervention, the offer by Integra Design, which was deemed too costly, was quickly discarded and
Scotty’s Builders’ offer soon followed as it would have forced to find a new contractor for the
equipment and IT implementation.
Samuel Hint instructed the demolition company, Handy Andy, to clear the extended area
needed for the new design. This new demolition contract was worth 800 000$. But on the following
Monday morning, Hint received a call from the demolition company’s boss, Andy Bull, he was facing
the resistance of inhabitants of the neighbourhood, who argued that the demolition of their homes
was unlawful.
It was quickly concluded that the legal documents for the demolition of those properties were
not in order and that they required a completely different procedure from the one for the hospital
design. Those papers had been taken care of by Craig Lewis’ office at the time of the old hospital site
demolition, but he had not intervened this time.
Above from delaying the demolition for a couple of months, this incident had also a negative
impact on the opinion of the community over the project. The concerned citizens filled a lawsuit
against the project for the demolition of their homes. In addition, an association of citizens was created
to organize the many voices that were rising against the Hospital project, but also against the Rebirth
Program that they saw as a disguised mean to push the poorest out of the neighbourhood.

The construction

After the delay due to the change in design and the one due to the legal dispute, the project
was already five months behind Hint’s schedule when the soil engineers from the Unity Workers
company discovered that the flooding had eroded the ground and there would probably be a need for
reinforced foundations, the construction was thus stopped for further investigation.
A month and a half later, it was concluded that the ground had indeed been eroded in part but
that this would not impact the solidity of the foundations and that the work could resume.
Two years into the project, everything seemed to go finally smoothly for Hint and his team.
Quality Services in charge of the Hospital equipment and IT systems were regularly sending reports
confirming their progress and the Unity Workers company had its teams and subcontractors working
round the clock. But everything stopped on the worksite when one morning no worker or sub-
contractor came to work. Samuel Hint quickly learned that they had not been paid for a few weeks and
that the UW company was going bankrupt.
When asked, Kearney confirmed that even if they had had a problem of cash flow a few months
back, they had always managed to pay the Unity Workers company and they had just transferred an
advance to launch the construction of the covered carpark.
 This put the whole worksite to a standstill, but it also forced Kearney to negotiate with Quality
Services, because every day of delay on the worksite was a day of delay for the Quality services’ first
deliveries, as there was nowhere to store the equipment.
To resolve the solution as fast as possible, Hint took the initiative to contact the two companies
that had answered the public tender, Integra Design and Scotty’s Builders. Integra Design quickly
answered that due to another hospital project, they did not have the necessary resources to make an
offer. The Scotty’s Builders company on the other hand was able to answer the call.
Between the period of uncertainty, the search for a new contractor and the time needed to
organize the work with the new teams and the suppliers, it took almost a year for the worksite to come
back to life and two years to reach the expected productivity. In the meantime, some infrastructures
and worksite equipment were damaged because it took almost 3 months before a plan was put into
motion to preserve the worksite. All the damaged structures and equipment had to be replaced or
repaired later.

The staffing

From the project conception, it was known that the New Horizon Public Hospital was going, in
a spirit of continuity, to be managed by the For Good Health Network.
Dr Jane Fry proposed early in the project one of her protegees, Shanna Pendergrass, for the
management of the hospital staffing. Pendergrass was at the time a manager in the HR Department
for the Charity Hospital in the state of Nowind, a hospital part of the FGH Network.
Two years before the planned opening, Samuel Hint decided it was time to start the staffing
of the future hospital. Shanna Pendergrass was interviewed and quickly put in charge of recruiting the
staff for the hospital. But the task quickly proved more difficult than she anticipated. Since there had
not been any facilities for doctors and specialized nurses to practice their craft in Greenport for more
than four years, most of them had since followed their patients outside the city or outside the state.
During the following two years, she tried to convince the city officials to offer financial
incentives to try and bring the health care professionals back to the city. But as the hospital project
was already over budget and criticized in the press, the politicians had cold feet on the subject. Despite
her hard work, Pendergrass only managed to enrol eighty percent of the required staff, lacking
personnel particularly for the most specialized positions.

