The Work Begins

On the first working day in January 1983, a meeting was held with the three vice presidents and Dr. Reddy to discuss the support needed for the project. (West was not in attendance at this meeting, although all participants had a copy of his memo.)

Reddy: "I think we're heading for trouble in accepting this project. I've worked with Peters Company previously on R&D efforts, and they're tough to get along with. West is a good man, but I would never have assigned him as the project leader. His expertise is in managing internal rather than external projects. But, no matter what happens, I'll support West the best I can."

Royce: "You're too pessimistic. You have good people in your group and I'm sure you'll be able to give him the support he needs. I'll try to look in on the project every so often. West will still be reporting to you for this project. Try not to burden him too much with other work. This project is important to the company."

West spent the first few days after vacation soliciting the support that he needed from the other line groups. Many of the other groups were upset that they had not been informed earlier and were unsure as to what support they could provide. West met with Reddy to discuss the final schedules.

Reddy: "Your schedules look pretty good, Dan. I think you have a good grasp on the problem. You won't need very much help from me. I have a lot of work to do on other activities, so I'm just going to be in the background on this project. Just drop me a note every once in a while telling me what's going on. I don't need anything formal. Just a paragraph or two will suffice."

By the end of the third week, all of the raw materials had been purchased, and initial formulations and testing were ready to begin. In addition, the contract was ready for signature. The contract contained a clause specifying that Peters Company had the right to send an in-house representative into Corwin Corporation for the duration of the project. Peters Company informed Corwin that Patrick Ray would be the in-house representative, reporting to Delia, and would assume his responsibilities on or about February 15.

By the time Pat Ray appeared at Corwin Corporation, West had completed the first three tests. The results were not what was expected, but gave promise that Corwin was heading in the right direction. Pat Ray's interpretation of the tests was completely opposite to that of West. Ray thought that Corwin was "way off base," and redirection was needed.

Ray: "Look, Dan! We have only six months to do this effort and we shouldn't waste our time on marginally acceptable data. These are the next five tests I'd like to see performed."

West: "Let me look over your request and review it with my people. That will take a couple of days, and, in the meanwhile, I'm going to run the other two tests as planned."

Ray's arrogant attitude bothered West. However, West decided that the project was too important to "knock heads" with Ray and simply decided to cater to Ray the best he could. This was not exactly the working relationship that West expected to have with the in-house representative.

West reviewed the test data and the new test matrix with engineering personnel, who felt that the test data were inconclusive as yet and preferred to withhold their opinion until the results of the fourth and fifth tests were made available. Although this displeased Ray, he agreed to wait a few more days if it meant getting Corwin Corporation on the right track.

The fourth and fifth tests appeared to be marginally acceptable just as the first three were. Corwin's engineering people analyzed the data and made their recommendations.

West: "Pat, my people feel that we're going in the right direction and that our path has greater promise than your test matrix."

Ray: "As long as we're paying the bills, we're going to have a say in what tests are conducted. Your proposal stated that we would work together in developing the other test conditions. Let's go with my test matrix. I've already reported back to my boss that the first five tests were failures and that we're changing the direction of the project."

West: "I've already purchased $30,000 worth of raw materials. Your matrix uses other materials and will require additional expenditures of $12,000."

Ray: "That's your problem. Perhaps you shouldn't have purchased all of the raw materials until we agreed on the complete test matrix."

During the month of February, West conducted fifteen tests, all under Ray's direction. The tests were scattered over such a wide range that no valid conclusions could be drawn. Ray continued sending reports back to Delia confirming that Corwin was not producing beneficial results and there was no indication that the situation would reverse itself. Delia ordered Ray to take any steps necessary to ensure a successful completion of the project.

Ray and West met again as they had done for each of the past forty-five days to discuss the status and direction of the project.

Ray: "Dan, my boss is putting tremendous pressure on me for results, and thus far I've given him nothing. I'm up for promotion in a couple of months and I can't let this project stand in my way. It's time to completely redirect the project."

West: "Your redirection of the activities is playing havoc with my scheduling. I have people in other departments who just cannot commit to this continual rescheduling. They blame me for not communicating with them when, in fact, I'm embarrassed to."

Ray: "Everybody has their problems. We'll get this problem solved. I spent this morning working with some of your lab people in designing the next fifteen tests. Here are the test conditions."

West: "I certainly would have liked to be involved with this. After all, I thought I was the project manager. Shouldn't I have been at the meeting?"

Ray: "Look, Dan! I really like you, but I'm not sure that you can handle this project. We need some good results immediately, or my neck will be stuck out for the next four months. I don't want that. Just have your lab personnel start on these tests, and we'll get along fine. Also, I'm planning on spending a great deal of time in your lab area. I want to observe the testing personally and talk to your lab personnel."

