MGMT 660 Boeing Analysis

Question 1 -- General question: How would you describe Boeing's approach to project management? What are its basic elements? Its strengths and weaknesses? This question can be broken into several specific questions:

Environment

The aircraft manufacturing industry was large and complex, and required extensive planning and resources to bring projects to completion. For instance, a typical 767 composed of 3.1 million parts and close to 85 miles of wiring that per federal regulations were required to be traceable. A typical 767 manufacturing required over a one thousand scientists and engineers, over 28,600 workforce, and about 62-acre building complex.

The industry is different from most other industries as it required massive resources, and was very capital intensive just to build even a single aircraft that maybe commercialized or not upon contingent of passing all safety and technical requirements. In fact, Lockheed Martin left the commercial airline manufacturing industry in 1981 when its wide-bodied L-1011 incurred the company losses of $2.5 billion. Such capital intensive projects can put a company’s entire net worth on the line.

Strategy and Culture

Boeing is an industry leader, and made over 9 billion dollars in 1981. The company manufactures commercial airlines, helicopters, space equipment, rockets, missiles, and aircraft avionics. The company was founded in 1916 by William Boeing. The company’s strategy has been incorporating flexible designs with inherent growth potential – modifications without whole revisions in its design. It also employ a more efficient design and development process to benefit families of airlines manufactured. The company was a leader in global marketing, technological leadership, customer service, and production skills. This made the company an industry low-cost producer as the company is able to pass on savings to customers.

The company’s culture included expectation from employees to be competent and capable of working as team players. The company was also focused on commitments – to honor its commitments to both customers and suppliers as well as employees. Meeting schedules was of paramount importance, and the company implemented tools – master phasing plan to project accurate and realistic schedules for projects.

Project Management

Key elements of Boeing’s project management begins first with the programs definition. During this phase, Boeing works out market and cost of technology as well as development and

production costs. Next, the company work on design configurations – fuel efficiency, more passengers, and if necessary minimum transatlantic stops.

Boeing as a company has several strengths that include the company’s focus on robust design and advance technology. The company was also a leader in global marketing and customer service. However, project decision making sometimes was less fluid to ensure smooth development and manufacturing with projects.

Typically, the company assesses market conditions, and costs that the company will incur to successfully design, build, and market its products. Such pre-planning is done well in advance before the company commence on design and technological configurations for a particular project. Due to capital intensive nature of commercial airline manufacturing, only the company’s board of directors are able to approve changes with designs and technological configurations.

Parametric Estimating Techniques

The parametric approach helps Boeing efficiently to calculate costs with projects from beginning to end. However, the technique is without flaws, mostly human reliance on previous benchmarking of other projects to calculate costs, not taking into account that each project is unique in its own way. Thus, making Dennis Wilson’s argument of “an airplane is an airplane” somewhat “risky – taking short cuts”. Although, parametric techniques are usually fine-tuned to account for differences among projects.

Question 3: Managing Risk

As noted previously, Boeing is an industry leader in commercial airline manufacturing, and also a leader with global marketing and customer service with a sophisticated supplier chain. The company mitigates risks based on its industry experience by conducting a thorough marketing analysis for the need of its several airline models. The company also analyzes development and production costs prior to commencing manufacturing its products. The company implements a Master phasing plan that outlines program milestones – design, cost phase, manufacturing, and selling to existing or new customers. With many tools developed to mitigate risks – specific work stations, stand up meetings with first line supervisors and management visibility study.

Question 4: Three-Crew to Two-Crew Conversion

Using in-line conversion was more efficient, as it prevented having to take the plane apart to modify, and convert to two-persons from three-person cockpit. Obviously, this process saves time, and money.

In my opinion, from an operational and financial point using the “off-line” approach requires much more time to take plane apart, and convert to a two-person cockpit. Additionally, any adjustments or future accommodation on the part of Boeing to remedy modifications would not have much impact compared to using an off-line approach that will require modification to be done separately, which could be costly and result in delays.

Question 5: Boeing (B) Case -- There are several specific questions:

Environmental Changes: How has the airframe business changed in the 1980s?

The industry changed after 1980, with fewer planes being produced. For instance, in 1987 out of 263 767’s ordered only 181 were delivered. Deregulation and fierce competition also contributed to the company changing its priorities with projects to pursue. Unlike, Boeings “old days” – where the company focused, and was infatuated with technology and robust designs. Nowadays, the company is more mindful of cost savings and profitability