The hospital commissioning

Six years and a half after the project had been approved and launched by the city council, the
opening was finally approaching. A slight delay had occurred two months before the scheduled
opening due to a paint delivery problem. Nonetheless, Hint was confident that the building would be
finished in time for the inauguration date. An inauguration that was to be conducted by the successor
of Mayor Coles, Arthur Bell.
 Just after his election, Arthur Bell had reluctantly campaigned for the city council to approve a
budget increase to complete the project. Abandoning the project was unthinkable even for him, who
had been the face of the opposition during Allen K. Coles’ mandate.
To compensate the delay due to the delivery problem, it was decided to reduce of one week
the already short four-week “dry run period” scheduled to get the staff acquainted with the facilities.
The staff complained about the lack of time to train all the teams and feared that several of them
would have to get familiar with the facilities while treating patients.
None of it happened as five weeks before the scheduled opening, the state health authority
announced that they were not delivering the permits due to a multitude of defects detected during an
inspection. Those defects went from faulty lightning systems and substandard paint for healthcare
facilities to missing documentation on certain medical appliances. A few days after this announcement,
a video leaked in the press showing, among other problems, hospital beds too large to pass through
bedroom doors and television screens fixed on walls with no electrical outlet near to plug them in.
After this fiasco, Mayor Bell halted all work on the facility to have an independent auditor,
Better Be Good, assess the situation and an investigation was launched for mismanagement against
Samuel Hint, Mayor Coles, and Craig Lewis.
After a month, Better Be Good, in collaboration with the health authorities, had designed a
plan to open the New Horizon Public Hospital in six months. This plan required additional investments
to resolve the most pressing defects that were preventing the opening. In a second phase, other
investments would have to be made to redesign complete sections of the hospital to comply with
regulations on risk of flooding, regulations that were enacted four years earlier and that all public
infrastructures had to comply with now.
Six months later, the Cursed Hospital, as named by the local media, finally opened. In the
meantime, the medical staff, who had the opportunity to practice in the facilities for a few months,
had to change some of its procedures due to certain IT systems not being adapted to the FGH Network
standard procedures. Also, a lot of patients, who were supposed to be transferred from other hospitals
after the NHPH opening, refused to move, stating that they were not confident in the management of
the hospital and that they feared that the care would be of poor quality.

The post-project appraisal

The report of the commission based mostly on the findings of the BBG auditor was
unequivocal. Between the costly delays, the revisions to comply to regulations and sector standards,
the replacement of more than half the beds, the lawsuits and the compensations to the hospitals which
took in charge part of Greenport’s patients, the project is expected to have in the end an overall cost
of 865 million $ without accounting for the impact on the hospital’s reputation and on the confidence
in the capacity of the city’s officials.
In its report the commission also pointed out the lack of documentation over the different
meetings and decisions during the project. This and the poor storage and classification of the available
documents made the work of the investigators and auditors even more difficult.
Exercise

The NHPH Project derailed due to many bad choices and practices from the people in charge.
Your objectives are to highlight the management mistakes made during the project and to explain how
you would have run this project from the beginning.
The following questionnaire goes over certain knowledge areas of project management and is
designed to get you acquainted with the case, and make you reflect on the various facets of the project.
It should not be used as a framework for your resolution of the case, but you are advised to try and
answer those questions, to grasp better the case.

The questionnaire

 What were the objectives behind the project? Do you think the project management was aligned
with those objectives?
 Why identifying milestones at project conception can prove useful later? What could have been
the project milestones?
 The scope of the project has changed at various occasions during the project, what are the risks
when managing the scope in such a way?
 The project manager and sponsors opted for a big bang opening, what are the advantages and
disadvantages of this approach and are there alternatives?
 How did the project team deal with the time constraint? What could have been done to deal with
it better?
 How did they manage the individuals and organizations impacted and concerned by the project?
What are the best practices and tools they could have implemented to do a better job with it?
 What do you think of the process used by Darnell Kearney to create the cash flow chart?
 What happened during the project so that there were so many defects discovered by the health
authorities just a few weeks before the opening?
 It took three months before a protection was installed for the equipment and infrastructures after
the bankruptcy of Unity Workers, could they have done a better job, how?
 In the scope of the project was included the staffing of the facilities, how did Samuel Hint and his
team manage it? If it had been decided to exclude the staffing from the scope, what would have
changed for the project?
 How do you explain the differences between the offers made by the contractors during the public
request for tender, could the management have done something to limit the disparities?
 The source selection decision-making seemed to be focused on a specific aspect, what was it and
what do you think about it?
 How do you explain that the Health Authorities criterions were not met by the hospital and that it
was only discovered when the health authorities came for their inspection?