BAHRIA UNIVERSITY LAHORE CAMPUS

Project Monitoring, Evaluation and Control Management

Q.1) Should Jerry go to the general manager?

Ans: It is more prudent that Jerry go to the General Manager for the following reasons:

1. Being the project manager for this project, the main onus for the success of this
project is on Jerry. In his opinion if the key people are critical for the success of
the project, and if laying them off or reassigning them to other projects can
jeopardize the project success, then he should take up this matter with the
General Manager.
2. Secondly, on the face value, by making the management reserves look like
excess profit and closing out the project it seems that Frank might be putting
his personal interests above the interest of the project and the company. This
lack of interest is also cause of concern for Jerry, and could convince him to
take up this matter with the Project Manager.
3. Thirdly the Scott project was of particular strategic nature to the company which
offered tremendous opportunities for follow-on work over the next several
years. Any potential actions of Jerry or Frank could affect the outcome of this
project and thus the business growth of the company. Therefore, it is possibly
a wise choice to take up this matter with the General Manager of the company
and inform him about the importance of this project and the value of key people
to this project.

Q.2) Should the key people be supported on overhead?

Ans. The decision as to whether the key people should be supported on overhead or
not depends on several factors.

The first factor that needs to be considered is the possibility if these people can be re-
appointed to the same project after the bathtub period ends.

Secondly it is possible that the other projects that these people are assigned to are
even more critical in nature than the Scott project. It is thus possible that the project
managers of those project may not be willing to let these people go, to prevent
jeopardizing the success of their projects. In such case the company may need to find
people with the same or better skill set to replace the transferred key personnel.
However, it is also possible that putting these people on overheads means keeping
them idle, rather utilizing them on other projects and expending funds that might be
better utilized elsewhere.

Q.3) How do you prevent this situation from recurring on all yearly follow-on
contracts?

Ans. The best way to avoid a recurring of this kind of situation is to prepare a risk
mitigation plan for such an eventuality. During the planning phase for the subsequent
year-on-year contracts, the probability of occurrence of such a risk and its potential
impact on financial health of the project needs to be considered by the project manager
and his team. Accordingly, some contingency funds should be allocated for use in
bathtub period.

Secondly Park Industries should think about the kind of contract that it negotiates with
Scott Corporation about the year-on-year work. Certain clauses can be incorporated
in the subsequent contracts to safeguard the executing company interests and clarify
the Client’s responsibilities regarding informing the executing company about any
potential factors that might affect the project’s execution or cash-flows.

Thirdly it is possible that the Scott Industries negotiate all subsequent year-on-year
contracts with Park Industries with a foreview that such a bathtub period can occur
again, and accordingly requisition additional funds for such a period from the client.