West: "We've already conducted twenty tests, and you're scheduling another fifteen tests. I priced out only thirty tests in the proposal. We're heading for a cost-overrun condition."

Ray: "Our contract is a firm-fixed-price effort. Therefore, the cost overrun is your problem."

West met with Dr. Reddy to discuss the new direction of the project and potential cost overruns. West brought along a memo projecting the costs through the end of the third month of the project (see Exhibit 10-3).

Dr. Reddy: "I'm already overburdened on other projects and won't be able to help you out. Royce picked you to be the project manager because he felt that you could do the job. Now, don't let him down. Send me a brief memo next month explaining the situation, and I'll see what I can do. Perhaps the situation will correct itself."

During the month of March, the third month of the project, West received almost daily phone calls from the people in the lab stating that Pat Ray was interfering with their job. In fact, one phone call stated that Ray had changed the test conditions from what was agreed on in the latest test matrix. When West confronted Ray on his meddling, Ray asserted that Corwin personnel were very unprofessional in their attitude and that he thought this was being carried down to the testing as well. Furthermore, Ray demanded that one of the functional employees be removed immediately from

Exhibit 10-3. Projected Cost Summary at the End of the Third Month

Direct labor/support Testing Overhead Materials G&A Totals

Original Proposal Cost Total Project Costs Projected at End of Third Month

Summary for Six-Month Project

$ 30,000 60,000 (30 tests) 90,000 (100%) 30,000 21,000 (10%) $231,000

$ 15,000 70,000 (35 tests) 92,000 (120%)* 50,000 22,700 (10%) $249,700

*Total engineering overhead was estimated at 100%, whereas the R&D overhead was 120%.

the project because of incompetence. West stated that he would talk to the employee's department manager. Ray, however, felt that this would be useless and said, "Remove him or else!" The functional employee was removed from the project.

By the end of the third month, most Corwin employees were becoming disenchanted with the project and were looking for other assignments. West attributed this to Ray's harassment of the employees. To aggravate the situation even further, Ray met with Royce and Reddy, and demanded that West be removed and a new project manager be assigned.

Royce refused to remove West as project manager, and ordered Reddy to take charge and help West get the project back on track.

Reddy: "You've kept me in the dark concerning this project, West. If you want me to help you, as Royce requested, I'll need all the information tomorrow, especially the cost data. I'll expect you in my office tomorrow morning at 8:00 a.m. I'll bail you out of this mess."

West prepared the projected cost data for the remainder of the work and presented the results to Dr. Reddy (see Exhibit 10-4). Both West and Reddy agreed that the project was now out of control, and severe measures would be required to correct the situation, in addition to more than $250,000 in corporate funding.

Reddy: "Dan, I've called a meeting for 10:00 a.m. with several of our R&D people to completely construct a new test matrix. This is what we should have done right from the start."

West: "Shouldn't we invite Ray to attend this meeting? I'm sure he'd want to be involved in designing the new test matrix."

Reddy: "I'm running this show now, not Ray!! Tell Ray that I'm instituting new policies and procedures for in-house representatives. He's no longer authorized to visit the labs at his own discretion. He must be accompanied by either you or me. If he doesn't like these rules, he can get out. I'm not going to allow that guy to disrupt our organization. We're spending our money now, not his."

West met with Ray and informed him of the new test matrix as well as the new policies and procedures for in-house representatives. Ray was furious over the new

Exhibit 10-4. Estimate of Total Project Completion Costs

Direct labor/support

Testing (60 tests) Overhead (120%)

200,000

120,000

Materials

103,000

G&A

47,000

$517,000

Peters contract

250,000

Overrun

$267,000

*Includes Dr. Reddy.

turn of events and stated that he was returning to Peters Company for a meeting with Delia.

On the following Monday, Frimel received a letter from Delia stating that Peters Company was officially canceling the contract. The reasons given by Delia were as follows:

1. Corwin had produced absolutely no data that looked promising.

2. Corwin continually changed the direction of the project and did not appear to have a systematic plan of attack.

3. Corwin did not provide a project manager capable of handling such a

4. Corwin did not provide sufficient support for the in-house representative.

5. Corwin's top management did not appear to be sincerely interested in the project and did not provide sufficient executive-level support.

Royce and Frimel met to decide on a course of action in order to sustain good working relations with Peters Company. Frimel wrote a strong letter refuting all of the accusations in the Peters letter, but to no avail. Even the fact that Corwin was willing to spend $250,000 of their own funds had no bearing on Delia's decision. The damage was done. Frimel was now thoroughly convinced that a contract should not be accepted on ''Pearl Harbor Day."

The Boeing 767:

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